Risk Management and Employee Benefit Review Flashcards
which of the following provides for a guaranteed death benefit?
- Variable Universal Life
- Variable Life
2 only
which of the following is true regarding Whole Life policies?
- death benefit remains level
- used for low risk tolerance clients
- premiums are level throughout policy life
- provides for lifetime coverage
all are true
which of the following is true regarding annual renewable term policies?
- the premiums will decrease as you get older
- used for long term needs
- has a fixed/level death benefit
- no cash value
3 and 4
the following statements describe which type of life insurance policy?
- appropriate for people who have higher risk tolerance
- death benefit is adjustable
- premium payments are flexible
- invests in subaccounts
Variable Universal Life
true or false?
Variable Life policies provide for flexible premium payments
false, Variable universal life policies provide for flexible payments
true or false?
annual renewable term policies should be used for short to intermediate needs
true
second to die policies have ___ costs than first to die policies
lower
second to die policies are usually used for ___
estate liquidity needs
first to die policies are usually used for ____
paying off a debt at the first spouses death
true or false?
if the employer pays the premiums on a life insurance policy for the employee and is not the beneficiary of the policy then the premium payments are deductible to the employer
true
under a fixed annuity the ____ bears the investment risk
insurer
true or false?
a fixed annuity is more appropriate for conservative investors than investors with a higher risk tolerance
true
under a variable annuity the ____ bears the investment risk
owner or annuitant
true or false?
bonus annuities usually have shorter surrender charge periods than other annuities
false, usually have longer
true or false?
bonus annuities usually have higher management fees than other annuities
true
what is the difference between a guaranteed lifetime withdrawal benefit rider (GLWB) and a guaranteed minimum withdrawal benefit rider (GMWB)?
GLWB will last for life
the practice of using misrepresentations to induce a policy owner with one insurance company to lapse, forfeit, or surrender a life insurance or annuity policy for the purpose of taking out a policy with a another insurance company
twisting
occurs when policy values of an existing life insurance or annuity contract are used to purchase another policy or contract with the same insurance company for the purpose of earning additional commissions without an objective reasonable basis for believing that the new policy will result in an actual benefit for the client
churning
what’s the difference between the own occupation definition of disability and the modified own occupation definition?
under the modified own occupation definition the insured cannot be working in order to receive benefits
which of the following will automatically qualify the insured to receive full disability benefits?
- blind
- deaf
- loss of 2 or more limbs
- loss of speach
all will automatically qualify the insured to receive full benefits
____ disability is certain conditions that automatically qualify the insured to receive full benefits
presumptive
if you disability insurance policy has an elimination period of 60 days you typically won’t receive a payment until day ___
90
a disability benefit rider that pays the difference between the original pay and current pay if the insured returns to work
residual DI rider
a disability benefit rider that provides coverage for the insured when the insured is unable to perform one or more important duties of their own occupation, but can still perform some duties
partial DI rider
type of DI policy where a right to renew the policy is guaranteed but the insurance company can increase premiums based on the policyholder’s class
guaranteed renewable
type of DI policy that guarantees the insured the right to renew until a specified age or stated number of years at a fixed level premium
noncancellable
true or false?
noncancellable DI policies are usually expensive
true
under a S corp the employer can only deduct DI premium payments to ___ and greater than ___% shareholders
partners ; 2%
true or false?
DI premiums paid for a disability buyout or buy sell agreement are deductible by the employer
false
true or false?
under a S corp DI premiums paid by the employer are included in taxable income to the partners or greater than 2% shareholders
true
true or false?
partners and 2% shareholders of an S corp will receive DI benefits tax free if the premiums were paid by the corp
true
true or false?
business overhead expense insurance is tax deductible as a business expense for the employer and are also taxable income to the business when benefits are received
true
the waiver of premium provision normally waives the premium after ___ days of disability
90
residual disability benefits are based on a ____ of lost income
percentage
true or false?
a disability policy application is more in depth than a life insurance policy application
true
____ is the dollar amount of covered benefits to which the coinsurance provision is applied and does not include the deductible
stop loss limit
_____ the maximum amount the insured pays which includes the coinsurance and deductible
maximum out of pocket
true or false?
COBRA coverage applies to plans that only provide life insurance and/or disability benefits?
false, it would not apply to a plan who only provides those things
under COBRA coverage employees and dependents are entitled to ___ months of coverage resulting from reduction in hours or normal termination
18
under COBRA coverage employees are entitled to ___ months of coverage if the employee meets the social security definition of disabled
29
under COBRA coverage employees and dependents are entitled to ___ months of coverage if the employee dies, if they get divorced, or the plan terminates
36
under COBRA coverage dependents are entitled to ___ months of coverage if the employee becomes eligible for Medicare
36
___ limits the application of preexisting condition exclusions when enrolling in a new employer’s health plan
HIPAA (1996)
HIPAA defines a preexisting condition as a medical condition for which medical advice, treatment, or diagnosis was recommended or received within ____ months prior to enrollment date in the new plan
6
true or false?
The 2010 Health Care Reform Legislation requires preventive services to be free without a deductible, co payment, or coinsurance
true
true or false?
The 2010 Health Care Reform Legislation is allowed to impose lifetime maximums and annual maximums for essential health benefits
false, neither maximum can be enforced
which of the following regarding health insurance policies purchased on exchanges are correct?
- policies must be guaranteed issue and renewable
- to purchase insurance through an exchange the individual must not have qualifying coverage through an employer or or a public program
- premiums and cost sharing credits are available to some low income individuals/families
all are correct
true or false?
to be covered under your parent’s health plan you must live at home and be claimed as a dependent on their tax return
false, neither statement is true
true or false?
a married child can be covered under their parent’s health plan but the child’s spouse cannot be covered
true
which of the following are covered under Medicare Part A?
- hospital care
- skilled nursing care
- physician’s fee
- hospice care
- home health care
- outpatient services
1, 2, 4, and 5
which of the following are covered under Medicare Part B?
- hospital care
- skilled nursing care
- physician’s fee
- hospice care
- home health care
- outpatient services
3 and 6
true or false?
people of any age with permanent kidney (ESRD) failure that requires dialysis or a kidney transplant are eligible for medicare part A
true
people who have been receiving social security disability benefits for at least ___ months are also eligible for medicare benefits
24
medicare pays for hospital services for up to ___ days in each benefit period
90
a benefit period under medicare ends when the patient is out of the hospital for ___ consecutive days
60
under medicare part A a lifetime reserve of __ days is also available to individuals who have exhausted the regular 90 days of benefits
60
to receive skilled nursing benefits, a physician must certify that skilled nursing care or rehab services are needed for a condition that was treated in a hospital within the past ___ days
30
medicare part A will pay skilled nursing benefits in full for the first ___ days
20
true or false?
medicare coverage is not provided for skilled nursing after 100 days
true
medical equipment and diagnostic tests are covered under Medicare part ___
B
home health services are covered under medicare part ___
A
drug coverage is provided under medicare part ___
D
nonqualified withdrawals from a HSA will incur a penalty until age ___
65
___ is a long term care approach that uses coverage equal to a specified dollar amount
pool of money concept
chronically ill means you can’t perform ___ of the ___ ADL’s for at least ___ days
2 ; 6 ; 90
name the 6 ADL’s
eating bathing continence transfer from bed to chair dressing toileting
NAIC legislation for long term care policies requires a ___ day free look back period
30
NAIC legislation for long term care policies requires expected loss ratio to be at least ___%
60%
what is the major draw to using a partnership long term care policy?
partnership long term care policies can provide for more asset protection by requiring an insured person to only spend down assets to a specified level instead of having to spend down to the $2,000 usually required for medicaid
true or false?
under the 2010 Health Care Reform Legislation individuals could be penalized if they do not have appropriate health insurance coverage
true, if they are uninsured they could face penalties depending on income level
nonqualified plans may be ___ or ___
funded ; unfunded
____ nonqualified plans use informal funding with life insurance, annuities, mutual funds or general investments
unfunded
___ nonqualified plans are plans where assets are owned by the company and are subject to company’s creditors
unfunded
under a ____ nonqualified plan there is no company tax deduction until the employee receives the benefit or has constructive receipt
unfunded
true or false?
a Top Hat plan is an example of a funded nonqualified plan
false
true or false?
rabbi trust are an example of an unfunded nonqualified plan
true
true or false?
rabbi trust are subject to the claims of a company’s creditors
true
true or false?
rabbi trusts immediately create taxable income for the employee
false
true or false?
secular trusts are subject to the claims of a company’s creditors
false
true or false?
secular trusts create immediate taxable income to the employee
true
do employers receive an immediate tax deduction when they contribute to a secular trust?
yes
do employers receive an immediate tax deduction when they contribute to a rabbi trust?
no
do employees get to defer taxes under a secular trust?
no
do employees get to defer taxes under a rabbi trust?
yes
a nonqualified deferred comp plan that focuses on providing adequate retirement income to executives and is appropriate to provide benefits above both IRC Section 415 Limits and compensation limits
SERP (Supplemental executive retirement plan)
true or false?
when an employee converts junior class shares to common shares they will be taxed
false
no more than ___ families may occupy the dwelling under a homeowners insurance policy
two
personal property is covered under ____ and this applies to all forms of homeowners insurance policies
actual cash value
actual cash value = ______ minus ____
replacement cost minus depreciation
homeowners section A covers ___
dwelling
homeowners section B covers ___
other structures
homeowners section C covers ___
personal property
homeowners section D covers ___
loss of use
what section of homeowners insurance covers materials and supplies intended for use in construction?
section A
True or false?
land is specifically excluded from section A of homeowners insurance
true
generally ___% of the amount of insurance on the dwelling applies as insurance on detached structures
10%
homeowners section ___ covers the garage and other structures that are detached from the dwelling
B
name the three exclusions under coverage B of homeowners insurance
land
business use
rental use
homeowners section ___ covers personal property and contents
C
generally the amount of insurance available under homeowners section C is ___% of the coverage on the dwelling
50%
generally homeowners insurance section D is limited to ___% of the dwelling for HO-2 , HO-3, and HO-5 policies
20%
generally homeowners insurance section D is limited to ___% of the dwelling for HO-1 and HO-8 policies
10%
what are the three types of benefits provided under section D of homeowners insurance?
fair rental value
additional living expenses
prohibited use
homeowners section 2 covers ____ and ___
personal liability and medical
coverage E covers ____
personal liability
coverage F covers
medical payments to others
true or false?
coverage F covers medical payments to others from incidents that may occur on or off the premises
true
this coverage protects the insured against claims arising out of both bodily injury and property damage
coverage E
name the 8 general exclusions under a homeowners policy
water damage nuclear hazard earth movement ordinance or law power failure neglect war intentional loss
HO-2 is considered ___ form
broad
HO-2 covers ___ named perils
18
loss of use coverage under HO-4 is limited to ___% of the amount of coverage ____
30% ; C
loss of use coverage under HO-6 is equal to ___% of the amount of coverage
40% ; C
true or false?
under HO-6 an attached shed is considered part of the dwelling
true
true or false?
there is no section B coverage (other structures) under a HO-6 policy
true
true or false?
under HO-6 a detached shed will be considered personal property
true
