Risk Management and Employee Benefit Review

Question 1

which of the following provides for a guaranteed death benefit?

1. Variable Universal Life
2. Variable Life

Answer 1

2 only

Question 2

which of the following is true regarding Whole Life policies?

1. death benefit remains level
2. used for low risk tolerance clients
3. premiums are level throughout policy life
4. provides for lifetime coverage

Answer 2

all are true

Question 3

which of the following is true regarding annual renewable term policies?

1. the premiums will decrease as you get older
2. used for long term needs
3. has a fixed/level death benefit
4. no cash value

Answer 3

3 and 4

Question 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

Answer 4

Variable Universal Life

Question 5

true or false?

Variable Life policies provide for flexible premium payments

Answer 5

false, Variable universal life policies provide for flexible payments

Question 6

true or false?

annual renewable term policies should be used for short to intermediate needs

Answer 6

true

Question 7

second to die policies have ___ costs than first to die policies

Answer 7

lower

Question 8

second to die policies are usually used for ___

Answer 8

estate liquidity needs

Question 9

first to die policies are usually used for ____

Answer 9

paying off a debt at the first spouses death

Question 10

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

Answer 10

true

Question 11

under a fixed annuity the ____ bears the investment risk

Answer 11

insurer

Question 12

true or false?

a fixed annuity is more appropriate for conservative investors than investors with a higher risk tolerance

Answer 12

true

Question 13

under a variable annuity the ____ bears the investment risk

Answer 13

owner or annuitant

Question 14

true or false?

bonus annuities usually have shorter surrender charge periods than other annuities

Answer 14

false, usually have longer

Question 15

true or false?

bonus annuities usually have higher management fees than other annuities

Answer 15

true

Question 16

what is the difference between a guaranteed lifetime withdrawal benefit rider (GLWB) and a guaranteed minimum withdrawal benefit rider (GMWB)?

Answer 16

GLWB will last for life

Question 17

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

Answer 17

twisting

Question 18

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

Answer 18

churning

Question 19

what’s the difference between the own occupation definition of disability and the modified own occupation definition?

Answer 19

under the modified own occupation definition the insured cannot be working in order to receive benefits

Question 20

which of the following will automatically qualify the insured to receive full disability benefits?

1. blind
2. deaf
3. loss of 2 or more limbs
4. loss of speach

Answer 20

all will automatically qualify the insured to receive full benefits

Question 21

____ disability is certain conditions that automatically qualify the insured to receive full benefits

Answer 21

presumptive

Question 22

if you disability insurance policy has an elimination period of 60 days you typically won’t receive a payment until day ___

Answer 22

90

Question 23

a disability benefit rider that pays the difference between the original pay and current pay if the insured returns to work

Answer 23

residual DI rider

Question 24

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

Answer 24

partial DI rider

Question 25

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

Answer 25

guaranteed renewable

Question 26

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

Answer 26

noncancellable

Question 27

true or false? noncancellable DI policies are usually expensive

Answer 27

true

Question 28

under a S corp the employer can only deduct DI premium payments to ___ and greater than ___% shareholders

Answer 28

partners ; 2%

Question 29

true or false? DI premiums paid for a disability buyout or buy sell agreement are deductible by the employer

Answer 29

false

Question 30

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

Answer 30

true

Question 31

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

Answer 31

true

Question 32

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

Answer 32

true

Question 33

the waiver of premium provision normally waives the premium after ___ days of disability

Answer 33

90

Question 34

residual disability benefits are based on a ____ of lost income

Answer 34

percentage

Question 35

true or false? a disability policy application is more in depth than a life insurance policy application

Answer 35

true

Question 36

____ is the dollar amount of covered benefits to which the coinsurance provision is applied and does not include the deductible

Answer 36

stop loss limit

Question 37

_____ the maximum amount the insured pays which includes the coinsurance and deductible

Answer 37

maximum out of pocket

Question 38

true or false? COBRA coverage applies to plans that only provide life insurance and/or disability benefits?

Answer 38

false, it would not apply to a plan who only provides those things

Question 39

under COBRA coverage employees and dependents are entitled to ___ months of coverage resulting from reduction in hours or normal termination

Answer 39

18

Question 40

under COBRA coverage employees are entitled to ___ months of coverage if the employee meets the social security definition of disabled

Answer 40

29

Question 41

under COBRA coverage employees and dependents are entitled to ___ months of coverage if the employee dies, if they get divorced, or the plan terminates

Answer 41

36

Question 42

under COBRA coverage dependents are entitled to ___ months of coverage if the employee becomes eligible for Medicare

Answer 42

36

Question 43

___ limits the application of preexisting condition exclusions when enrolling in a new employer's health plan

Answer 43

HIPAA (1996)

Question 44

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

Answer 44

6

Question 45

true or false? The 2010 Health Care Reform Legislation requires preventive services to be free without a deductible, co payment, or coinsurance

Answer 45

true

Question 46

true or false? The 2010 Health Care Reform Legislation is allowed to impose lifetime maximums and annual maximums for essential health benefits

Answer 46

false, neither maximum can be enforced

Question 47

which of the following regarding health insurance policies purchased on exchanges are correct? 1. policies must be guaranteed issue and renewable 2. to purchase insurance through an exchange the individual must not have qualifying coverage through an employer or or a public program 3. premiums and cost sharing credits are available to some low income individuals/families

Answer 47

all are correct

Question 48

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

Answer 48

false, neither statement is true

Question 49

true or false? a married child can be covered under their parent's health plan but the child's spouse cannot be covered

Answer 49

true

Question 50

which of the following are covered under Medicare Part A? 1. hospital care 2. skilled nursing care 3. physician's fee 4. hospice care 5. home health care 6. outpatient services

Answer 50

1, 2, 4, and 5

Question 51

which of the following are covered under Medicare Part B? 1. hospital care 2. skilled nursing care 3. physician's fee 4. hospice care 5. home health care 6. outpatient services

Answer 51

3 and 6

Question 52

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

Answer 52

true

Question 53

people who have been receiving social security disability benefits for at least ___ months are also eligible for medicare benefits

Answer 53

24

Question 54

medicare pays for hospital services for up to ___ days in each benefit period

Answer 54

90

Question 55

a benefit period under medicare ends when the patient is out of the hospital for ___ consecutive days

Answer 55

60

Question 56

under medicare part A a lifetime reserve of __ days is also available to individuals who have exhausted the regular 90 days of benefits

Answer 56

60

Question 57

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

Answer 57

30

Question 58

medicare part A will pay skilled nursing benefits in full for the first ___ days

Answer 58

20

Question 59

true or false? medicare coverage is not provided for skilled nursing after 100 days

Answer 59

true

Question 60

medical equipment and diagnostic tests are covered under Medicare part ___

Answer 60

B

Question 61

home health services are covered under medicare part ___

Answer 61

A

Question 62

drug coverage is provided under medicare part ___

Answer 62

D

Question 63

nonqualified withdrawals from a HSA will incur a penalty until age ___

Answer 63

65

Question 64

___ is a long term care approach that uses coverage equal to a specified dollar amount

Answer 64

pool of money concept

Question 65

chronically ill means you can't perform ___ of the ___ ADL's for at least ___ days

Answer 65

2 ; 6 ; 90

Question 66

name the 6 ADL's

Answer 66

``` eating bathing continence transfer from bed to chair dressing toileting ```

Question 67

NAIC legislation for long term care policies requires a ___ day free look back period

Answer 67

30

Question 68

NAIC legislation for long term care policies requires expected loss ratio to be at least ___%

Answer 68

60%

Question 69

what is the major draw to using a partnership long term care policy?

Answer 69

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

Question 70

true or false? under the 2010 Health Care Reform Legislation individuals could be penalized if they do not have appropriate health insurance coverage

Answer 70

true, if they are uninsured they could face penalties depending on income level

Question 71

nonqualified plans may be ___ or ___

Answer 71

funded ; unfunded

Question 72

____ nonqualified plans use informal funding with life insurance, annuities, mutual funds or general investments

Answer 72

unfunded

Question 73

___ nonqualified plans are plans where assets are owned by the company and are subject to company's creditors

Answer 73

unfunded

Question 74

under a ____ nonqualified plan there is no company tax deduction until the employee receives the benefit or has constructive receipt

Answer 74

unfunded

Question 75

true or false? a Top Hat plan is an example of a funded nonqualified plan

Answer 75

false

Question 76

true or false? rabbi trust are an example of an unfunded nonqualified plan

Answer 76

true

Question 77

true or false? rabbi trust are subject to the claims of a company's creditors

Answer 77

true

Question 78

true or false? rabbi trusts immediately create taxable income for the employee

Answer 78

false

Question 79

true or false? secular trusts are subject to the claims of a company's creditors

Answer 79

false

Question 80

true or false? secular trusts create immediate taxable income to the employee

Answer 80

true

Question 81

do employers receive an immediate tax deduction when they contribute to a secular trust?

Answer 81

yes

Question 82

do employers receive an immediate tax deduction when they contribute to a rabbi trust?

Answer 82

no

Question 83

do employees get to defer taxes under a secular trust?

Answer 83

no

Question 84

do employees get to defer taxes under a rabbi trust?

Answer 84

yes

Question 85

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

Answer 85

SERP (Supplemental executive retirement plan)

Question 86

true or false? when an employee converts junior class shares to common shares they will be taxed

Answer 86

false

Question 87

no more than ___ families may occupy the dwelling under a homeowners insurance policy

Answer 87

two

Question 88

personal property is covered under ____ and this applies to all forms of homeowners insurance policies

Answer 88

actual cash value

Question 89

actual cash value = ______ minus ____

Answer 89

replacement cost minus depreciation

Question 90

homeowners section A covers ___

Answer 90

dwelling

Question 91

homeowners section B covers ___

Answer 91

other structures

Question 92

homeowners section C covers ___

Answer 92

personal property

Question 93

homeowners section D covers ___

Answer 93

loss of use

Question 94

what section of homeowners insurance covers materials and supplies intended for use in construction?

Answer 94

section A

Question 95

True or false? land is specifically excluded from section A of homeowners insurance

Answer 95

true

Question 96

generally ___% of the amount of insurance on the dwelling applies as insurance on detached structures

Answer 96

10%

Question 97

homeowners section ___ covers the garage and other structures that are detached from the dwelling

Answer 97

B

Question 98

name the three exclusions under coverage B of homeowners insurance

Answer 98

land business use rental use

Question 99

homeowners section ___ covers personal property and contents

Answer 99

C

Question 100

generally the amount of insurance available under homeowners section C is ___% of the coverage on the dwelling

Answer 100

50%

Question 101

generally homeowners insurance section D is limited to ___% of the dwelling for HO-2 , HO-3, and HO-5 policies

Answer 101

20%

Question 102

generally homeowners insurance section D is limited to ___% of the dwelling for HO-1 and HO-8 policies

Answer 102

10%

Question 103

what are the three types of benefits provided under section D of homeowners insurance?

Answer 103

fair rental value additional living expenses prohibited use

Question 104

homeowners section 2 covers ____ and ___

Answer 104

personal liability and medical

Question 105

coverage E covers ____

Answer 105

personal liability

Question 106

coverage F covers

Answer 106

medical payments to others

Question 107

true or false? coverage F covers medical payments to others from incidents that may occur on or off the premises

Answer 107

true

Question 108

this coverage protects the insured against claims arising out of both bodily injury and property damage

Answer 108

coverage E

Question 109

name the 8 general exclusions under a homeowners policy

Answer 109

``` water damage nuclear hazard earth movement ordinance or law power failure neglect war intentional loss ```

Question 110

HO-2 is considered ___ form

Answer 110

broad

Question 111

HO-2 covers ___ named perils

Answer 111

18

Question 112

loss of use coverage under HO-4 is limited to ___% of the amount of coverage ____

Answer 112

30% ; C

Question 113

loss of use coverage under HO-6 is equal to ___% of the amount of coverage

Answer 113

40% ; C

Question 114

true or false? under HO-6 an attached shed is considered part of the dwelling

Answer 114

true

Question 115

true or false? there is no section B coverage (other structures) under a HO-6 policy

Answer 115

true

Question 116

true or false? under HO-6 a detached shed will be considered personal property

Answer 116

true