Risk Management and Employee Benefits Flashcards
Which type of insurance provides the highest death benefit for the lowest premium?
Annual renewable term insurance
What are most single premium policies?
MEC
How are withdrawals and loans treated for a MEC?
Included in taxable income to the extent the cash value exceeds the premiums paid using LIFO
MEC 59.5 rule and exception:
Persons under age 59.5 may be subject to a 10% tax penalty on withdrawals and loans if there is a profit in the contract.
No penalty or tax due on the return of basis in the contract
Group Term Life: Section 70 Table 1 cost is:
per $1,000 of insurance per month
What is presumptive disability and who needs it?
Certain conditions that automatically qualify the insured for full benefit(blindness, deafness, loss of speech, loss of two or more limbs) For high profile entertainers, actors or athletes.
What amount of disability insurance is adequate?
60%-80%
What is Social Insurance Substitute integrate with and how does it work
Rider that provides a benefit that is integrated with S.S., workers comp, or social insurance. The benefit is reduced dollar-for-dollar by an social insurance amounts received.
What is a stop-loss limit:
It is the dollar amount of covered benefits to which the coinsurance provision is applied and doesn’t include the deductible
COBRA is available to which employers? How much cost can be passed through?
Those who have a healthcare plan, 20 or more employees (PT counts as .5)
102%
COBRA: What are the requirements for 18 months and 36 months?
18 months if terminated or change of status
36 months for everything else
COBRA: What is the 29 month option available for and why?
Those that qualify for the S.S. definition of disability. (You have to wait 5 months before getting on S.S. disability, then 24 months on S.S. disability then you can qualify for medicare)
ADS’s and time required:
BEDTTC (bed to the chair), 90 days
What is the primary reason to purchase Long-term Care Insurance:
to protect wealth
ISO Disqualifying Disposition:
1 year from date of exercise and 2 years from date of grant, determined by date sold
How is ISO taxed if it is disqualifying disposition and when does the holding period start?
Ordinary income, no payroll tax, hp starts when exercised.
Should ACV or replacement cost be insured?
Replacement cost, the older the property, the lower the ACV due to depreciation
What is Section I Coverage and how much should be recommended?
Sections A, B, C and D, 100%
What does Section A cover?
Dwelling (permanently attached), construction materials. Land isn’t included.
What does Section B cover? what amount of A is covered?
Other structures (detached), 10%, doesn’t apply to land or business property
What does Section C Cover? What amount of Coverage A ? Where?
Personal property, 50%, all over the world,
How would someone who has lots of personal property obtain additional insurance?
Through a separate policy or a rider
What does Section D Cover?
Loss of use
What is covered under section II Coverage?
Coverage E:
Coverage F:
What does Coverage E cover?
Personal Liability: neighbor falls and needs major surgery that costs hundreds of thousands of dollars, covers golf course can’t be doing business
What does Coverage F cover?
Medical payments to others: Neighbor falls and needs stitches, can’t be immediate family, $5,000-$10,000
