Risk Management, Insurance, and Employee Benefits

Question 1

Peril is the cause of a ______

Answer 1

financial loss

Question 2

Hazard is a condition that _____

Answer 2

increases the prob that a loss will occur

Question 3

Static risks are losses that are caused by factors other than the _____

Answer 3

economy

Question 4

Dynamic risks are the result of the ____ changing

Answer 4

economy

Question 5

Speculative risk involves both the chance of ______ and ____ and is uninsurable

Answer 5

loss or gain (gambling)

Question 6

Risk management process has six steps:

Answer 6

1. determine objectives
2. id risks
3. evaluate risks as to their probability and potential loss
4. determine alternatives to manage risk and select best option
5. implement program
6. monitor and evaluate

Question 7

Insurance seeks to avoid adverse selection, which means that ____

Answer 7

the people with the highest risk are the ones who buy the most insurance

Question 8

A tort can result in two forms of injury:

Answer 8

bodily and property damage

Question 9

For life insurance policies, the insured may ______ the policy but must inform the insurer in writing

Answer 9

may assign all aspects of the policy

Question 10

Decreasing term insurance is usually used to protect your _____

Answer 10

mortgage

Question 11

Between limited pay whole life and modified whole life, which has the lower initial premium payments?

Answer 11

modified whole life

Question 12

Universal life has a ____ premium, an _____ death benefit, and _______ life insurance contract

Answer 12

flexible premium, adjustable death bene, and unbundled life insurance contract

Question 13

Life insurance programming is used to determine _____

Answer 13

the amount of life insurance needed

Question 14

THe capital retention method of life insurance analysis is based on the amount of money needed for continued ________ and does not consider ______

Answer 14

continued support of the family and does not consider inflation

Question 15

The human life value method of insurance analysis projects the _____ of the individual then uses a ____- to get the present value

Answer 15

projects income to get present value

Question 16

The financial needs insurance analysis method examines all ____- expenses to the dependent survivors and any _____ expenditures

Answer 16

recurring expenses and unusual expenditures related to the death of the insured

Question 17

The risk of superannuation is the risk of _____

Answer 17

running out of money within ones life

Question 18

A QLAC is a qualified longevity annuity that ensures that a retiree has a _____ throughout their advanced years

Answer 18

regular income stream

Question 19

For life insurance, dividends are generally considered ______ which reduced the ____

Answer 19

return of premiums which reduces the basis

Question 20

Withdrawals or loans from MECs receive what kind of accounting treatment?

Answer 20

LIFO

Question 21

Can you 1035 a MEC into another kind of insurance policy?

Answer 21

NO - once a MEC, always a MEC

Question 22

The fixed annuity exclusion ratio =

Answer 22

investment in the contract / expected return

Question 23

The variable annuity exclusion ratio =

Answer 23

investment in contract / annuitants life

Question 24

For any amount of group term above _____, the schedule premiums above $1,000 per the IRS table is included in W2 wages less employee contributions

Answer 24

above $50k

Question 25

Split dollar life insurance is when an ___ and an ____ share the cost

Answer 25

employer and employee - good for executives, preretirement death benefiit is objective, selective executive benefits, finance of stock buyout

Question 26

Does an employer receive a deduction for split dollar premium payments?

Answer 26

NO

Question 27

For life insurance in a qualified plan, the coverage cannot exceed _____ the expected monthly benefit

Answer 27

100x

Question 28

Nonqualified deferred compensation plans are useful when an employer wants to ___, ____, ____. or ____ employees

Answer 28

recruit, retain, reward or retire (FOUR Rs)

Question 29

Nonqualified deferred comp plans are advantageous in part because they can favor_______

Answer 29

favor executives or a group of employees

Question 30

Disadvantages of nonqual def comp plans is that employers generally cannot ______

Answer 30

deduct for contributions

Question 31

Are most nonqual def comp plans funded or nonfunded?

Answer 31

NONfunded because of the tax implications

Question 32

A rabbi trust holds property that funds a ___________

Answer 32

nonqual def comp plan

Question 33

SERPs are useful over a defined benefit plan because there is no _____

Answer 33

benefit limit ($220k for 2018)

Question 34

NQSOs are taxed as ____ at exercise as the difference between the ___ and the ____

Answer 34

taxed as ordinary income, difference between exercise price and FMV

Question 35

Basis for NQSOs after exercise is the _____

Answer 35

FMV at exercise

Question 36

An 83(b) election can only be made for _____ and allows them to recognize the income immediately rather than waiting until there is no longer a substantial risk of forfeiture

Answer 36

restricted stock

Question 37

A cafeteria plan is one in which employees may choose the form of their _____

Answer 37

employee benefits

Question 38

Meals and lodging provided by an employer are not includable in gross income provided that two conditions are met:

Answer 38

- meals furnished by employer, on employer premises, and for employers convenience - employee required to accept the lodging as a condition of employment

Question 39

A VEBA is a trust or corporation set up to hold funds to pay for _____ under an employee benefit plan

Answer 39

hold funds to pay for future benefits (Voluntary Employees Beneficiary Association)

Question 40

The policy elements of disability insurance are:

Answer 40

- definition of disability - elimination period - benefit amount/% - benefit term - coverage (perils insured against)

Question 41

For an individual, health insurance premiums receive beneficial tax treatment only if all medical expenditures exceed _____ of AGI

Answer 41

10%

Question 42

An HRA is a ______ between an employer and employee

Answer 42

health reimbursement arrangement

Question 43

Medicare part A covers _____

Answer 43

hospital care, skilled nursing, hospice, and home health

Question 44

Medicare part B is optional and covers ______

Answer 44

physicians fees and outpatient services

Question 45

Medicare part C is the medicare ____ plans and allows individuals to choose _____ to parts A & B

Answer 45

medicare advantage plans and allows individuals to choose alternatives to parts A&B

Question 46

Medicare part D is ______

Answer 46

prescription drug coverage

Question 47

Assets that are not included in determining medicaid coverage are

Answer 47

primary residence personal property and household belongings one motor vehicle life insurance with face value less than $1.5k up to $1.5k in burial funds assets held in specific trusts

Question 48

The actual cash value for homeowners insurance =

Answer 48

replacement cost - depreciation

Question 49

The eight general exclusions for perils for homeowners policies are:

Answer 49

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

Question 50

HO-1 policies cover ____ perils

Answer 50

12

Question 51

HO-2 policies cover _____ perils

Answer 51

18

Question 52

HO-3 policies cover _____ perils

Answer 52

open perils - except for those that are excluded

Question 53

HO-4 is designed for _____

Answer 53

renters

Question 54

HO-5 is like HO-3 in terms of the building but covers _____ on an open perils basis (HO-3 covers this on a broad perils basis)

Answer 54

personal property

Question 55

HO-6 is for _____

Answer 55

condo owners

Question 56

HO-8 is for _____ homes

Answer 56

old

Question 57

A commercial package policy (CPP) is a policy to cover ______

Answer 57

business property