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CEBS GBA - Module 1 Exam Questions and Answers
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CEBS GBA - Module 1 ExamQuestions and Answers
Fringe Benefits - -Addition of benefits as an offset to higher labor
-Broad View - -"Virtually any form of compensation other than direct wages"
-Limited (Narrow) View - -Benefits that stem from an employment
relationship, not underwritten or paid for directly by the government
-Reasons for growth in Employee Benefit Plans - -Business, tax legislation,
collective bargaining, efficiency of the approach
-Labor Management Relations Act (Taft Hartley Act) - -Administered by the
NLRB, requires good faith bargaining between employers and employees in
the matters of hours, wages, and working conditions.
-Effect of the Industrial Revolution - -Employees started moving to
employers in Cities, the grouping of employees made it easier to cover all
employees under one contract. Employer benefits are convenient and
simple.
-Effect of World War II - -Wages were limited due to the government,
employee benefits were deemed as compensation.
-Group Technique - -Only certain groups are eligible (a specific company's
employees), steady flow of lives (cost increases as age increases), minimum
number of lives.
-Functional Approach - -Organized system for analyzing audience,
participants exposure to risk, focused on employee needs, reducing company
loss, and being thoughtful of cost parameters, originated in 1967 by George
C. Foust.
-Risk - -Uncertainty when thinking in terms of a 'loss' (Loss referring to the
insurance of a decrease in value). Eg. Illness, death, disability,
unemployment, cost of medical bills .
-Peril - -The cause of personal/property loss, destruction, or damage.
-Hazard - -A condition that increases the probability of a peril occurring or
that can increase the loss in the event of a peril.
, -Physical Hazard - -The presence of flammable materials in absence of
extinguishers, machines without safety mechanisms, faulty heating/air
conditioner units.
-Moral Hazard - -Dishonest, unethical, and immoral people - those who
steal/damage company property; file fraudulent medical claims, abuse sick
time, falsify pay records or expenses
-Morale Hazard - -Those that arise through a person acting careless. It can
also include the act of not securing items of value; failing to notify
employees of hazards, etc.
-Pure Risk - -Either risk will happen, or will not happen. These types of risks
can be insured. Eg. sickness, accident, unemployment, disability, theft of
property, etc.
-Speculative Risk - -Either loss, no loss, or gain. Eg. Purchases of stock, new
business ventures, gambling. In each, one could lose, break even, or gain.
-Personal Risk - -The most important risk in employee benefits. Includes
death, illness, accidents, unemployment, and old age. Can be measured with
some degree of accuracy. Potential loss can be estimated through estimates
of such factors as medical costs.
-Property Risk - -Risk of uncertainty that leads to decrease in value of real
personal property. Includes fire, flood, earthquake, wind, theft, auto collision.
Types of property include home, furniture, cars, jewelry.
-Legal Liability Risk - -A loss resulting from negligent acts of a person
resulting in injury to another person. Stems from an injured plaintiff seeking
damages.
-Personal risk - -The type of risk that is the focal point of employee benefit
plans?
-Methods of Handling Risk - -Avoidance, Control, Retention, Transfer,
Insurance
-Avoidance - -Perfect choice as risk is basically never assumed. Does not
alleviate all risk of a particular factor. Difficult to achieve in employee
benefits due to illness, death, etc.
-Control - -The attempt to prevent or reduce potential loss from taking place
or to reduce severity of loss. Eg. smoke detectors, seat belts, physical
exams, exercise and diet. Examples of this in employee benefits are wellness
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