CEBS GBA 2: Life Insurance Correct Questions & Answers (SCORED A+)
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CEBS GBA 2: Life Insurance
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CEBS GBA 2: Life Insurance
31 day continuation of protection - ANSWERextra days of protection while looking at the conversion privilege or waiting for coverage to start
about how many group life policies are in force? - ANSWER46% of all life policies in force. value at $8.7 trillion
accelerated benefits - ANSWERplans w...
CEBS GBA 2: Life Insurance Correct Questions &
Answers (SCORED A+)
31 day continuation of protection - ANSWERextra days of protection while looking at the conversion
privilege or waiting for coverage to start
about how many group life policies are in force? - ANSWER46% of all life policies in force. value at
$8.7 trillion
accelerated benefits - ANSWERplans will pay for all or part of the dealth benefit if a patient can prove
that he or she has a terminal illness
ADEA- age discrimination in employment act of 1967 and ammendments - ANSWERremoved the age
70 ceiling on active employment. clarified the Older Workers Benefit Protection Act. employees over
age 40 are considered a protected group. their benefits may be cut back or reduced but indiv plans
must be actuarilly analyzed to derermine cost justified reductions.
advantages of contributory plans - ANSWER1 larger benefits (liberal/ more $)
2 cover more employees as cost is shared between employer and the employee
3 employees have more say
4 more employee interest as they share cost
advantages of group paid up life insurance - ANSWERprovides permanent protection. cash value
accumulations. group paid up provides a scientific way to fund post retirement coverage over the
working life of the employee. facilitiate the conversion by long service employees of any term
coverage remining at age 65. employers electing to continue all or part of the coverage on retirees
find the schedules amount of term reduced well below the amount needed in the absence of paid up
ins. well recognized by the IRS
BOLI - ANSWERbank owned life ins
business continuation insurance plan - ANSWERan ins plan designed to enable a business ower to
provide for the continued operation of the business if the owner or key person dies
, COLI- corporate owned life insurance - ANSWERthis life ins is sep from the employers exec
compensation plan or agreement to provide benefits for the exec. the employer is both owner and
beneficiary of permanent life ins covering the lives of participating execs. when the exec dies, the
employer gets the money and may pay a death bene to the exec beneficiary
collateral assignment split dollar - ANSWERthe policyowner is either the exec or an irrevocable trust
set up by the exec. the employer pays the premiums. exec is the policy owner and executes a
collateral assignment of the policy cash values and death benefit to the employer to make sure the
employer is repaid any costs
coversion privilege - ANSWERan employee may convert group term ins to an indiv permanent life ins
policy if the employees coverage ceases due to termination of employment. termination of
membership in a classification that was once eligible or he retires
describe the employees tax treatment regarding COLI - ANSWERthe value of the death benefit
protection provided under the COLI plan does not create imputed income each year for the insured.
payments rec by the exec under a sep benefit plan are taxable. beneficiaries of a benefit plan must
pay taxes on the income. IRD distributions paid to a spouse nay qualify for the marital deduction. tax
liabilities coming from the IRD for the beneficiary may be mitigated but not eliminated. tax
treatement should match the federal tax laws in general
disadvantages of group paid up life ins - ANSWERthe type of employer that can use it is limited.
relatively high cost of administering the plan. changes amount to more admin paper work. employer
cost is highest in the early years. you get less coverage per premium dollar for whole than for term
life
economic benefit approach - ANSWERapplies under endorsement split dollar when the employer in
the role of premium payor, owns the policy and the insude exec has imputed gross income for the
economic value
endorsement split dollar - ANSWERthe employer is the owner benefiticary and normally the
premium payor of a permanent policy on the execs life. the endorsement provides that if the insued
execs death happens then the death proceeds are split between the employer and the named
beneficiary
equity split dollar - ANSWERthe collateral assignment involves less than the policy's full cash value.
value may be less than the premiums paid
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