Chapter 9 Quiz

If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?

12 credits (Persons disable between ages 24 and 31 can qualify for benefits if they have credit for having worked half of the time between age 21 and the start of the disability. For example, if Joe becomes disabled at age 27, he would need 12 credits (or 3 years' worth) out of the prior 6 years (between ages 21 and 27).)

In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5 years (If the master contract is terminated, every individual who has been on the plan for at least 5 years will be allowed to convert to individual insurance of the same coverage.)

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits (To be considered currently (or partially) insured, an individual must have earned 6 credits during the last 13-quarter period.)

The minimum number of credits required for partially insured status for Social Security disability benefits is 1. 40 credits. 2. 6 credits. 3. 4 credits. 4. 10 credits.

6 credits (To be considered partially insured, an individual must have earned 6 credits during the last 13-quarter period.)

Which of the following is the required number of participants in a contributory group plan? 1. 25% 2. 50% 3. 100% 4. 75%

75% (Under a contributory plan, an insurer will require that 75% of eligible employees be included in the plan.)

When employees are covered by group insurance, they receive 1. The original policy. 2. A copy of the policy. 3. The dividends, if any, in cash. 4. A certificate of insurance.

A certificate of insurance. (The employer receives the original contract, but employees need only be given a certificate of insurance showing their coverage and privileges. (CIC 10209))

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his

Attained age (If an employee terminates membership in the insured group, the employee has the right to convert to an individual whole life policy without proving insurability. The insurer will determine what type(s) of policy an employee may convert to, but it must be issued at a standard rate, based on the individual's attained age.)

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT?

B. A. Premiums are determined by age, occupation, and individual underwriting. B. 100% participation of members is required in noncontributory plans. C. Coverage cannot be converted when an individual leaves the group. D. Each member covered receives a policy. (If the employer pays all of the premium, then all employees must be included.)

After being hired to deliver newspapers to his neighbors, a man is provided with $10,000 of life insurance by the newspaper. He would be covered under which kind of life insurance?

Blanket life (Blanket life insurance is available to newspapers hiring persons as "independent contractors" to deliver newspapers. (CIC 10222).)

All of the following are characteristics of a group life insurance plan EXCEPT A. A minimum number of participants is required in order to underwrite the plan. B. The cost of the plan is determined by the average age of the group. C. The participants receive a Certificate of Insurance as their proof of insurance. D. There is a requirement to prove insurability on the part of the participants.

D (There is no individual underwriting for group life insurance.)

Which of the following is TRUE of a qualified plan? A. It may discriminate in favor of highly paid employees. B. It may allow unlimited contributions. C. It does not need to have a vesting schedule. D. It has a tax benefit for both employer and employee.

D. (A qualified plan is approved by the IRS, which then gives both the employer and employee benefits in deductibility of contributions and tax deferral of growth.)

In group life policies, a certificate of insurance is given to

Each insured person (In group life policies, individual certificates are given to each insured person.)

Selection of coverage in employee benefits plans refers to 1. Employee choosing benefits. 2. Employer choosing the benefits for employees. 3. Employer choosing providers. 4. None of the above.

Employee choosing benefits (Selection of coverage allows the employee to choose benefits that best suit his/her needs. There may also be a choice of providers for coverage.)

For a retirement plan to be qualified, it must be designed for the benefit of

Employees. (Qualified plans are designed for the exclusive of the employees and their beneficiaries.)

When an employee terminates coverage under a group insurance policy, coverage continues in force 1. Until the employee can obtain coverage under a new group plan. 2. For 60 days. 3. Until the employee notifies the group insurance provider that coverage conversion policy is issued. 4. For 31 days.

For 31 days. (An employee has 31 days under the conversion privilege to convert to an individual policy.)

An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits? 1. Have accumulated 20 work credits in the past 10 years 2. Have accumulated 6 work credits in the past 3 years 3. Have accumulated 40 work credits 4. Have reached the age of 25.

Have accumulated 6 work credits in the past 3 years (To qualify for disability benefits under Social Security, the disabled person must have earned a certain amount of work credits. A maximum of 4 work credits can be earned each year. The amount of credits required varies by age. Persons disabled before the age of 24 can qualify for Social Security Benefits with only 6 work credits earned in the 3 years prior to the start of the disability.)

An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do?

Join during the open enrollment period

In a single employer group plan, what is the name of the policy issued to the employer?

Master contract (In group insurance, the actual policy (master policy/contract) is issued to the sponsor of the group, which is often an employer.)

Which of the following is INCORRECT concerning a noncontributory group plan? 1. The employer pays 100% of the premiums. 2. The employees receive individual policies. 3. They help to reduce adverse selection against the insurer. 4. They require 100% employee participation.

The employees receive individual policies. (The employer receives a master policy, and employees receive a certificate of insurance.)

After an employee was laid off, he was informed of the right to convert the group coverage to an individual policy within 31 days. Twenty days into the conversion period, the employee suffered a heart attack and died before he could obtain individual coverage. What is the group policy insurer required to do? 1 The insurer has no obligation to pay the claim. 2 The insurer only has to pay the death benefit if ordered by the courts. 3 The insurer is only obligated to refund unused premiums. 4 The insurer must pay the death benefit under the former group coverage.

The insurer must pay the death benefit under the former group coverage. (If an employee dies within the 31-day period of eligibility for conversion, the insurer must pay the claim under the employee's former group coverage, whether or not he/she actually applied for individual coverage.)

All of the following are general requirements of a qualified plan EXCEPT

The plan must provide an offset for social security benefits. (Plans must meet the general requirements established by IRS.)

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why?

The purpose of the group was to purchase life insurance. (In order to qualify for small group life insurance, a group must be formed for a purpose other than attaining life insurance.)

In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called?

blackout period (The interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 is called a "Blackout Period". No benefits are paid during this time.)

Social security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are again available for the spouse after reaching age 60. What is the time period called during which the surviving spouse does not receive benefits?

blackout period (The period of time after the youngest child reaches age 16 and prior to the surviving spouse reaching age 60 is called a black-out period. No Social Security benefits would be paid to the surviving spouse during this time.)