Term
| How do you calculate the Human Life value approach in determining life insurance? |
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Definition
- Estimate Net avg earnings & number of years until retirement
Cons:
1. assumes no change in income
2. doesn't account for inflation
3. doesn't account for income after a person death (such as SSN survivor bens). |
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Term
| What are the factors in the "needs" approach for life insurance |
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Definition
1. Funds to cover estate, debt and educational expenses
2. Income during readjustment period (1-2 yrs where same income needed)
3. income during dependency period (until kids graduate)
4. Life income for the spouse (taking into account SSN survivor benefits etc.)
Pro: accurate method for specific point in time.
Con: future projections require a lot of calculation |
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Term
| What is the capital retention approach? |
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Definition
| takes current assets and looks at what $ amount is needed to retain the same lifestyle & not liquidate current assets |
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Term
| List characteristics & uses of term life insurance |
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Definition
Insures for specific period at cheaper rate. Can renew after that but much more expensive.
Pro: Can get more coverage for less $ & can provide "gap" coverage in case of early death, when more $ is needed than if death occurs post-retirement
Con: Most deaths will not occur during a gap insurance period, & doesn't accrue cash value |
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Term
| List characteristics & uses of ordinary whole life insurance |
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Definition
Provides lifetime protection to age 121.
Premiums level during whole term
Accrues cash value & can surrender policy for it's cash value
Con: higher cost means ppl under-insure with whole life |
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Term
| List characteristics & uses of variable life insurance |
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Definition
Death benefit & cash surrender value vary depending on % investment returns of the Life Insurance company.
- Fixed premium
- Has minimum death benefit (even if % return is - some years) |
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Term
| List characteristics & uses of universal life insurance |
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Definition
Like variable life, but with flexible premiums (minimum amount to keep contract active)
- premiums are credited to a cash-value account (less mortality charges and admin expenses) |
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Term
| What are the 2 forms of universal life insurance? |
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Definition
a) pays level death benefit in early years, and then higher benefit in later years as cash value increases
b) death benefit is related to the cash-value (doesn't guarantee increasing death benefit) |
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Term
| How does variable universal Life differ from universal life? |
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Definition
- policy owner has variety of investment options and can move cash around
2) no floor rate of interest or minimum cash value guaranteed (completely fluctuates with investment returns) |
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Term
| What are the main features of group life insurance |
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Definition
1) No EOI
2) Premiums experience rated
3) easier administration
4) master contract determines features of the plan & outlasts individual employment |
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Term
| What are the advantages of both the non-contributory and contributory basic life approaches |
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Definition
Non-Contributory: All ee's are insured. Premiums tax-advantaged. Easy admin & control of plan
Contributory: larger benefits. Better use of ER $s if EEs can decide how much they need. Better EE interest |
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Term
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Definition
| EE can convert policy to individual life within 30 days of termination |
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Term
| What are the most common disability provisions in group life |
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Definition
Waiver of Premium: continues life coverage with no premiums if disabled while covered.
Extended Death benefit: continues life insurance while totally and continuously disabled. |
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Term
| What are the guidelines for providing retiree life coverage? |
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Definition
- amount is generally reduced by % based on age
- ERs can make cost-justified reductions @ age 65 IF can show that lesser amounts for older population are same $ as larger amounts for younger |
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Term
| How were early disability policies written? |
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Definition
| Early contracts used flat rate to all ages and increased benefits the longer the disability continued |
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Term
| What are the public sector disability programs? |
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Definition
1) Workers Comp: occ
2) SSN disability income: occ and non-occ
3) Veterans benefits
4) State retirement system benefits: usually in leiu of SSN disability
5) State disability programs: CA, HI, NY, NJ, RI |
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Term
| How do public and private disability programs interact? |
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Definition
| Payment by ER group plan reduced by any state disability program |
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Term
| How can you qualify for SSN disability income (SSDI)? |
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Definition
1) Have contributed to sSN for 5 out of 10 previous years
2) 65 or younger
3) Will be disabled for 12+ months
4) Must apply
5) Complete 5 month waiting period |
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Term
| What is the def. of disability under the Old-Age, Survivors & Disability Insurance (OASDI)? |
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Definition
| 1) cannot engage in ANY gainful employment (even burger king)for 12 months or more |
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Term
| What is the difference between the SSDI and the Supplemental Security Income (SSI)? |
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Definition
| SSDI is funded by ER and EE contribs. SSI is funded through Federal revenue. SSI is a needs-based program that must earn <$X annually to qualify for |
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Term
| What is the state public employee retirement system (PERS)? |
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Definition
- established by individual states to sub for OASDI.
1) eligibility may require 5 yrs service
2) benefit levels based on salary formula determined by state (e.g. 2% of sal)
3) benefits paid to 65
4) total permanent disability required |
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Term
| How do private ERs provide disability benefits |
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Definition
1) Sick leave
2) STD
3) LTD: own occ then any occ after 24 months (avg) |
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Term
| Why do LTD plans often have pre-existing clauses? |
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Definition
| Because you shouldn't be able to buy fire insurance when your barn is already on fire. Usually look back 3 months to see if any treatment for current condition. |
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Term
| How does Financial Accounting Standard 112 (FAS112) impact self-funded LTD plans? |
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Definition
| Requires ERs to use accrual method for liabilities associated with plan (for reserves). ERs should consider what impact that has vs. just paying LTD premiums. |
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Term
| How long are the breaks that the Fair Labor Standards Act (FLSA) says ERs have to pay for? |
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Definition
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Term
| What eligibility requirement must be met by non-exempt ee's to receive paid holidays under FLSA |
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Definition
| They must work the day before and after |
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Term
| How are sick days often treated in the workforce? |
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Definition
- Non-exempt ee's normally accrue one sick day per one completed month of service.
- Exempt ee's often accrue 1.5 days in that same period.
ERs can decide if sick days can accrue from one year to the next |
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Term
| What is the usual minimum vacation policy |
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Definition
| 2 weeks after 1 year of work. |
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Term
| Why would ERs want to offer PTO? |
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Definition
| By combining vacation, sick leave and personal days under a PTO plan, ERs can often offer fewer days, reduce tracking admin costs & reduce unscheduled absences as everything takes away from the vacation days an ee can take. |
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Term
| What is the difference between military leave offered in peace time vs war-time? |
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Definition
Peace time: time granted with pay for annual obligatory military duty (can be topped up by PTO)
War time: governed by USERRA & allows active duty excusion from work of up to 5 years as long as the ee returns to work ina "timely manner" after a tour of duty |
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Term
| What does USERRA define as a "timely manner" return to work after active duty? |
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Definition
< 31 days: time to return home + 8 hour rest period
31 - 180: 14 days after completion of service
181 + days: 90 days after completion of service
*unless ill or injured- extends up to 2 years |
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Term
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Definition
1993: allows 12 weeks of "protected" unpaid leave if with the employer for the last 12 months.
- Used for Birth, Adoption, Care of spouse, child or parent with serious illness (hospitalization or incapacity to work due to illness)
* If ER classifies leave as FMLA, EE can't choose to use paid leave instead |
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Term
| What FMLA leaves to family of US soldiers have? |
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Definition
Qualifying Exigency Leave: If spouse, son or daughter is on active duty or called to active duty
Military Caregiver Leave: 26 weeks unpaid leave to care for soldier who is seriously injured |
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Term
| What items should be included in an attendance policy to avoid lawsuits? |
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Definition
- List of acceptable absence reasons (N/A with PTO)
- Company procedure for handling tardiness/the need to leave work early
- Procedures to notify managers of absence (and consequences if you don't)
- Provisions outlining time-off with pay
- Definition of "excessive absences"
- Disciplinary measures for excessive absenteeism |
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Term
| What does an ee need to do to take FMLA leave? |
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Definition
- Provide 30 days' notice if feasible & demonstrate the leave is FMLA (including providing certification from the health care provider if requested)
- Provide fitness for duty report to demonstrate able to return to work |
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Term
| Can employers substitute paid leave accrued by EE before tapping into unpaid leave? |
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Definition
| Ye,s, but the total paid and unpaid leave still counts towards FMLA 12 week entitlement |
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Term
| Summarize differences between ADA and FMLA |
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Definition
1) ADA only permits the transfer of an employee when a proposed reduced schedule would eliminate an undue hardship if the EE was to return to their position.
2) FMLA requires EE be reinstated to current position, where ADA allows reinstatement to a lower position in certain situations
3) FMLA requires ERs to grant leave; ADA leave requests may be denied if another alternative is available
4) ER must continue benefits under FMLA; ADA doesn't have that requirement
5) FMLA is more restrictive on the type of med info the ER can access to certify a serious health condition |
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Term
| What is the Americans with Disabilities Act (ADA) |
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Definition
| Anit-discrimination legislation for EE's with disabilities that require ER's to accommodate the disability if doing so allows EE to perform the jobs "essential functions". |
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