ALU 202 COMPREHENSIVE EXAMINATION
TEST SOLVED QUESTIONS AND CORRECT
ANSWERS FULL SOLUTION REVIEW
RESOURCE
⩥ Nonqualified Executive compensation plans.
Answer: deferred compensation plans
supplemental executive retirement plans
section 162 bonus plans
equity repurchase plans
⩥ Qualified pension plans.
Answer: Deferred benefit plan
Defined contribution plan
Employee stock ownership plan (ESOP)
⩥ Supplemental Executive Retirement Plans.
Answer: employer - owner and payor, limits anti-selection
⩥ Section 162 bonus plans.
Answer: employer - payor, employee -owner -introduces a level of anti-
selection
,⩥ Sinking fund.
Answer: a separate accumulation of cash or investments in a fund in
accordance with the terms of a trust agreement funded by periodic
deposits by the issuer
⩥ External forces impacting multilife marketplace.
Answer: insurer financial ratings
interest rates
regulatory environment
⩥ Pension Protection Act 2006 - key person for COLI, highly
compensated employee have at LEAST ONE attributes:.
Answer: 5% or more shareholder position
earned comp of $130k
among the highest paid 20% of all employees
⩥ Non-voluntary plans designs amount of coverage can be based on.
Answer: multiple of salary
flat amount
based on formula
⩥ Mortality Risk.
,Answer: the risk of a particular individual dying, at any given time,
when compared to other individuals of the same age and sex
⩥ Morbidity Risk.
Answer: the risk of a particular individual contracting a disease, injury,
accident or other disabling condition, at any given time, when compared
to other individuals of the same age and sex
⩥ 3 types of renewability provisions for individual DI.
Answer: conditionally renewable (non-traditional)
guaranteed renewable (traditional)
non-cancelable (traditional)
⩥ Conditionally Renewable DI.
Answer: also know as cancellable, allow the company the most
flexibility in making changes to inforce policies
can change the premium or cancel the policy for policyholders in that
class
low-cost DI, for those who do not qualify for traditional coverage
⩥ Guaranteed Renewable DI.
Answer: CANNOT be canceled, have any changes, or additional
restrictions applied, provided the premium is paid on time. Premium can
be increased by class
, ⩥ Non-cancelable DI.
Answer: premium DI coverage
most strictly underwritten, greatest risk to the company
cannot increase premiums, unless client agrees
cannot change or add provisions or restrictions
cannot cancel, regardless of changes to occu or health
⩥ Total Disability categories.
Answer: own occupation
regular occupation
any occupation
⩥ DI category: Own Occupation.
Answer: inability to perform the important duties of own occupation (ex.
sugeon -losing use of one hand)
⩥ DI category: Regular Occupation.
Answer: ineligible for benefits if able to work in an occupation for
which that individual has been educated, trained, or has experience
⩥ DI category: Any Occupation.
TEST SOLVED QUESTIONS AND CORRECT
ANSWERS FULL SOLUTION REVIEW
RESOURCE
⩥ Nonqualified Executive compensation plans.
Answer: deferred compensation plans
supplemental executive retirement plans
section 162 bonus plans
equity repurchase plans
⩥ Qualified pension plans.
Answer: Deferred benefit plan
Defined contribution plan
Employee stock ownership plan (ESOP)
⩥ Supplemental Executive Retirement Plans.
Answer: employer - owner and payor, limits anti-selection
⩥ Section 162 bonus plans.
Answer: employer - payor, employee -owner -introduces a level of anti-
selection
,⩥ Sinking fund.
Answer: a separate accumulation of cash or investments in a fund in
accordance with the terms of a trust agreement funded by periodic
deposits by the issuer
⩥ External forces impacting multilife marketplace.
Answer: insurer financial ratings
interest rates
regulatory environment
⩥ Pension Protection Act 2006 - key person for COLI, highly
compensated employee have at LEAST ONE attributes:.
Answer: 5% or more shareholder position
earned comp of $130k
among the highest paid 20% of all employees
⩥ Non-voluntary plans designs amount of coverage can be based on.
Answer: multiple of salary
flat amount
based on formula
⩥ Mortality Risk.
,Answer: the risk of a particular individual dying, at any given time,
when compared to other individuals of the same age and sex
⩥ Morbidity Risk.
Answer: the risk of a particular individual contracting a disease, injury,
accident or other disabling condition, at any given time, when compared
to other individuals of the same age and sex
⩥ 3 types of renewability provisions for individual DI.
Answer: conditionally renewable (non-traditional)
guaranteed renewable (traditional)
non-cancelable (traditional)
⩥ Conditionally Renewable DI.
Answer: also know as cancellable, allow the company the most
flexibility in making changes to inforce policies
can change the premium or cancel the policy for policyholders in that
class
low-cost DI, for those who do not qualify for traditional coverage
⩥ Guaranteed Renewable DI.
Answer: CANNOT be canceled, have any changes, or additional
restrictions applied, provided the premium is paid on time. Premium can
be increased by class
, ⩥ Non-cancelable DI.
Answer: premium DI coverage
most strictly underwritten, greatest risk to the company
cannot increase premiums, unless client agrees
cannot change or add provisions or restrictions
cannot cancel, regardless of changes to occu or health
⩥ Total Disability categories.
Answer: own occupation
regular occupation
any occupation
⩥ DI category: Own Occupation.
Answer: inability to perform the important duties of own occupation (ex.
sugeon -losing use of one hand)
⩥ DI category: Regular Occupation.
Answer: ineligible for benefits if able to work in an occupation for
which that individual has been educated, trained, or has experience
⩥ DI category: Any Occupation.
