CEBS GBA - Module 1 LATEST QUESTIONS WITH COMPLETE SOLUTIONS GRADED A+

Fringe Benefits - ANSWER Addition of benefits as an offset to higher labor Broad View - ANSWER "Virtually any form of compensation other than direct wages" Limited (Narrow) View - ANSWER Benefits that stem from an employment relationship, not underwritten or paid for directly by the government Reasons for growth in Employee Benefit Plans - ANSWER Business, tax legislation, collective bargaining, efficiency of the approach Labor Management Relations Act (Taft Hartley Act) - ANSWER 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 - ANSWER 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 - ANSWER Wages were limited due to the government, employee benefits were deemed as compensation. Group Technique - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER The cause of personal/property loss, destruction, or damage. Hazard - ANSWER A condition that increases the probability of a peril occurring or that can increase the loss in the event of a peril. Physical Hazard - ANSWER The presence of flammable materials in absence of extinguishers, machines without safety mechanisms, faulty heating/air conditioner units. Moral Hazard - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER A loss resulting from negligent acts of a person resulting in injury to another person. Stems from an injured plaintiff seeking damages. Personal risk - ANSWER The type of risk that is the focal point of employee benefit plans? Methods of Handling Risk - ANSWER Avoidance, Control, Retention, Transfer, Insurance