Iowa State University personal Risk Management and Insurance Questions this is a personal Risk Management and Insurance exam just finish them correct and a

Iowa State University personal Risk Management and Insurance Questions this is a personal Risk Management and Insurance exam just finish them correct and asap Take Home Exam 3 – Part 2 (Choose the BEST answer)
1. Which of the following describes a Roth IRA?
a) allows an employee to defer before-tax compensation toward a retirement account, which
may be matched or supplemented by employer contributions
b) individual retirement account that allows individuals to defer taxes on account
contributions and earnings on contributions until the account is withdrawn, subject to
annual income and contribution limits; also the vehicle for rolling over employer’s
sponsored retirement accounts in order to avoid penalties and tax issues
c) individual retirement account funded with after-tax dollars, but earnings on the account are
never taxed, even when drawn upon at retirement, subject to annual income and
contribution limits
d) allows tax-deferred retirement contributions toward retirement savings for self-employed
persons
2. Social Security is a social insurance program that was created as an outcome of which of the
following?
a) the Great Depression
b) World War II
c) the 1922 stock market crash
d) the 2008 credit crisis
3. In terms of health risk management, which of the following describes preferred provider
organizations (PPOs)?
a) a set amount paid to each health care provider based on the number of subscribers in the
provider’s plan
b) the costs of health care services that insurers generally agree to cover in fee-for-service or
managed care arrangements, based on studies of the appropriate cost for each medical
procedure
c) groups of hospitals, physicians and other health care providers that contract with insurers,
third-party administrators, or directly with employers to provide medical care to members
of the contracting group(s) at discounted prices
d) an HMO model where contractual arrangements are made with physicians and other
providers in a community who practice out of their own offices and treat both HMO and
non-HMO members
4. Which of the following best describes a certificate of insurance for group benefits coverage?
a) in group insurance, document issued to employer describing all the terms and conditions
of the group policy
b) a group benefit plan may include employees, their dependents (including a spouse and
children under a specified age, such as 21,when enrolled in school), retirees, and their
dependents
c) document provided by employers to insured employees as evidence of participation in a
group insurance plan
d) when large employers with sufficient means pay claims in a group insurance arrangement
and bear the risk that actual claims will exceed expected claims
5. Which of the following describes a dental policy?
a) allows limited contributions from employers and employees of small businesses and selfemployed persons to help cover out-of-pocket medical expenses
b) any health insurance plan that requires deductibles up to the amounts established by the
IRS annually
c) typically pays for teeth-related diagnostic, preventive, restorative, and orthodontic
services, as well as services required because of accidents
d) pays for the extra expenses incurred during the period of medical treatment for a covered
illness; used to supplement medical coverage
6. Which of the following describes a long-term disability insurance?
a) after satisfying a waiting period, pays employees between 60–70 percent of salary for a
five to ten years or longer in the event of non-occupational injury or illness that interrupts
employment
b) determines when an employee is eligible for short-term disability insurance benefits,
generally stated as the inability of the employee to perform any and every duty of the job;
long-term disability definitions are more restrictive
c) pays employees between 65–75 percent of salary from three months to two years in the
event of non-occupational injury or illness that interrupts employment
d) a one- to seven-day absence from work often required before employees qualify for
benefits from short-term disability; in the case of long-term disability, may be the benefit
period under short-term disability
7. Which of the following characterizes a wellness program?
a) a medical or surgical condition that recognizes age, sex, and other determinants of
treatment costs
b) designed to promote healthy lifestyles and reduce the incidence and severity of employee
medical expenses
c) analysis process that identifies any over utilization or excessive charges by providers of
medical care
d) practice of paying a flat fee for patient care based on a patient’s diagnostic related group;
provided an economic incentive to providers, specifically hospitals, to minimize length of
stay and other cost parameters
8. Which of the following describes OASDHI?
a) an insurance program that is compulsory for nearly all Americans with eligibility criteria
and benefits specified by law and financed wholly or partially through employment taxes
b) old age (or retirement), survivors, disability, and health insurance (or Medicare) benefits,
which include hospital insurance and supplemental medical insurance
c) second largest expenditure of the U.S. government
d) social insurance program in the United States guaranteeing old age, survivors, disability
(OASD) and health insurance (HI) benefits to eligible citizens who have contributed to the
program
9. Who insures defined benefit plans?
a) Federal Depository Insurance Corporation
b) Pension Benefit Guaranty Corporation
c) Social Security Administration
d) U.S. Department of the Treasury
10. Which of the following describes major medical insurance?
a) covers virtually all charges for hospitals, doctors, medicines, blood, wheelchairs, and other
medically necessary items in a fee-for-service arrangement and has four fundamental
features: high maximum limits (or no limits), a large deductible, coverage of a broad range
of different medical services, and coinsurance provisions
b) limits the total amount the insurer will pay over the insured’s lifetime
c) limits specified services such as hospital room and board charges
d) term for which premiums, deductibles, co-payments, and limits on insurance apply
11. In terms of Social Security, what is considered normal retirement age?
a) the minimum age allowed to have benefits, which can begin age 59-1/2
b) the earliest age in which Social Security can be taken, which is age 62
c) the age at which full retirement benefits become available to retirees; age 65 – 67
depending upon date of birth
d) the age at which retirement benefits become available to retirees in most private plans
12. Which of the following describes activities of daily living?
a) activities that a person is able to accomplish independently such as bathing,
dressing/undressing, eating, and grooming
b) disability policy provision that replaces Social Security benefits if the individual does not
qualify under the strict definition of disability in Social Security
c) life insurance rider that covers the costs of nursing home stays, home health care
treatment, and other long-term care services typically covered by stand-alone long-term
care insurance policies
d) maximum daily benefits that cover the costs of skilled nursing care, intermediate care,
custodial care needed to handle personal needs, home health care, and adult day care for
individuals whose ability to perform a certain number of activities of daily living is
impaired
13. Employee benefits are considered which of the following?
a) benefits
b) cash compensation
c) non-cash compensation
d) compensation
14. Medicare Part B covers which of the following?
a) hospital insurance
b) outpatient hospital services
c) prescription medication insurance
d) supplementary medical insurance
15. Under ERISA laws, what are coverage requirements designed to do?
a) exclude participation by non-highly compensated employees
b) improve participation for highly compensated employees
c) improve participation by highly compensated employees
d) improve participation by non-highly compensated employees
16. Which of the following describes the coinsurance provision in a medical insurance policy?
a) covers virtually all charges for hospitals, doctors, medicines, blood, wheelchairs, and other
medically necessary items in a fee-for-service arrangement and has four fundamental
features: high maximum limits (or no limits), a large deductible, coverage of a broad range
of different medical services, and coinsurance provisions
b) gives the percentage of expenses the insurer will pay in excess of the deductible, usually
between 70–90 percent
c) provisions such as deductibles and coinsurance requirements that increase personal costs
to insureds, reducing overall costs and moral hazard
d) term for which premiums, deductibles, co-payments, and limits on insurance apply; in
group insurance, usually a calendar year
17. What characterizes automatic cost-of-living adjustments (COLAs)?
a) increases in Social Security benefit amounts annually in relation to increases in the
consumer price index
b) increases in Social Security benefit amounts annually in relation to increases in the
national average earnings
c) increases in Social Security benefit amounts annually in relation to increases in the price
of gold
d) increases in Social Security benefit amounts annually in relation to tax base increases
18. Retirement benefits have some of the following characteristics:
I. tax deductible to the employer
II. tax deferred to the employees until their retirement
III. tax evasion opportunity for employers
IV. tax-free for the employer
a) I and II
b) I and III
c) II and III
d) II and IV
19. Which of the following characterizes vesting in a pension plan?
a) in pension plans, specifies the extent of employee’s right to benefits for which the
employer has made contributions, subject to ERISA, EGTRRA and other federal
requirements
b) pension plan funded only by employer contributions
c) pension plan that requires the employee to pay all or part of pension fund contributions
d) pension plans in which the owners or highest-paid employees hold over 60% of the value
of the plans
20. Which of the following characterizes self-insured group benefits claims?
a) in group insurance, document issued to employer describing all the terms and conditions
of the group policy
b) a group benefit plan may include employees, their dependents (including a spouse and
children under a specified age, such as 21,when enrolled in school), retirees, and their
dependents
c) certificate of insurance provided by employers to insured employees as evidence of
participation in a group insurance plan
d) when large employers with sufficient means pay claims in a group insurance arrangement
and bear the risk that actual claims will exceed expected claims
21. In terms of pension plans, why is it important to the employer that the plan be qualified?
a) tax-favored arrangements for retirement savings
b) non–tax-favored arrangements for the employer
c) non–tax-favored arrangements for the employee
d) tax-exempt for the employee
22. Which of the following characterizes a third-party administrator (or TPA)?
a) arrangement under which an insurer or independent unaffiliated administrator handles
record keeping and claim payment functions for employers sponsoring self-funded group
insurance plans
b) a group benefit plan may include employees, their dependents (including a spouse and
children under a specified age, such as 21,when enrolled in school), retirees, and their
dependents
c) unaffiliated party contracted to administer self-funded group insurance
d) when large employers with sufficient means pay claims in a group insurance arrangement
and bear the risk that actual claims will exceed expected claims
23. Which of the following describes a defined contribution (DC) plan?
a) incentive-defined contribution plan whereby employers may voluntarily elect to annually
distribute a specified portion of company profits among employees in relation to salary
b) profit-sharing plan in which the employer puts part of its profits in trust for the benefit of
employees
c) type of pension plan that assures employees of a certain amount at retirement, leaving all
risk to the employer to meet the specified commitment; accumulated funds for all
participants are managed in one account
d) type of pension plan that promises only to contribute an amount to the employee’s
separate or individual account where the employee has the investment risk and no
assurances of the level of retirement amount
24. In terms of administering group insurance, what is stop-loss insurance?
a) arrangement under which an insurer or independent unaffiliated administrator handles
record keeping and claim payment functions for employers sponsoring self-insured group
insurance plans, who pay 5–10% of the normal premium for these services
b) insurance for self-insured group insurance plans that provides a limit on the total claims in
a year for which the employer is responsible
c) insurance for self-insured group insurance plans that provides a limit per claim above
which the employer is not responsible
d) a form of reinsurance or excess insurance for self-insured group insurance plans whereby
an insurer or third-party administrator provides protection against unexpectedly high
claims
25. Once funds are collected from payroll taxes for Social Security, where are they placed?
a) general fund
b) present Social Security payments
c) savings
d) trust funds
26. Which of the following describes a 401(k) benefits plan?
a) allows an employee to defer before-tax compensation toward a retirement account, which
may be matched or supplemented by employer contributions
b) type of pension plan that assures employees of a certain amount at retirement, leaving all
risk to the employer to meet the specified commitment; accumulated funds for all
participants are managed in one account
c) type of pension plan that promises only to contribute an amount to the employee’s separate
or individual account; the employee has the investment risk and no assurances of the level
of retirement amount; has separate accounts under the control of each participant
d) special type of profit-sharing plan where all investments are in employer’s common stock
27. Which of the following have trouble finding an insurance carrier willing to service their
group if one or more individuals are in ill health?
a) large companies
b) labor unions
c) midsize companies
d) smaller employers
28. Which of the following describes a traditional IRA?
a) allows an employee to defer before-tax compensation toward a retirement account, which
may be matched or supplemented by employer contributions
b) individual retirement account that allows individuals to defer taxes on account
contributions and earnings on contributions until the account is withdrawn, subject to
annual income and contribution limits
c) individual retirement account funded with after-tax dollars, but earnings on the account are
never taxed, even when drawn upon at retirement
d) allows tax-deferred retirement contributions toward retirement savings only for selfemployed persons
29. Medicare Part A covers which of the following?
a) hospital insurance
b) managed care medical insurance
c) prescription medication insurance
d) supplementary medical insurance
30. In terms of group benefits, what determines a contributory plan?
a) premiums paid entirely by the employer
b) premiums paid entirely by the employee
c) premiums partially paid by both the employer and employee
d) self-insured employer plans with co-insurance paid by the employee

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