Chapter 5 Review
Group carve-out plans enable an employer to overcome the substantial group term life insurance limitations that result from the various requirements that it must meet. For the employer, the benefits of a group carve out plan include an avoidance of discrimination concerns, the providing of additional benefits without an increase in cost, the ability to choose which executives may participate and a current income tax deduction. By using a group carve-out plan, the executive's coverage provides post-retirement death benefits, tax-deferral of earnings on voluntary contributions, portability and supplemental retirement income.
These plans provide substantial advantages to both employers and executives without any significant disadvantages.
Chapter 5 Review Questions
A. The employer is fined
B. Its tax advantages may be lost
C. The plan is disqualified
D. The employees are subject to tax audit
A. $50,000
B. $75,000
C. $100,000
D. $250,000
A. additional compensation
B. bonus compensation
C. an employee benefit
D. a dividend
A. compensation
B. an employee benefit
C. a dividend
D. a charitable contribution
A. The coverage terminates
B. The coverage is portable and stays with the executive
C. The coverage reduces by 50%
D. The coverage becomes fully paid-up for the executive
|