Risk Management

Business

Quiz 21 :

Employment-Based and Individual Longevity Risk Management

Quiz 21 :

Employment-Based and Individual Longevity Risk Management

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Under the traditional defined benefit plan, the employer guarantees only the annual contribution but not any returns.
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True False
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False

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The time during which premiums are being paid and benefits (distribution) have not begun is called the accumulation period.
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True False
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True

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For annuities that are bought with after-tax money by individuals, ordinary income taxes are paid on the return of investment earnings.
Free
True False
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True

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All defined benefit plans may provide for adjustments to account for inflation during the retirement years.
True False
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Distributions are benefits paid out to participants or their beneficiaries, usually at retirement.
True False
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Guaranteed mortality factors and investment return factors exist in fixed amount annuity.
True False
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The agent or broker receive a normal level of sales commission on no-load and low-load annuities and the commission is deducted directly from the contributions.
True False
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Target plans are aimed at providing every employee the same formula of benefit at retirement.
True False
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A qualified retirement plan must be for the exclusive benefit of the employees rather than their beneficiaries.
True False
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Target pension plan is a defined contribution plan which favors newer employees of the organization.
True False
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An employer provides a defined benefit plan and has opted for graded vesting.Under this plan, the employees are eligible for 80 percent of employer contributions after four years.
True False
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In a deferred profit-sharing plan, the employees are given the shares of profit, based on the total experience, as a component of their monthly compensation.
True False
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In a qualified retirement plan, employer contributions to an employee's pension during the employee's working years are deductible as a business expense and are not taxable income to the employee until they are received as benefits.
True False
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The profit-sharing plan is funded at the discretion of the employer during periods of profits, whereas pension plans require annual minimum funding.
True False
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A refund annuity guarantees that the annuitant and/or beneficiary will receive, during the liquidation period, minimum payments equal to the single premium in an immediate annuity or the accumulation value in a deferred annuity.
True False
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The most popular defined benefit formula is the percentage unit benefit plan which recognizes both the employee's years of service and level of compensation.
True False
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During the liquidation or distribution period, annuity units are exchanged for dollar value of the annuity.
True False
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The cash balance plan provides a specific amount of benefit that will be available for the employee at retirement.
True False
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An employee who has not reached twenty-one years of age is not eligible for protection under ERISA.
True False
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A defined contribution (DC) plan is a qualified pension plan in which the contribution amount and the benefit amount available at retirement is clearly defined.
True False
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