You are a benefits consultant reviewing the group life and disability coverages
ID: 2655030 • Letter: Y
Question
You are a benefits consultant reviewing the group life and disability coverages offered by one of your client firms.
a. The firm is currently considering two group life insurance benefit plans with the following basic characteristics:
Plan A Plan B
Type Term Life Whole Life
Benefit 2 times annual $10,000 per year
salary of service
Premium Contributory Non-contributory
_Comment on the relative attractiveness of the two plans according to their type, benefit, and premium arrangements. (be very specific)
b. The disability plan this firm offers provides short-term benefits equal to 100% of salary for 3 full years and long-term lifetime benefits equal to 75% of salary. The definition of disability for both short- and long-term benefits is termed as "total and continuous inability to perform any and every aspect of the regular occupation." The plan is not integrated with workers' compensation or Social Security benefits at all. Explain to the firm why they have such a high rate of disability claims. (be very spicific)
Explanation / Answer
plan A gives coverage to a specific period with the amount of annual salaries, and here the payment will be reasonable. if any unexpected risk happens during the tenure they will be benefited. and term plans are good traditional plans for pure insurance coverages.
when it comes to whole life covers, it is better to the people who are aged and who are yet to retire without having any financial assistance. and the premium is upto the period when they are in service, so it is not a problem to them to pay it.
b. because they are considereing both long term and short term disabilites, and irrespective of the regulations they are considering those people. thats why the disabilities applications are huge
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