Income tax treatment of insured group medical expense plans

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Reference no: EM131770307

1. All the following statements concerning the federal income tax treatment of insured group medical expense plans are correct EXCEPT:

A. Contributions by the employer for an employee's coverage are generally tax deductible to the employer.

B. Contributions by the employer for an employee's coverage create an income tax liability for the employee.

C. A portion of employee contributions under a contributory plan may be deductible to the employee as a medical expense.

D. Benefits are taxable to an employee to the extent they exceed any medical expenses incurred.

2. While Ruth was on a winter vacation, somebody stole the large outdoor propane tank that fuels her furnace. She returned home to find severe plumbing damage because many frozen pipes burst when her furnace stopped operating. The fish in her aquarium also died because of the lack of heat. She rented a hotel room, because her house cannot be occupied without heat or plumbing. Ruth has an H0-3 policy with adequate limits. All the following statements concerning her homeowners insurance coverage for this incident are correct EXCEPT:

A. It will pay the additional cost of living in a hotel while her house is being repaired.

B. It will pay the cost of repairing her plumbing.

C. It will pay to replace her fish.

D. It will pay to replace the stolen tank and its contents.

3. Many clients with substantial assets to protect can reduce their auto insurance costs without exposing their assets to serious loss by doing all the following EXCEPT

A. comparison shopping

B. purchasing coverage with high collision and other-than-collision deductibles

C. purchasing the lowest liability limits that satisfy compulsory insurance requirements

D. purchasing the lowest liability limits that satisfy the underlying insurance requirements of a personal umbrella policy

4. All the following statements concerning the marketing provisions of NAIC model legislation for long-term care insurance are correct EXCEPT:

A. An outline of coverage must be delivered to a prospective applicant at the time of solicitation.

B. The applicant must be given the option of electing a third party to be notified of any pending policy lapse because of nonpayment of premium.

C. A policy must allow the applicant to have a 90-day free-look period after the policy's delivery.

D. The insurer must establish procedures to ensure that any comparisons by agents and other producers are fair and accurate.

Reference no: EM131770307

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