Question

In: Finance

29. In contributory plans, where employees pay all or part of the premium amount, 75 percent...

29. In contributory plans, where employees pay all or part of the premium amount, 75 percent of employees must participate. Identify the rationale for this rule.

a. It helps reduce the premiums for group insurance contracts.

b. It helps in gaining accurate information about insureds participating in the contract.

c. It helps protect the plan from adverse selection.

d. It helps the underwriter to acknowledge attribution error.

e. It helps the employer to take stop loss insurance and reinsurance contracts to limit losses.

30. Employers are required under nondiscrimination laws to offer the same benefits package to all employees to avoid:

a. attribution error.

b. self-serving bias.

c. morale hazard.

d. demutualization.

e. adverse selection.

Solutions

Expert Solution

29.

Ans: c. It helps protect the plan from adverse selection.

30.

Ans: c. morale hazard.

jeff jeffy answered 2 years ago
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