EXAM Assignment Example | Topics and Well Written Essays - 750 words

EXAM - Assignment Example The impacts of the United States Tax Code on the amount of capital held by the insurers The United States code has reformed in such a way that the individuals who are eligible for paying the insurance fee receive much of the benefits from the insurance companies. The tax codes instituted by the United States have increased the number of people covered in the insurance plans. This enhances a lot of capital tied up in the insurance issues. This increases the amount of capital held by the insurers. Reason why workers are willing to accept the pay as you earn plan instead of the private pension plan One of the fundamental reasons why workers would prefer the pay as you go unfunded pension plans to the private pension plans is due to the cost burden associate with the private pension plan The Pay as you go pension plan offers provisions that allow a regular deduction of a specified amount from the worker’s salary. This would enhance a long run cost benefit to the workers. Private p ension plans also do not have any subsidy and; therefore, the workers may not prefer it. Benefits planners and statutory laws The benefit planners ought to understand the statutory laws provided in the carious sources in order to facilitate an effective plan design and management within the various sectors. Statutory laws are essential to the benefit planners since they are the basis of all other rules, court cases, and regulations affecting the planners. Sources of statutory law in the benefit area The internal revenue code is one of the sources of statutory laws in the benefit area. This involves the taxation that pertains to the amount of deductibles and taxation pensions to the employee benefit programs. This is essential in the determination of the amount of funds deductible from the different employees. It contributes the pay as you go pension plans. Security laws are another statutory law in the benefit area. It involves the protection of the investors. This benefit plan is e ssential in the protection of the amount of money that the employees have. It is, therefore, essential in ensuring the protection of the employee’s excess funds placed forwards as investments. Civil rights laws are also a given law designed for the statutory sectors. This part of the employee compensation policies prohibits different discriminatory elements in employment. This is essential in enhancing fair employee practices during operations. Employee Retirements Income Security Act also affects the benefit planners. This involves the provisions set aside to safeguard the employees’ funds set aside for future benefits. This act ensures protection against fraudulent actions on employee benefit funds. Realized rate of return John’s salary= $20,000 Contribution= 3% Pre-tax return= 15% Tax bracket= 28% John contribution = Yield/dividend after 1year= Final yield= $600+$90= $690 After tax rate of return = Tax deducted = Final amount = $690-$74.52= $615.48 Realized r ate of return = Realized rate of return= 2.58% Mr. Miller’s Illness Mr. Miller’s illness falls under critical illness. By medical diagnosis, to the extent that Mr. Miller have been bedridden for the last three months and does not take solid food, he must be have been diagnosed with histological conformation shown by rapid growth of malignant cells and invasion of tissues of the digestive system. Insurance policies treat these conditions as critical illness. Part A question 1 The liability in this case may be