객관식
The amount of money the insurance company agrees to pay for an incident is called ___________.
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7. Receivables and Investments
Types of Receivables
객관식
Which of the following best describes how an employee's group life insurance contract can be handled upon retirement at age 59 1/2?
A
Transferred to accounts receivable
B
Converted to an individual life insurance policy
C
Recorded as a note receivable
D
Written off as a bad debt expense
검증된 단계별 안내1
Understand the nature of group life insurance: Group life insurance is typically provided by employers as a benefit to employees during their employment. Upon retirement, the employee may have options for continuing coverage.
Identify the options for handling the group life insurance contract upon retirement: The options provided in the problem include transferring to accounts receivable, converting to an individual life insurance policy, recording as a note receivable, or writing off as a bad debt expense.
Evaluate the feasibility of each option: Transferring to accounts receivable or recording as a note receivable does not align with the nature of insurance contracts, as these are financial accounting terms related to receivables, not insurance. Writing off as a bad debt expense is also irrelevant because it pertains to uncollectible receivables, not insurance policies.
Focus on the correct option: Converting to an individual life insurance policy is a common practice when an employee retires. This allows the employee to maintain life insurance coverage independently of the group plan provided by the employer.
Conclude the reasoning: The correct handling of the group life insurance contract upon retirement is to convert it to an individual life insurance policy, as this ensures continuity of coverage for the retiree.
