In order to qualify for self-insurance after July 1, 1994, which net worth and average net income profile would meet the standard?

• A. $2,000,000 net worth and $250,000 average income
• B. $5,000,000 net worth and $400,000 average income
• C. $6,000,000 net worth and average net income for the past 5 years of at least $500,000
• D. $5,000,000 net worth and average net income for the past 5 years of at least $500,000

Answer: (D)

The key idea is that qualifying for self-insurance after July 1, 1994 hinges on solid financial strength measured by two fixed thresholds: net worth and the average net income over the past five years. To meet the standard, you must have a net worth of at least five million dollars and an average net income of at least five hundred thousand dollars over the last five years.

The profile that fits this exactly shows five million in net worth and an average five-year net income of at least five hundred thousand. This alignment with the two specified minimums is why it meets the standard. The other options fall short of one of these requirements (or mix in figures that don’t clearly satisfy both thresholds), so they don’t meet the standard.