Chapter 4: Disability Income & Related Insurance

What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider?

1 year

In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least...?

12 months

The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over what period of time?

2 years

What is the number of credits required for fully insured status for Social Security disability benefits?

40 credits

What is the elimination period for Social Security disability benefits?

5 months

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

If an employer provides long-term group disability insurance for its employees, what percentage of monthly wages are lower-paid employees eligible to collect?

66 and 2/3%

Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this?

A construction worker pays a higher premium and receives a poorer classification of disability * The more hazardous the occuopation=Higher premiums

Which of the following would best describe total disability?

A person's ability to work is significantly reduced or eliminated for the rest of his/her life

Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified.In this case, total disability is defined as...?

Any occupation- More restrictive than other definitions

Group disability income benefits are...?

Based on the employee's income

Which of the following would qualify someone for disability benefits?

Both accident (injury) and sickness

In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is?

Broader in general

Which rider, when added to a disability income policy, provides for changes in the benefits payable based on changes in the consumer price index?

Cost of Living Adjustment Rider

After a year of receiving disability income benefits, the insured notices that her monthly benefit has increased slightly. What rider does the policy most likely have that would cause this?

Cost of Living Adjustment Rider (COLA)

According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase and insured's benefit level?

Death of a spouse

In disability income insurance, the time between the onset of an injury or sickness and when benefits begin is known as...?

Elimination period

Under which of the following disability income plans would the benefits be subject to income tax?

Group

Which of the following is considered presumptive disability income policy?

Loss of two limbs

A 37 year old owns a policy with a Guaranteed Insurability Rider. The policyowner would like to increase the benefit amount offered by the policy. What documentation will be required?

No documentation

Which of the following applies to partial disability benefits?

Payments is limited to a certain period of time

Residual disability

Pays an amount to make up the difference between what the insured would have earned before the loss

Which of the following occupations would have the lowest disability insurance premiums?

Personal trainer

After the elimination period, a totally disabled insured qualified for benefits from a disability income policy that has a waiver of premium rider. What will happen to the premium that was paid into the policy during the elimination period?

Premiums will be refunded

What provision can reduce the disability benefit based upon the insured's current income?

Relation of earnings to insurance

The primary purpose of disability income insurance is to...?

Replace income lost due to disability

When a group disability insurance policy is paid entirely by the employer, benefits paid to disabled employees are?

Taxable income to the employee

Your client has a Social Security Insurance Supplement (SIS)rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security Benefit payments. Which of the following will happen?

The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment

Income benefits is a disability income policy are characterized by all of the following EXCEPT...?

The amount to be paid is unlimited

Which of the following is NOT a characteristic of a group long-term disability plan?

The benefit can be up to 50% of one's yearly income.

Which of the following definitions would make it easier to qualify for total disability benefits?

The more liberal "own occupation"

If a policy is rated-up, which of the following is true?

The premium increase

Under a disability income policy, the insurer pays a monthly benefit that is less than the insured's income. What is the reason for this?

To prevent over utilization and malingering (The insurer wants there to be a financial incentive to the insured to return to work)

All of the following benefits are available under Social Security EXCEPT?

Welfare benefits

When does a person qualify to receive disability-related income?

When the insured is unable to perform his/her job duties

What is the shortest possible elimination period for group short-term disability benefits provided by an employer?

0 Days