Chapter Seven: Disability Income Benefits

John is totally disabled and has applied for Social Security disability benefits. How long must John wait to be eligible to receive full Medicare benefits?

29 months A disabled covered worker, regardless of age, is eligible to receive full Medicare benefits after the waiting period and two years of receiving Social Security disability benefits after 29 months.

Disability income policies may be offered through:

A group plan An individual plan Through an employer-sponsored group plan Disability income policies may be offered as individual or group policies. In group disability income policies, the employer, association or organization sponsors and owns the group contract.

Which of the following policies pays for a loss of income without regard to performing work duties?

Income replacement Income replacement contract benefits are not dependent on the insured's inability to perform work duties. Instead, income replacement contracts replace a portion of the insured's lost income due to a covered accidental injury or sickness.

All of the following are true statements regarding business overhead expense coverage, EXCEPT:

Overhead expense coverage pays the owner's salary The owner's salary is not paid under a business overhead expense policy.

All of the following statements are true regarding short-term disability income policies, EXCEPT:

The benefit amount is 90-100% of the insured's income. Short-term disability income policies provide short benefit periods of less than two years. Group disability income policies are usually short-term disability policies. The benefit amount is 60-80% of the insured's income. The elimination period is typically no more than 30 days. Short-term disability income policies may be issued as occupational or nonoccupational coverages.

Which of the following is true regarding long-term disability income policies?

The benefit period is 2 years or more. Long-term disability income policies provide long benefit periods of two years or more, or until the insured reaches age 65. The benefit amount is 60 to 80% of the insured's income. The elimination period ranges from 30 to 180 days. Long-term disability income policies may be issued as occupational or nonoccupational coverages. Long-term disability income policies may coordinate benefits with an employer plan, Workers' Compensation or Social Security.

All of the following are characteristics of disability buy-sell policies, EXCEPT:

The business owner has ownership of the policy, but the business pays the premiums and receives the benefits. A disability buy-sell policy is used to establish how ownership in a business is transferred upon an owner's disability. The business owns the policy, pays premiums and receives the benefits. The benefit is used by the business to purchase the disabled owner's share in the business. The elimination period in Buy-Sell policies are one to two years. The benefits may be paid in monthly periodic payments or in a lump-sum.

All of the following are true regarding key person disability income insurance, EXCEPT:

The key person owns the policy, but the business pays the premiums and receives the benefits. Key person disability income pays periodic income benefits to businesses when a key employee is disabled. The amount of the disability income benefit is based on the key person's economic value to the business, the loss of income that would occur from reduced sales and hiring a replacement employee while the key person is disabled. Benefits may be paid as monthly periodic benefits or in a lump-sum. The business owns the policy, pays the premiums and receives the benefits.

After the 5-month waiting period, Social Security disability benefits are payable to a disabled covered worker in the amount of:

Their PIA Disability income benefits are paid to a covered worker in the amount of their PIA after a five-month waiting period.

How much is the Social Security disability benefit payable to a covered worker?

Their PIA Under Social Security disability benefits, a covered worker will receive monthly payments in the amount of their PIA. At the earliest, the disabled covered worker may be eligible to receive Social Security disability benefits upon the sixth month of disability.