Disability Income and Related Insurance

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

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

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

40 credits/quarters

What is the elimination period for Social Security disability benefits?

5 months

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.

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?

Business overhead expense policy

A Waiver of Premium provision may be included with which kind of health insurance policy?

Disability Income

In disability income insurance, the own occupation definition of disability applies

For the first 2 years of a disability.

Which of the following is an eligibility requirement for all Social Security Disability Income benefits?

Have attained fully insured status

How is the amount of Social Security disability benefits calculated?

It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years.

In a Disability Income policy, all of the following are considered presumptive disabilities EXCEPT

Loss of one eye.

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?

No benefits

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?

No coverage will apply, since the injury could have been foreseen.

The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called

Nonoccupational coverage.

The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is calledv

Nonoccupational coverage.

What is the official name for the Social Security program?

Old Age Survivors Disability Insurance

Regarding the taxation of Business Overhead policies,

Premiums are deductible, and benefits are taxed.

When an insurer combines two periods of disability into one, the insured must have suffered a

Recurrent disability.

In which of the following cases would an "any occupation" disability income policy pay the benefits?

The insured is unable to perform any jobs in the field related to the insured's education and experience.

An applicant is considered to be high-risk, but not so much that the insurer wants to deny coverage. Which of the following is NOT true?

The insurer will issue a conditional coverage.

An insured has been injured in an accident. Although he is still receiving benefits from his disability income policy, he does not have to pay premiums. This means that the policy includes

Waiver of premium feature.

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?

full benefits

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT

loss of the owner's income

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.

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin?

1

Which of the following statements regarding Business Overhead Expense policies is NOT true?

Benefits are usually limited to six months.

The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called

Cost of Living (COLA).

An insured severely burns her hand, but is not classified as disabled. Which of the following types of coverage would cover at least a portion of the insured's medical expenses?

Medical reimbursement benefit

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

Premiums are tax deductible as a business expense.

After the elimination period, a totally disabled insured qualified and started receiving benefits from his disability income policy that has a waiver of premium rider. What will most likely happen to the premiums paid into the policy during the elimination period?

Premiums will be refunded.

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?

Presumptive disability

If an individual is covered by a policy that includes an Accidental Death & Dismemberment rider, what term describes the maximum benefits he will receive if he loses sight in both eyes as a result of a fire?

Principal sum

An insured has a Social Insurance Supplement rider in her disability income plan. Following a disability, she begins receiving benefit payments from the insurer. She then begins receiving Social Security benefits that are smaller than the SIS benefit payments. At that point, her insurer ends the SIS benefit payments. Which of the following best describes the situation?

The insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit.

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?

none

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan?

2 years

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%

All of the following statements concerning workers compensation are correct EXCEPT

A worker receives benefits only if the work related injury was not his/her fault.

Social Security was created to provide all of the following benefits EXCEPT

Unemployment income.

Workers Compensation benefits are regulated by which entity?

State government

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.

The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over which years? Which years of income may be deleted from calculation?

Their highest 35; lowest 5