Ch. 4

a small business owner is the insured under a disability policy that funds a buy-sell agreement. If the owner dies or becomes disabled, the policy would provide which of the following? a) cash to the owner's business to accomplish a buyout b) the rent money for the building c) the business manager's salary d) disability insurance for the owner

a) cash to the owner's business to accomplish a buyout

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? a) no documentation b) proof of insurability c) medical records d) attending physician's report

a) no documentation

Under a disability income policy, the insurer does not pay a monthly benefit that is equal to the insured's previous income. The reason for paying a benefit amount that is less than the insured's income is to? a) prevent overutilization and malingering b) prevent the insured from obtaining excess insurance c) enable the insurer to provide affordable coverage d) enable the insurer to reduce variable costs

a) prevent overutilization and malingering

Which of the following is not true regarding partial disability? a) this is a form of insurance that covers part-time workers b) the insured can still report to work and receive benefits c) benefit payments are typically 50% of the total disability benefit d) an insured would qualify if he couldn't perform some of his normal job duties

a) this is a form of insurance that covers part-time workers

all of the following benefits are available under social security except? a) welfare benefits b) old-age and retirement benefits c) disability benefits d) death benefits

a) welfare benefits

All of the following requirements of eligibility for social security disability income benefits except? a) fully insured status b) waiting period of 5 months c) being age 65 d) inability to perform any gainful work

c) being age 65

Which rider, when added to a disability income policy, provides for changes in the benefits payable based on changes in the consumer price index? a) social security rider b) guaranteed insurability rider c) cost of living adjustment rider d) waiver of premium rider

c) 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 likely have that would cause this? a) social security rider b) additional monthly benefit rider c) cost of living adjustment rider (COLA) d) annual renewable term rider

c) cost of living adjustment rider (COLA)

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? a) full benefits for 2 years b) no benefits c) full benefits d) partial benefits

c) full benefits

The amount of disability benefits that an insured receives often depends upon the insured's? a) number of children at the time of the application b) medical history at the time of the application c) income at the time of the application d) martial status at the time of the application

c) income at the time of the application

in a disability income policy, all of the following are considered presumptive disabilities except? a) loss of two limbs b) loss of speech c) loss of one eye d) loss of hearing

c) loss of one eye

What is the elimination period for social security disability benefits? a) 6 months b) 12 months c) 3 months d) 5 months

d) 5 months

An insured wants to buy a disability policy that pays a maximum monthly benefit of $1,200. To make sure that the disability benefit keeps up with inflation, the insured would need? a) an additional monthly benefit rider b) a cost of living rider c) a guaranteed purchase option rider d) 5% more to the premium each year

b) a cost of living rider

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? a) premiums will be waived b) premiums will be refunded c) premiums will be retained by the company, but no further premium will be required for the duration of the disability d) premiums will be prorated

b) premiums will be refunded

Which of the following refers to "own occupation" disability? a) Insured is unable to perform duties of any occupation b) Insured is unable to perform duties of his/her own business c) Insured is unable to perform duties any related business d) Insured is unable to perform duties of the occupation for which he/she was educated and trained.

d) Insured is unable to perform duties of the occupation for which he/she was educated and trained.

Which of the following would qualify someone for disability benefits? a) injury only b) intentionally self-inflicted injury c) losses arising from war d) both accident and sickness

d) both accident and sickness

Which of the following applies to partial disability benefits? a) an insured is entitles to a principal sum benefit for the partial loss of a limb b) payment is based on termination of employment c) benefits a re reduced once an insured is no longer under a doctor's care d) payment is limited to a certain period of time

d) payment is limited to a certain period of time

What provision can reduce the disability benefit based upon the insured's current income? a) waiver of monthly premium b) pro rata provision c) rehabilitation benefit d) relation of earnings to insurance

d) relation of earnings to insurance

what is the purpose of rehabilitation benefit in disability insurance? a) to compensate the insured for the lost income b) to refund the insured's premium paid during the disability c) to help the insured recover from a disability d) to cover the expenses of retraining the insured to return to work

d) to cover the expenses of retraining the insured to return to work