Chapter 9 Disability Income and Related Insurance

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

40 credits

disability income insurance

Replaces lost income in the event of disability , insured must be unable to perform occupational duties

short term disability

benefit no longer than 2 years

presumptive disability

specifies condition that qualify insured for full disability benefits

elimination period

waiting period that lasts from the onset of disability until benefit payments starts

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 2/3%

A business wants to make sure that if a key employee becomes disabled, the business will be protected from any resulting loss. Which kind of insurance will protect the business?

Business Disability

benefit limitations

Maximum benefits an insurer is willing to accept for an individual risk; based on percentage of insured's past earnings

Income benefits in a disability income policy are characterized by all of the following EXCEPT The amount to be paid is stated in the policy The amount to be paid is unlimited The amount to be paid is limited to a percentage of the insured's income at the time of application The monthly benefit will be less than the insured's actual pre-disability income

The amount to be paid is unlimited

All of the following benefits are available under Social Security EXCEPT Welfare benefits Old Age and retirement benefits Disability benefits Death benefits

Welfare Benefits

tax deductible

a qualified expense that may reduce the amount of income subject to taxation

Key Person Disability Insurance

covers the potential loss of business income and the expense hiring and training a replacement for a key person

In a disability income insurance, the own occupation definition of disability applies for the first 2 years of a disability during the waiting period during the elimination period as long as the individual is unable to work

for the first 2 years of a disability

social security disability insured status

fully insured or currently insured, depending on the number of coverage credits earned

What is own occupation disability?

insured is unable to perform duties of the occupation for which he/she is educated and trained

Which of the following is considered a presumptive disability under a disability income policy? loss of one hand or one foot loss of two limbs loss of one eye loss of hearing in one ear

loss of two limbs

social insurance supplement rider

supplement or replace benefits payable under social security disability

principal sum

the amount of coverage paid for an accidental death under a health insurance policy

When does a person qualify to receive disability related income?

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

capital sum

a portion of the principal sum of a health insurance policy; paid for accidental dismemberment or loss of sight in one eye

Business Overhead Expense Policy

reimburses small business owners for overhead expenses incurred while the business owner is totally disabled

earned income

salary, wages, or commissions; but not income from investments, unemployment benefits, and similar sources of income

benefit period

a period of time during which benefits are paid under the policy

A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called?

Business Overhead Expense

Insurance that would pay for hiring a replacement for an important employee who becomes disabled is called

Key employee disability insurance

probationary period

Period after the policy starts during which benefits won't be paid for illness-related disabilities

recurrent disability

Specifies period of time during with the recurrence of an injury or illness will be considered a continuation of a prior disability

Business Disability Buyout Policy

Specifies who will purchase a business partner's interest in case of disability

waiver

The relinquishment of right or interest

The amount of Social Security disability benefits is based upon the worker's primary insurance amount 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

Social Security was created to provide all of the following benefits EXCEPT Unemployment income Survivor's benfits Disability income Retirement income

Unemployment income

Qualifications for Social Security Benefits

fully insured: 40 quarters of coverage currently insured : 6 credits during 13 quarter period 5 month waiting period Benefits based on Primary Insurance Account

total disability

inability of the insured to perform any occupation for which he or she is reasonably suited by reason of education, training, or experience

overinsurance

insurance that exceeds in amount the actual value of the person or property insured or insurance in a greater amount than the insured can afford

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 prevent what?

overutilization and malingering