Disability Income and Related Insurance

in a disability policy, the elimination (or waiting) period refers to the period between...

The first day of disability and the day the insured starts receiving benefits.

Which of the following is an eligibility requirement for all social security disability income benefits?

*a. have attained fully insured status. b. be disabled for at least 1 year. c. have permanent kidney failure. d. be at least age 50.

Under workers compensation, which of the following benefits are not included?

*a. legal benefits. b. medical and rehab benefits. c. income benefits. d. death benefits.

Any occupation disability typically means that an individual is unable to perform the duties of the occupation for which he/she is suited by all of these except:

*a. preference. b. education. c. training. d. experience.

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

*a. the benefit can be up to 50% of ones yearly income. b. The elimination period is the same as in the short term plans benefit period. c. The benefit period may be to age 65. d. The benefit can be up to 66 and 2/3% of ones monthly income.

social Security was created to provide all of the following benefits except:

*a. unemployment income. b. survivors benefits. c. disability income. d. retirement income.

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

0 days

Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this? 1) A stunt-person pays a lower premium than a data entry operator. 2) An attorney pays a higher premium and receives a poorer classification of disability. 3) A construction worker pays a low premium and receives a higher classification of disability. 4) A construction worker pays a higher premium and receives a poorer classification of disability.

A construction worker pays a higher premium and receives a poorer classification of disability.

The relation of earnings to insurance provision allows the insurance company to limit the insureds 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

The minimum number of credits required for partially insured status for Social Security disability benefits is...

6 credits

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

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?

Disability Buy-Sell

A waiver of premium provision may be included with which kind of health insurance policy?

Disability Income

An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day

Elimination period

What type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled?

Key Person Disability

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

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

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

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

None. (General disability policies do not cover laws is caused by war, military service, intentionally self-inflicted injuries, overseas residents, or injury suffered while committing or attempting to commit a felony.)

What is the official name for the Social Security program?

Old-Age, Survivors, and Disability Insurance

If an individual is covered by a policy that includes an accidental death and dismemberment rider, what term describes a maximum benefits he will receive if he loses sight in both eyes as a result of a fire?

Principal Sum. (if the insured dies, the insured pays the full amount, also known as the "principal Sam". Principal Sam will most likely be paid out if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye. the insured will be paid a percentage of the principal sum, called "capital sum".)

if a business wants to buy a disability income policy on a key employee, which of the following is considered the beneficiary?

a. the insurer. b. the employee. c. the producer. *d. the employer.

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.

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.

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

all of the following benefits are available under Social Security except:

a. death benefits. *b. welfare benefits. c. old-age and retirement benefits. d. disability benefits.

An employee is injured in a construction accident, rendering him unable to work for a year. Which of the following plans would provide him with medical expense coverage and income assistance?

a. long term care. b. social security disability. *c. workers compensation. d. major medical insurance.

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. (presumptive disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (loss of use does not qualify in some policies), total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work.)

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.

Which statement accurately describes group disability income insurance?

The extent of benefits is determined by the insured's income.

Income replacement contracts agree...

To replace the insured's income up to a stated percentage if the insured suffers a loss due to a covered accident or sickness.

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?

a. the insurer can increase the premium. b. the insurer can add exclusions to the policy. c. the insurer can rate up the policy. *d. the insurer will issue a conditional coverage.

Which of the following disability income policies would have the highest premium?

a. 15 day waiting period/5 year benefit policy. *b. 15 day waiting period/10 year benefit policy. c. 30 day waiting period/10 year benefit policy. d. 30 day waiting period/5 year benefit policy. (The waiting, or elimination, period is the time from the onset of disability the insured must wait before becoming eligible for benefits. The shorter the waiting period, the higher the premium. After the insured satisfies the waiting period, they will receive benefits from the insurer for a limited benefit period. The longer the benefit period, the higher the premium. A disability income policy that includes the shortest waiting period in the longest benefit period Would be most expensive.)

Which of the following statements about occupational vs. no occupational coverage is true?

a. Individual disability policies never cover nonoccupational injuries. b. only group disability income policies can be written on an occupational basis. *c. disability insurance can be written as occupational or nonoccupational. d. group medical expense policies and individual medical expense policies always cover both occupational and nonoccupational injuries.

All of the following are true about group disability income insurance except:

a. benefits are usually short term. b. the waiting period starts at the onset of the injury or sickness. c. the longer the waiting period, the lower the premium. *d. coverage applies both on and off the job. (Employees who are injured on the job are covered by workers compensation insurance. Group disability income insurance is designed to cover employees only while they are off the job, so the coverage is considered to be nonoccupational in nature.)

An insured owns a medical expense policy that he purchased for his family. The insured's employer purchased a group disability income policy for the insured and all eligible employees. The insured subsequently suffered an accident on the job that left him unable to work for four months. If the insured received benefits from his disability income policy, which of the following would be true?

a. benefits from employer contributions are not taxable. b. The insured can deduct his medical expense benefits from his income tax. *c. benefits received that are attributable to employer contributions are fully taxable to the employee as income. d. premiums the insured paid for his medical expense policy are normally deductible from his income.

What is the main purpose of the total disability plan?

a. to provide benefits when the insured is unable to preform any of the duties of the occupation for which they are suited by education or training. b. to pay additional monthly benefits to totally disabled individuals. *c. to protect individuals or families against the economic loss after a total disability of the wage earner. d. to provide comprehensive coverage for disabled individuals.

If a business owner becomes totally disabled, a business overhead expense policy will pay all of the following except:

a. utilities. b. employee payroll. *c. loss of the owners income. d. rent.

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

for the first 2 years of a disability.

If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is...

fully insured.

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

group

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

relation of earnings to insurance. (The relation of earnings to insurance provision allows the insurance company to limit the insurance benefits to his/her average income over the last 24 months.)

Workers compensation benefits are regulated by which entity?

state government

on a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform...

their regular job. (if a disability income policy contains that own occupation definition, then the insured will be considered disabled if they cannot perform that particular job, regardless of other jobs that they may be able to do.)

When does a person qualify to receive disability related income?

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