Disability Income and Related Insurance - Health/Dis WA State

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

15 day waiting period/10 year benefit period

A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?

15 days NOTE: probational period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is consdered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days

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 Under an own occupation plan, if the insured cannot perform their current job for a period of up to 2 years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that 2-year period. After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid

What is the elimination period for SSD benefits?

5 months

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

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%

The benefits for individual disability plans are based on

A flat amount Group disability plans usually specify the benefits based on a percentage of the worker's income, while individual policies usually specify a flat amount

What is a probationary period?

A type of waiting period that is imposed under some DI policies. It does not replace the elimination period, but is in addition to it. Waiting period typically 10-30 days, from the policy issue date during which benefits will not be paid for illness-related disabilities. The period applies to only sickness, not accidents or injury. The purpose of the probationary period is to reduce the chances of adverse selection against the insurer.

In disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which def of total disability

Any occupation

In disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability?

Any occupation

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT Fully insured status Waiting period of 5 months Being age 65 Inability to perform any gainful work

Being age 65 The term fully insured refers to someone who has earned 40 quarters of coverage (equiv of 10 years of work) and is therefore entitled to receive SS retirement, Medicare, and survivor benefits. The waiting, or elimination period for SSDI is 5 months.

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

Benefits are usually limited to 6 months NOTE: BOE insurance is sold to small business owners for a purpose of reimbursing the policyholder for business overhead expenses during the period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.

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 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

Cash to the owner's business partner to accomplish a buyout.

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) NOTE: this rider is used to protect against these trends by increasing the monthly benefits automatically once the insured has been receiving benefits for 12 months, if the cost of living increases.

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(COLA) Will help protect against inflation. Under this rider, the insured's monthly benefit will be increased automatically, once the claim has begun. Generally the first increase would be at the end of one year to e followed by annual increases for as long as the insured remains on the claim.

All of the following are true about group disability income insurance EXCEPT

Coverage applies both on and off the job. NOTE: employees injured on the job are covered by workers comp

According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level? Death of a spouse Age 40 Marriage Birth of a child

Death of a spouse NOTE: the FIO rider allows insureds to increase their benefit levels to certain amounts at specific times without proof of insurability. The following are the typical occasions when an insurer allows for a benefit increase: Ages 25, 28, 31, 34, 37, and 40; marriage; and the birth of a child

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

Disability Income NOTE: this type of rider genrally is included with guaranteed renewable and noncancellable individual disability income policies. It is a valuable provision because it exempts the insured from paying the policy's premium during periods of total disability

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

Disability income NOTE: It is generally included with guaranteed renewable and noncancellable individual disability income policies. It is a valuable provision because it exempts the insured from paying the policy's premium during periods of total disability

In a disability policy, the probationary period refers to the time

During which illness-related disabilities are excluded from coverage

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

In disability income insurance, the OWN OCCUPATION definition of disability applies

For the first 2 years of a disability

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

For the first 2 years of a disability

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

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

Have attained fully insured status - 40 quarters (10 years)

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

Key Person Disability

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

What type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities?

Medical Reimbursement Benefit

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 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

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?

No documentation NOTE: The GIR allows an insured to increase the benefit level to a specific predetermined amount at certain times or on certain occasions without proof of insurability

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 These policies do not cover losses caused by war, military duties, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

Which of the following applies to partial disability benefits?

Payment is limited to a certain period of time typically 50% of the total disability benefit, and is limited to a certain period of time

After the elimination period, a totally disabled insured qualified for benefits from a disability income policy that has a waiver of premium rider. What will happen to the premium that was paid into the policy during the elimination period?

Premiums will be refunded

Which of the following are the main factors taken into account when calculating residual disability benefits?

Present earnings and earnings prior to disability

Which of the following are the main factors taken into account when calculating residual disability benefits?

Present earnings and earnings prior to disability.

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

While repairing the roof of his house an insured accidentally falls off and breaks his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death & Dismemberment Rider. What is the extent of benefits that he will receive?

Principal Sum

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

Principal sum NOTE: most likely 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 the "capital sum."

What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered?

Probationary Period

What provision can reduce the disability benefit 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 insured's benefits to his/her average incomes over the last 24 months

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

Residual disability

Disability income policies can provide coverage for a loss of income when returning to work only part time after recovering from a total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

Residual disability NOTE: RD is calculated as a percentage, determined by current earnings and earnings prior to disablement

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

Residual disability NOTE: it will pay an amount to make up the difference between what the insured would have earned before the loss

Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. What will happen?

The SIS payment will be reduced dollar for dollar by the Social Security benefit payment

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

The employer

Which statement accurately describes group disability income insurance?

The extent of benefits is determined by the insured's income. Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

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 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 SS 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 SS benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit. NOTE: completely ending SIS payment is illegal

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.

If a policy is rated-up, which of the following is true?

The premium increases NOTE: if an applicant is considered to be too much of a risk, the application can be denied. If, however, the applicant's risks are not high enough to decline, two measures can be taken to protect the insurer: 1) the policy can be rated-up, which means that the premiums will increase, and 2) exclusions can be added, which means that the insurer will not have to cover conditions that make the applicant a high risk to insure

Your client has a SIS(social insurance supplement) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving SS benefit payments. Which of the following will happen?

The sis payment will be reduced dollar-for-dollar by the SS benefit payment

What is Residual Disability Benefit?

The type of disability income policy that provides benefits for loss of income when a person returns to work after a total disability, but is still not able to work as long or at the same level he/she/they worked before becoming disabled. May companies have replaced partial disability with residual disability. Will help pay for loss of earnings. If the person can only work part time or at a lesser paying position, residual disability will make up the difference between their present earnings and what they were earning prior to disability

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

Their regular job

What is the main purpose of the total disability plan?

To protect individuals or families against the economic loss after a total disability of the wage earner

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

Unemployment Income SS is designed to provide protection against financial loss due to old age, disability, or death. It also provides income during retirement.

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

Unemployment income

Social Security was created to provide all of the following benefits EXCEPT: DI Retirement Income Unemployment Income Survivor's benefits

Unemployment income

In the event of a loss, business overhead insurance will pay for

rent NOTE: it is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It does not pay the salary of the business owner or their loss of profits. However, it will provide the funds needed to pay the salary of employees other than the owners and their other ongoing business expenses, such as rent.