Life and Health - Chapter 10 Quiz
Which of the following is a typical benefit period for a group long-term disability benefit? 13 weeks 5 years 26 weeks 52 weeks
5 years Group long-term disability is often characterized by benefit periods of 2 years, 5 years, to age 65, or lifetime. Relevant content:10.4 Group Disability Income
Which of the following is a typical benefit period for a group short-term disability benefit? 5 years 52 weeks 2 years To age 65
52 weeks Short-Term Disability Income plans are characterized by maximum benefits for periods of rather short duration, such as 13, 26, or 52 weeks. Relevant content:10.4 Group Disability Income
To be eligible for social security disability the insured worker must be: Paralyzed Partially disabled Fully insured Eligible for Workers' Compensation
Fully insured To be eligible for Social Security disability, the insured worker must be fully insured. Some Social Security benefits are payable to a worker that is currently insured, but the other choices do not apply to Social Security. Relevant content:10.8 Social Security
Attaching a(n) ___________ rider excludes coverage for a condition that would otherwise be covered. Lifetime benefit Rehabilitation benefit Impairment Waiver
Impairment Attaching an impairment rider excludes coverage for a condition that would otherwise be covered. Relevant content:10.6 Disability Income Policy Riders
The Age Discrimination in Employment Act (ADEA) affects both the short- and long-term group disability benefits for people employed after age _______. 65 55 62 60
65 The Age Discrimination in Employment Act (ADEA) affects both the short- and long-term group disability benefits for people employed after age 65. Relevant content:10.4 Group Disability Income
Social Security uses which of the following definitions to determine total disability? Any substantial gainful activity Own occupation Loss of income Any occupation
Any substantial gainful activity Under Social Security, total disability means an individual must be unable to engage in any substantial gainful activity due to a medical condition. Relevant content:10.8 Social Security
Group long-term disability benefits are paid for: 2 years As long as the policy specifies Up to age 65 5 years
As long as the policy specifies While this coverage is often characterized by benefit periods of 2 years, 5 years, to age 65, or lifetime, the best answer to this question is based on the specifications of the policy. Relevant content:10.4 Group Disability Income
Which of the following is needed to qualify for a Social Security Disability Benefit? Have less than $1,000 in assets Fulfill a 4-month waiting period, and have paid into Social Security Be either currently or fully insured Be age 60, widowed, and have one dependent
Be either currently or fully insured In addition to satisfying all other requirements, a person must be either fully insured (40 credits) or currently insured (sliding scale based on age). Relevant content:10.8 Social Security
Which of the following will be covered under a business owner expense (business overhead) policy? Income to the disabled owner Business profit losses Weekly income to a disabled employee Business property rental
Business property rental The business overhead expense policy is designed to cover overhead such as rent, utilities, and employee's wages upon the disability of the owner. It will not cover the owner's wages, loss of profit, or disabled employee wages Relevant content:10.5 Disability Income Special Uses
Pete is a valuable veteran of 21 years at Joe's Garage working with 24 people and filling in for Joe when he is not in. Joe wants to insure Pete to offset any losses and the costs of trying to find, recruit and train a replacement, should Pete become disabled. What type of policy should Joe purchase? Key Employee Insurance Business Overhead Insurance Special Insurance Supplement Employee Impairment Insurance
Key Employee Insurance Joe is after a policy that will pay the business a benefit to help pay for hiring a replacement, loss of revenue, etc., when a key employee (Pete) becomes disabled. Relevant content:10.5 Disability Income Special Uses
Which of the following is a limited form of medical expense coverage added to a disability income policy? Social insurance supplement rider Non-disabling injury rider Additional monthly benefit rider Hospital confinement rider
Non-disabling injury rider A Non-Disabling Injury Rider does not pay disability income, but pays medical expenses related to an injury that does not result in total disability (emergency room, x-rays, durable medical equipment, etc.). It is a limited form of medical expense coverage added to a disability income policy. Relevant content:10.6 Disability Income Policy Riders
Steve Borden, a kindergarten teacher, was in a boating accident and lost both legs. Although he will continue to teach, his disability policy pays full benefits because of this provision: Residual Disability Presumptive Disability Total Disability Partial Disability
Presumptive Disability Presumptive Disability is where a loss is presumed to be total and permanent due to loss of sight, hearing, speech or loss of two limbs. Relevant content:10.2 Qualifying for Disability Benefits
Penelope received benefits from her disability policy and went back to work. After 30 days she found she was not able to work and began to immediately receive her disability payments. Which of following provisions made this possible? Residual Disability Provision Presumptive Disability Provision Recurrent Disability Provision Second Injury Provision
Recurrent Disability Provision The question defines the Recurrent Disability Provision. Relevant content:10.2 Qualifying for Disability Benefits
Which of the following would be considered a presumptive disability? The loss of a leg below the knee The loss of the ability to speak The loss of sight in an eye The partial loss of hearing in an ear
The loss of the ability to speak The only response that reflects complete loss of a function is the ability to speak. 'The loss of a leg below the knee does not represent loss of two limbs, and loss of sight in an eye or hearing in an ear does not reflect loss of all sight or hearing. Relevant content:10.2 Qualifying for Disability Benefits
Group Disability Income is usually offered only on a nonoccupational basis, which will not cover work-related disabilities, because: Damages for work-related injuries are determined in court The insurer may reduce its financial obligation this way Work related injuries are normally covered under Workers' Compensation Most individuals have their own disability income policy
Work related injuries are normally covered under Workers' Compensation Most group disability is written to be nonoccupational, because Workers' Compensation was developed and designed to cover work- and job-related accidents and disease. Relevant content:10.4 Group Disability Income
If a disabled worker is eligible for a Social Security disability benefits, his or her spouse and children may each also be eligible for a benefit in the amount of ____% of the disabled worker's benefit. 50 25 100 0
50 A disabled worker's spouse and dependent children are eligible under certain circumstances to receive a benefit in an amount equaling 50% of the worker's disability benefit. Relevant content:10.8 Social Security
Which of the following should be put in place by two business partners who want to be assured that the business will not be lost should either one of them become disabled? A Business Overhead Expense Contract A Guaranteed Purchase Option An Errors & Omissions Policy A Buy-Sell Agreement
A Buy-Sell Agreement The partners should put in place a Buy-Sell Agreement funded by a Disability Policy that would provide the funds needed to buy out the interests of either partner should one of them become totally disabled. Relevant content:10.5 Disability Income Special Uses
Which of the following statements is true regarding group short term disability benefits: The elimination period is 13, 26, or 52 weeks Benefits are payable to age 65 Benefits payable can be up to 100% of loss of income Payments are made on a quarterly basis
Benefits payable can be up to 100% of loss of income Group short-term disability benefits are payable for 13, 26, or 52 weeks typically, but never longer than 2 years. The elimination period is usually 0-7 days but rarely longer than 15-30 days. Benefits are typically paid weekly and can be as high as 100% of wages. Relevant content:10.4 Group Disability Income
What type of disability income insurance pays a lump sum enabling certain businesses to cover the cost of purchasing a disabled business owner's interest in the business? Buy-sell Reducing term Key employee Business overhead expense
Buy-sell Disability Buy-Sell insurance pays a lump sum benefit that enables the insured's business partners to buy out his or her interest in the business. Relevant content:10.5 Disability Income Special Uses
Which optional disability income insurance rider waives the elimination period if the insured is hospitalized and pays only when the insured is being treated as an inpatient. Non-disabling injury Impairment Cost-of-living Hospital confinement
Hospital confinement The hospital confinement rider waives the elimination period if the insured is hospitalized and pays only when the insured is being treated as an inpatient. Relevant content:10.6 Disability Income Policy Riders
Own occupation is the: Inability to perform one or more duties of one's occupation Inability to perform all duties of any occupation for which one is qualified based upon education, training, and experience Inability to perform all duties of one's own occupation Presumption an individual is disabled due to the loss of sight, hearing, speak, or the loss of 2 limbs
Inability to perform all duties of one's own occupation Own Occupation requires the insured's inability to perform the main duties of one's own occupation. Relevant content:10.2 Qualifying for Disability Benefits
Hank, an auto mechanic, had an accident in his garage. He was unconscious for several hours and he awoke in the hospital with a broken leg and missing an arm. His disability would be: Total, temporary Partial, permanent Total, permanent Partial, temporary
Partial, permanent The fact that the mechanic was missing an arm would be a permanent disability. It is not considered a total disability initially because a person can perform many functions with only one arm. In the unlikely event the person cannot perform any work with only one arm, the disability may be rerated to total. Relevant content:10.2 Qualifying for Disability Benefits
A disability that is presumed to be total and permanent due to the loss of sight, hearing, speech or the loss of two limbs is: Partial Recurrent Residual Presumptive
Presumptive Presumptive Disability is a loss that is presumed to be total and permanent due to the loss of sight, hearing, speech, or the loss of 2 limbs. Relevant content:10.2 Qualifying for Disability Benefits
Josh is a concert pianist and earns a very good living with his talent. He was in a car accident and broke his arm. His disability is considered: Temporary only Total, partial Partial, temporary Total, temporary
Total, temporary Temporary Disability occurs when the insured suffers a disability and is expected to recover fully. Temporary disability may be total or partial, depending on the person's ability to work or not. A professional pianist with a broken arm would not be able to perform, and would be considered totally disabled for a temporary period of time. Relevant content:10.2 Qualifying for Disability Benefits
Under what provision will a disability policy provide benefits if the insured is totally disabled because of donating an organ to another individual? Total Disability Residual Disability Transplant Permanent Disability
Transplant Under the Transplant provision, an insured will be deemed disabled as a result of sickness if he or she becomes totally disabled a result of a transplant of an organ to another individual. Relevant content:10.2 Qualifying for Disability Benefits
Under the Coordination of Benefits provision, if an insured is disabled due to a work-related loss, the primary payer is Workers' Compensation Individual disability Social Security disability Group disability
Workers' Compensation Because Workers' Compensation benefits are mandated by state (or federal) law, they are primary to any other insurance benefits. Relevant content:10.9 Coordination of Benefits
When disabled, which of the following would ensure payment for the wages of a business owner's employees? Business expenditures Disability buyout Business overhead Presumptive disability
Business overhead The Business overhead expense policy will provide income to the business to cover losses such as employee's wages if the owner becomes disabled. Relevant content:10.5 Disability Income Special Uses
Which of the following disability income benefit periods will result in the highest premium? Life 2 years Age 65 5 years
Life The benefit period is the time period the insured is eligible to receive payments after the elimination period has been met. The benefit period may be written for a specified number of years (2, 5, or 10 years), to age 65, or for life. The longer the potential benefit period, the higher the premium. Relevant content:10.1 Disability Income Insurance
The two categories of Group Disability Income policies are: Medicare and Social Security Long-Term and Short-Term Partial and Residual Sickness or Accidental
Long-Term and Short-Term Disability Income policies are characterized as being Long-Term or Short-Term. Relevant content:10.2 Qualifying for Disability Benefits
Joan was told she could only expect about 70% of her weekly salary on a disability check if she was ever disabled. The reason for this is to reduce _________. Malfunctions Manipulation Malingering Misalignment
Malingering Malingering can be characterized as either a moral hazard (lying about one's disability) or a morale hazard (a person chooses not to work because they have some income available). Relevant content:10.1 Disability Income Insurance
All of the following are 'statutory claims' for benefits under most states' Workers' Compensation laws, except: Rehabilitation Survivors Maternity Disability
Maternity There are 4 'statutory claims' for benefits under most states' Workers' Compensation laws: Disability Income, Rehabilitation (job retraining), Medical Expenses, and Survivors Income (including a burial benefit). Relevant content:10.7 State Workers' Compensation Benefits
Which statement is incorrect regarding Group Short-Term disability? Normally, the waiver of premium feature on these disability plans applies after a disability is prolonged for a specified period The elimination period may be as short as zero days for an accident and 7 days for sickness Benefits are typically paid weekly ranging from 50% to 100% of the insured's income Group Short-Term disability income plans have short benefit periods with a rather short duration of coverage of 13, 26, or 52 weeks
Normally, the waiver of premium feature on these disability plans applies after a disability is prolonged for a specified period Although waiver of premium features generally have an elimination period, this feature typically applies to Group Long-Term Disability, as opposed to Group Short-Term Disability. Relevant content:10.4 Group Disability Income
Ole Olson owns a Business Overhead Expense Policy whereby if he should become disabled, the policy will continue to cover most business expenses in his absence. The policy would cover all of the following, except: Ole's employee payroll Ole's office rent Ole's utility bills Ole's personal lost income
Ole's personal lost income. The intent of the policy is to offset expenses, not to replace the disabled owner's personal lost income. If Ole is concerned about his own personal lost income, he should own an individual Disability Income policy. Relevant content:10.5 Disability Income Special Uses
Recurrent disability: Requires an individual to meet the definition of Social Security disability before any benefits are payable Requires an individual to be unable to perform all duties of any occupation Protects an insured who is unable to perform one or more duties of any occupation Protects an insured who becomes disabled for the same loss and does not have to meet a new waiting period
Protects an insured who becomes disabled for the same loss and does not have to meet a new waiting period Recurrent Disability occurs when a second disability is suffered due to the same cause within a certain period of time (usually 6 months), the elimination period will not apply and the disability will be considered continuous. Relevant content:10.2 Qualifying for Disability Benefits
The purpose of the Social Insurance Supplement rider is to: Waives the elimination period if insured is hospitalized during the period of elimination, but only pays when being treated as an inpatient Pay the medical expenses that are related to an injury that does not result in total disability Provide a refund of 80% of premiums paid in to that point, less any dollar amounts paid out in claims Provide benefits in case an insured is declined Social Security disability benefits
Provide benefits in case an insured is declined Social Security disability benefits
Which statement is false regarding Social Security Disability benefits? Qualification for benefits is contingent only upon the employee's having 45 work credits and being unable to perform his or her usual job To collect disability benefits, an employee must be unable to engage in any kind of gainful work because of a medically determined physical or mental condition that has lasted, or is expected to last, at least 12 months or to result in death The benefit for a qualifying disabled worker is a percentage of the PIA The waiting period is 5 months
Qualification for benefits is contingent only upon the employee's having 45 work credits and being unable to perform his or her usual job For Social Security Disability benefits, the proper insured status is either 'fully' insured (40 credits) or 'currently' insured (a sliding scale of credits based on age), and the disability must last 12 months or be expected to result in death. In addition to satisfying the 5-month waiting period, the person must be unable to perform 'any substantial gainful activity.' Relevant content:10.8 Social Security
What provision states that if there is a second disability due to the same cause within a specified period, the elimination period will be waived? Second Disability Rehabilitation Disability Residual Disability Recurrent Disability
Recurrent Disability Under the Recurrent Disability provision, if a second disability is suffered due to the same cause as the first, within a given period of time, the elimination period will be waived. Relevant content:10.2 Qualifying for Disability Benefits
If a disability insurance applicant is insurable, but not at a standard rate, all of the following are actions an underwriter can take, except: Increase the elimination period Reduce the dividends the policy is eligible for Reduce the benefit period and/or amount Charge a higher premium
Reduce the dividends the policy is eligible for If an applicant is substandard, the insurer may want to reduce the risk. This may be accomplished by charging an extra premium, increasing the elimination period, shortening the benefit period, reducing the amount of benefit and/or utilizing an exclusion rider when a condition appears certain to result in recurrent disabilities. Relevant content:10.3 Unique Aspects of Individual Disability Underwriting
What type of disability income insurance is designed to help a small business continue to make regular monthly payments on its long-term financial commitments in the event of the owner's disability? Reducing term Business overhead expense Buy-sell Key employee
Reducing term Disability Reducing Term helps a small business that has long-term financial commitments requiring regular monthly payments to meet its obligations. The amount of the benefit remains the same monthly, but the benefit period reduces. Relevant content:10.5 Disability Income Special Uses
Sam is totally disabled and receiving benefits while attending an insurer-approved vocational training program. What provision guarantees the continuation of benefits while Sam participates in the training program and remains totally disabled? Temporary Disability Presumptive Disability Impairment Disability Rehabilitation
Rehabilitation Under the Rehabilitation Provision, total disability benefits will be continued as long as the insured is actively participating in the training program and remains totally disabled. Relevant content:10.6 Disability Income Policy Riders
A court reporter develops arthritis making it impossible to continue this employment. The reporter now has other employment at a reduced salary and receives a monthly benefit from an insurance contract due to which of the following policy provisions? Partial Disability Residual Disability Recurrent Disability Total Disability
Residual Disability Residual Disability recognizes one's ability to continue to work, but at a reduction of earnings. Relevant content:10.2 Qualifying for Disability Benefits
Which of the following definitions does not match the term? Guaranteed Purchase Option -- Guarantees that on specified dates, ages or occurrences, the insured may purchase additional monthly benefits, if income justifies it, without proof of insurability Waiver of Premium -- In the event total disability continues beyond a specified period, the insurer will waive premiums for the duration of the disability Cost of Living -- Automatically increases monthly benefits, after the onset of disability, often in relation to increases in the Consumer Price Index Return of Premium Rider -- A special provision that provides for a refund of the cash value if disability occurs after a certain period
Return of Premium Rider -- A special provision that provides for a refund of the cash value if disability occurs after a certain period The Return of Premium Rider provides for a refund of the entire or some part of the premium (not cash value) based upon favorable claim activity over a specified period. Relevant content:10.6 Disability Income Policy Riders
Which of the following would be considered a presumptive disability? The partial loss of hearing in an ear The loss of sight in an eye The loss of a leg below the knee The loss of the ability to speak
The loss of the ability to speak The only response that reflects complete loss of a function is the ability to speak. 'The loss of a leg below the knee does not represent loss of two limbs, and loss of sight in an eye or hearing in an ear does not reflect loss of all sight or hearing. Relevant content:10.2 Qualifying for Disability Benefits
A partial disability is defined as an individual: Unable to perform all duties of any occupation for which he/she is qualified based upon education, training, and experience Presumed to be disabled due to the loss of sight, hearing, speech, or the loss of 2 limbs Unable to perform one or more duties of his/her occupation Unable to perform all duties of his/her occupation
Unable to perform one or more duties of his/her occupation Partial Disability is a disability resulting in an inability to perform 1 or more of the regular duties of an occupation. The benefit usually pays up to 50% of a total disability benefit for 3 to 6 months. Relevant content:10.2 Qualifying for Disability Benefits
All of the following are possible business uses of Disability Income Insurance, except: Workers' Compensation Key Employee Insurance Buy-Sell Business Overhead Expense
Workers' Compensation Disability Income Insurance would not be used to provide benefits under Workers' Compensation. Relevant content:10.5 Disability Income Special Uses
