Chapter 10 Disability income and Related insruance

Social Security was created to protect against all of the following EXCEPT A Bad investment choices. B Sickness in old age. C Premature death. D Disability.

Bad investment choices.- Social Security is a Federal program enacted in 1935, that is designed to provide protection, for eligible workers and their dependents, against financial loss due to death, disability, superannuation (retirement income), and sickness in old age.

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

Death of a spouse - 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.

All of the following are 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.

Being age 65. - The term fully insured refers to someone who has earned 40 quarters of coverage (the equivalent of 10 years of work), and is therefore entitled to receive Social Security retirement, Medicare, and survivor benefits. The waiting, or elimination period for Social Security disability benefits is 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? A 4 credits B 6 credits C 10 credits D 40 credits

6 Credits - To be considered currently (or partially) insured, an individual must have earned 6 credits during the last 13-quarter period.

Benefit periods for individual short-term disability policies will usually continue from A 6 months to 2 years. B 2 years to age 65. C 1 week to 4 weeks. D 3 months to 3 years.

6 months to 2 years. - Short-term disability is defined as a disability lasting not more than 2 years.

Which of the following refers to "own occupation" disability? A Insured business owner is unable to perform the duties of his/her own business. B Insured business owner is unable to perform the duties of any related business. C 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 any occupation.

Insured is unable to perform duties of the occupation for which he/she was educated and trained. - Under an Own Occupation plan, if the insured cannot perform duties of his/her current job or the job that he/she was educated and trained for, disability benefits will be paid, even if the insured would be capable of earning income at a different occupation.

What is the official name for the Social Security program? A Social Insurance Program B Defined Benefit Retirement Insurance C Qualified Pension Plan D Old Age Survivors Disability Insurance

Old Age Survivors Disability Insurance - Social Security is formally called Old Age Survivors Disability Insurance - OASDI.

Which of the following occupations would have the lowest disability insurance premiums? A Police officer B Personal Trainer C Construction worker D Stunt pilot

Personal Trainer - The more hazardous an occupation is, the higher the insurance premiums will be. Therefore, because working as a personal trainer poses the least amount of risk, the premiums for this job would be the lowest.

In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is A More limited in duration. B Broader in duration. C Broader in general. D More limited in general.

Broader in general. - A policy that uses the accidental bodily injury definition will provide broader coverage than a policy that uses the accidental means definition.

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. Which of the following will happen? A Both plans will continue to pay fully. B The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. C Social Security will discontinue benefits until the SIS rider expires. D The SIS rider will discontinue paying benefits.

The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. - A Social Insurance Supplement (SIS) rider pays a disability benefit in an amount close to what Social Security would pay. If Social Security benefit payments begin, 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 applicant? A The employer B The insurer C The employee D The producer

The employer - In key person disability insurance purchased by a business, the business is the applicant and the key person is the insured. When the policy is issued, the business is the policyowner and is responsible for paying the premiums.

In which of the following cases would an "any occupation" disability income policy pay the benefits? A The insured is unable to perform any jobs in the field related to the insured's education and experience. B The insured is unable to perform the duties of his or her specific occupation. C The insured changes jobs and is injured as a result of a more hazardous occupation. D The insured's family has unexpected expenses due to the insured's disability.

The insured is unable to perform any jobs in the field related to the insured's education and experience - A policy that has an "any occupation" provision will only provide benefits when the insured is unable to perform any of the duties of the occupation for which they are suited by reason of education, training, or experience.

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? A Full benefits until the blindness lifts B No benefits C Full benefits D Partial benefits

No Benefits - Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.

In a disability policy, the elimination (or waiting) period refers to the period between A Coverage under a disability policy and coverage under Social Security. B During which any specific illness or accident is excluded from coverage. C The first day of disability and the day the insured starts receiving benefits. D The effective date of the policy and the date the first premium is due.

The first day of disability and the day the insured starts receiving benefits. - The elimination, or waiting, period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start.

The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over which years? Which years of income may be deleted from calculation? A Their highest 35; lowest 5 B Their highest 40; lowest 5 C Their highest 15; lowest 4 D Their highest 20; lowest 2

Their highest 35; lowest 5 - The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. The lowest 5 years of income may be deleted from calculation.