Chapter 9 Quiz

The mode of premium payment

Is defined as the frequency and the amount of the premium payment

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as

Subrogation

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

Present earnings and earnings prior to disability

Unreimbursed medical expenses paid for the insured may be claimed as deductions if the expenses exceed what percentage of the adjusted gross income?

7.5%

which of the following is CORRECT regarding Business Overhead Expense insurance?

Premiums are tax deductible

Premiums paid by self-employed sole proprietors or partners for medical expense insurance are

Totally tax deductible

An insured has a primary group health plan, each covering losses up to $10,000. The insured suffered a loss of $15,000. Disregarding any copayments or deductibles, how much will the excess plan pay?

$5,000

What percentage of individually-owned disability income benefits is taxable?

0%

When a disabled dependent child reaches the age limit for coverage, how long does the policyowner have to provide proof of the dependency in order for the dependent to remain covered under the policy?

31 days

Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as

Any occupation-more restrictive that other definitions

Which statement accurately describes the change of beneficiary provision?

Any policy that has a death benefit must also have a Change of Beneficiary provision

All of the following are true of the Key Person disability income policy EXCEPT

Benefits are considered taxable income to the business

When an insurer combines two periods of disability into one, the insured must have suffered a

Recurrent disability

A man works for company A and his wife works for company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim

The insurance through his company is primary

Which of the following definitions would make it easier to qualify for total disability benefits?

The more liberal "own occupation"

Which of the following would best describe total disability?

A person's ability to work is significantly reduced or eliminated for the rest of his/her life

All of the following statements concerning workers compensation are correct EXCEPT

A worker receives benefits only if the work related injury was not his/her fault

What type of insurance is sold to small business owners that must meet overhead expenses such as rent or utilities following a disability?

Business overhead expense

Premium payments for personally-owned disability income policies are

Not tax deductible

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

Which of the following statements regarding the Change of Beneficiaries Provision is FALSE

The policyowner has the right to change beneficiaries in any case

A policyowner names his five children as primary beneficiaries and his wife as a contingent beneficiary. If the policyowner and one of his children die, who would receive policy benefits?

The remaining 4 primary beneficiaries

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy?

When the expenses exceed a certain percentage of the insured's adjusted gross income

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?

Workers Compensation

Which of the following statements is correct concerning taxation of long-term care insurance?

Excessive benefits may be taxable

A provision found in insurance policies which prevents the insured from collecting twice for the same loss is called

Subrogation

In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received?

No tax

The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called

Nonoccupationally coverage