Chapter 4 (Disability Income)

V is insured under an individual Disability Income policy with a 30-day Elimination period. On July 1, he is involved in an accident and temporarily disabled. He returns to work on December 1. How many months of benefit are payable?

4 months

B is a teacher who was injured in a car accident and cannot work. She is now receiving n benefits as a result of this accident. Which type of policy does B have?

Disability Income Policy

M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?

Earned, but unpaid benefits

In a Disability Income policy, which of these clauses acts as a deductible?

Elimination period

Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase?

Applicant's monthly income

A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant?

Disability Income

In the even of an illness, a(n) _________ policy would reimburse an insured for loss of earnings

Disability Income

K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?

Disability Income

A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?

Guaranteed Insurability Option rider

Bryce purchased a disability income policy with a rider that guarantees him the option of purch idditional amounts of coverage at predetermined times without requiring to provide evidence nsurability. What kind of rider is this?

Guaranteed Insurability Rider

J has a Disability Income policy that does NOT provide benefits for losses occurring as the result of r employment. What kind of coverage is this?

Non occupational coverage

Which of these statements concerning an individual Disability Income policy is TRUE?

Normally includes an Elimination period

When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?

Residual disability

What does a Guaranteed Insurability rider provide a Disability Income policyowner?

The ability to periodically increase the amount of coverage without evidence of insurability

What is the elimination period of an individual disability policy?

Time period a disabled person must wait before benefits are paid

R becomes disabled and owns an individual Disability Income policy. When is R eligible to receive disability benefits?

Upon satisfying the elimination period requirement

The provision in a health insurance policy that suspends premiums being paid to the insurer while th insured is disabled is called the:

Waiver of Premium

Disability policies do NOT normally pay for disabilities arising from which of the following?

War

With Disability Income insurance, an insurance company may limit the monthly benefit amount a prospective policy holder may obtain because of the insured's:

gross income at the time of purchase

When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is:

income

An individual Disability Income insurance applicant may be required to submit all of the following information, EXCEPT:

spouse's occupation

An insured owns an individual Disability Income policy with a 30-day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would receive for an approved claim?

$1,250 3.5 months - 1 month elimination period = 2.5 months. 2.5 months X $500 monthly indemnity = $1,250.

Non-occupational disability coverage is designed for:

Employees who suffer non-work related disability, since work-related disability are covered by workers compensation.

Which of the following actions may NOT be taken by an insurance company to insure a substandard applicant for disability income coverage?

Lengthen the contestability period

T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect?

Less than $5,000 per month benefit regardless of the cause

P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?

Recurrent Disability

T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?

The insurer will rescind the policy, deny the claim, and recover all payments made