Disability Income and Related Insurance

What is the shortest possible elimination period for group short-term disability benefits provided by an employer? A. 0 days B. 30 days C. 60 days D. 90 days

A. 0 days

Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this? A. A construction worker pays a higher premium and receives a poorer classification of disability B. A stunt person pays a low premium and receives a superior classification of disability C. An attorney pays a higher premium and receives a poorer classification of disability D. A secretary pays a higher premium and receives a superior classification of disability

A. A construction worker pays a higher premium and receives a poorer classification of disability

Which of the following statements regarding Business Overhead Expense policies is NOT true? A. Benefits are usually limited to six months B. Premiums paid for BOE are tax-deductible C. Any benefits received are taxable to the business D. Leased equipment expenses are covered by the plan

A. Benefits are usually limited to six months

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability? A. Business overhead expense policy B. Key period insurance C. Disability buy-sell agreement D. Business disability policy

A. Business overhead expense policy

Which agreement specifies how a business will transfer hands when one of the owners dies or become disabled? A. Disability Buy-Sell B. Proprietary Transfer C. Absolute assignment D. Transfer of Ownership

A. Disability Buy-Sell

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 would indicate that his policy was written with a 30 day A. Elimination period B. Blackout period C. Probationary period D. Disability period

A. Elimination period

In which of the following health plans are benefit payments attributed to employer contributions taxable to the employee? A. Group Disability Income B. AD&D C. Disability Buy Out D. Medical Expense

A. Group Disability Income

Under workers compensation, which of the following benefits are NOT included? A. Legal benefits B. Medical and rehabilitation benefits C. Income benefits D. Death benefits

A. Legal benefits

In a Disability Income policy, all of the following are considered presumptive disabilities EXCEPT A. Loss of one eye B. Loss of hearing C. Loss of two limbs D. Loss of speech

A. Loss of one eye

Regarding the taxation of Business Overhead policies, A. Premiums are deductible, and benefits are taxed B. Premiums are not deductible, and benefits are taxed C. Premiums are not deductible, but benefits are deductible D. Premiums are not deductible, but expenses paid are deductible

A. Premiums are deductible, and benefits are taxed

Workers Compensation benefits are regulated by which entity? A. State government B. Employer C. Insurer D. Federal Government

A. State government

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? A. Workers Compensation B. Major Medical Insurance C. Long-term Care D. Social Security Disability

A. Worker's Compensation

Which of the following disability income policies would have the highest premium? A. 15-day waiting period / 5-year benefit period B. 15-day waiting period / 10-year benefit period C. 30-day waiting period / 10-year benefit period D. 30-day waiting period / 5-year benefit period

B. 15-day waiting period / 10-year benefit period

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

B. 6 months to 2 years

All of the following apply to short-term disability plans EXCEPT A. A benefit period of 26 weeks is most common for group plans B. Both group and individual plans are renewable C. Group plans can provide benefit periods of up to 52 weeks D. Individual plans can provide benefit periods of up to 2 years

B. Both group and individual plans are renewable

All of the following are true about group disability income insurance EXCEPT A. The longer the waiting period, the lower the premium B. Coverage applies both on and off the job C. Benefits are usually short term D. The waiting period starts at the onset of the injury or sickness

B. Coverage applies both on and off the job

A Waiver of Premium provision may be included with which kind of health insurance policy? A. Dread Disease B. Disability Income C. Basic medical D. Hospitality indemnity

B. Disability Income

Under which of the following disability income plans would the benefits be subject to income tax? A. Partnership buy-out B. Group C. Individual D. Key person

B. Group

The amount of disability benefits that an insured receives often depends upon the insured's A. Medical history at the time of application B. Income at the time of the application C. Martial status at the time of the application D. Number of children at the time of the application

B. Income at the time of the application

Insurance that would pay for hiring a replacement for an important employee who becomes disabled is called A. Business overhead expense disability insurance B. Key employee disability insurance C. Blanket disability insurance D. Long-term disability

B. Key employee disability insurance

Which of the following is considered a presumptive disability under a disability income policy? A. Loss of one hand or foot B. Loss of two limbs C. Loss of one eye D. Loss of hearing in one ear

B. Loss of two limbs

After the elimination period, a totally disabled insured qualified and started receiving benefits from his disability income policy that has a waiver of premium rider. What will most likely happen to the premiums paid into the policy during the elimination period? A. Premiums will be waived B. Premiums will be refunded C. Premiums will be retained by the company, but no further premium will be required for the durations of the disability D. Premiums will be prorated

B. Premiums will be refunded

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability provision does this describe? A. Residual disability B. Presumptive disability C. Dismemberment disability D. Partial disability

B. Presumptive disability

Under a disability income policy, the insurer does not pay a monthly benefit that is equal to the insured's previous income. The reason for paying a benefit amount that is less than the insured's income is to A. Enable the insurer to reduce variable costs B. Prevent overutilization and malingering C. Prevent the insured from obtaining excess insurance D. Enable the insurer to provide affordable coverage

B. Prevent overutilization and malingering

On a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform A. Any job that they are suited for by prior experience B. Their regular job C. Any job that they are suited for by prior education D. Any job that they are suited for by prior training

B. Their regular job

Which of the following is NOT true regarding partial disability? A. An insured would qualify if he couldn't perform some of his normal job duties B. This a form of insurance that covers part-time workers C. The insured can still report to work and receive benefits D. Benefit payments are typically 50% of the total disability benefit

B. This is a form of insurance that covers part-time workers

A single mother wants to make sure that if she is unable to work for health reasons, she and her child would be protected financially. Which of the following insurance plans would best suit her needs? A. Accidental death and dismemberment B. Total disability plan C. Workers compensation D. Comprehensive health insurance plan

B. Total disability plan

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 the insured be receiving benefits under an "own occupation" disability plan? A. The insured would not receive any benefits B. 3 years C. 2 years D. 1 month

C. 2 years

An insured owns a medical expense policy that he purchases for his family. The insured's employer purchased a Group Disability Income policy for the insured and all eligible employees. The insured subsequently suffered an accident on the job that left him unable to work for four months. If the insured receives benefits from his disability income policy, which of the following would be true? A. Benefits from employer contributions are not taxable B. The insured can deduct his medical expense benefits from his income tax C. Benefits received that are attributable to employer contributions are fully taxable to the employee as income D. Premiums the insured paid for his medical expense policy are normally deductible from his income

C. Benefits received that are attributable to employer contributions are fully taxable tot he employee as income

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? A. Management Loss B. Business Loss C. Business Disability D. Individual Disability

C. 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? A. The business manager's salary B. Disability insurance to the owner C. Cash to the owner's business partner to accomplish a buyout D. The rent money for the building

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

In disability income insurance, the own occupation definition of disability applies A. During the elimination period B. As long as an individual is unable to work C. For the first 2 years of a disability D. During the waiting period

C. For the first 2 years of a disability

In disability income insurance, the own occupation definition of disability applies A. During the elimination period B. As long as the individual is unable to work C. For the first 2 years of a disability D. During the waiting period

C. 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? A. Full benefits for 2 years B. No benefits C. Full benefits D. Partial benefits

C. Full benefits

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 receives Presumptive Disability benefits? A. Partial benefits B. Full benefits until the blindness lifts C. No benefits D. Full benefits

C. No benefits

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

C. Personal Trainer

Any occupation disability typically means that individuals are unable to perform the duties of the occupation for which they are suited by all of the following EXCEPT A. Training B. Experience C. Preference D. Education

C. Preference

When an insurer combines two periods of disability into one, the insured must have suffered a A. Residual disability B. Presumptive disability C. Recurrent disability D. Partial disability

C. Recurrent disability

In the event of a loss, business overhead insurance would pay for A. Salary of the business owner B. Medical bills of the business owner C. Rent D. Loss of profits

C. Rent

Income benefits in a disability income policy are characterized by all of the following EXCEPT A. The monthly benefit will be less than the insured's actual pre-disability income B. The amount to be paid is stated in the policy C. The amount to be paid is unlimited D. The amount to be paid is limited to a percentage of the insured's income at the time of application

C. The amount to be paid is unlimited

The period of time immediately following a disability during which benefits are not payable is A. The grace period B. The blackout period C. The elimination period D. The probationary period

C. The elimination period

Which statement accurately describes group disability income insurance? A. There are no participation requirements for employees B. Short-term plans provide benefits for up to 1 year C. The extent of benefits is determined by the insured's income D. In long-term plans, monthly benefits are limited to 75% of the insured's income

C. The extent of benefits is determined by the insured's income

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

C. The first day of disability and the day the insured starts receiving benefits

An insured owns a general disability policy and is injured during a war, rendering him disabled. What will be the extent of benefits that he will receive? A. 100% B. 50% C. 25% D. 0%

D. 0%

The benefits for individual disability plans are based on A. The employer's net worth B. The number of employees of the company C. A percentage of the worker's income D. A flat amount

D. A flat amount

Which of the following would qualify someone for disability benefits? A. Injury only B. Intentionally self-inflicted injury C. Losses arising from war D. Both accident and sickness

D. Both accident and sickness

Which of the following refers to "own occupation" disability? A. Insured is unable to perform duties of any occupation B. Insured business owner is unable to perform the duties of their own business C. Insured businessowner is unable to perform the duties of any related business D. Insured is unable to perform duties of the occupation for which they were educated and trained

D. Insured is unable to perform duties of the occupation for which they were educated and trained

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT A. Rent B. Utilities C. Employee payroll D. Loss of the owner's income

D. Loss of the owner's income

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? A. Full B. 50% C. 25% D. None

D. None

Which of the following applies to partial disability benefits? A. An insured is entitled to a principal sum benefit for the partial loss of a limb B. Payment is based on termination of employment C. Benefits are reduced once an insured is no longer under a doctor's care D. Payment is limited to a certain period of time

D. Payment is limited to a certain period of time

When a group disability insurance policy is paid entirely by the employer, benefits paid to disabled employees are A. Deductible income to the employee B. Deductible business expense to the employer C. Taxable income to the employer D. Taxable income to the employee

D. Taxable income to the employee

If a business wants to buy a disability income policy on a key employee, which of the following is considered the beneficiary? A. The insurer B. The employee C. The producer D. The employer

D. The employer

Which of the following factors does an insurer use the most to determine the extent of disability benefits that will promise in a contract? A. The insured's marital status B. The insured's moral history C. The insured's hobbies D. The insured's income

D. The insured's income

What is the main purpose of the total disability plan? A. To provide comprehensive coverage for disabled individuals B. To provide benefits when the insured is unable to perform any duties of the occupation for which they are suited by education or training C. To pay additional monthly benefits to totally disabled individuals D. To protect individuals or families against the economic loss after a total disability of the wage earner

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

An insured has been in an accident. Although he is still receiving benefits from his disability income policy, he does not have to pay premiums. This means that the policy includes A. Return of premium rider B. Benefit of payment clause C. Waiver of all payment D. Waiver of premium feature

D. Waiver of premium feature

When does a person qualify to receive disability-related income? A. When the disability reaches a designated state of severity B. When an injury is severe and the insured is not a dependent C. When an insured is hospitalized D. When the insured is unable to perform his/her job duties

D. When the insured is unable to perform his/her job duties