Chapter 6 - Disability Income Insurance

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

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

$1250 (3.5 Months - 1 month elimination period = 2.5 months x $500 monthly indemnity = $1250.)

N is covered under an individual Disability policy with a 30-day Elimination period and a monthly benefit of $500. N is totally disabled for 3 1/2 months. N's total benefit received on this claim is

$1250 (After the 30 day elimination period has been satisfied, the total benefit paid on this claim is $1250. ($500+$500+$250))

In the event of an illness, a ________ ________ policy would reimburse an insured for loss of earnings.

Disability Income (would reimburse an insured for loss of earnings due to sickness)

R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?

Residual Disability (Usually a percentage of the total disability benefit for periods when the insured is unable to perform some of the duties of his/her occupation.)

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 (earned income at the time of purchase limits the amount of the monthly benefit that an insured purchase in a Disability Income Policy.)

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

Income

X owns a Disability Income policy. X recently suffered a disability which was due to the same cause as a previous disability. These disabilities both occurred over a four-month span. Which of the following provisions allows X's second disability to be covered without a new elimination period?

Recurrent Disability (Insurer will provide the same benefits without a new elimination period under the recurrent disability provision. A period of time is specified where the recurrence of a disability is considered a continuation of the prior disability.)

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 (A second period of disability from the same or related cause of a prior disability is a recurrent disability.)

What is the primary factor that determines the benefits paid under a disability income policy?

Wages