Chapter 12/1: Disability Income Insurance

Which of the following is not a factor pertaining to qualifying for disability benefits?

Delayed disability is not a factor that is considered when looking at an insured's qualification for disability benefits. The correct answer is: Delayed disability

Most disability income benefits are paid:

Disability income benefits are typically paid on a monthly or bimonthly basis. The correct answer is: In periodic benefits

Which of the following statements correctly describes disability income policies?

Disability income policies differ from medical expense insurance because they are only issued on the life of an individual with earned income, not on an entire family. The correct answer is: Disability income policies are only issued on an individual with earned income.

ABC insurer is in the process of underwriting Kara's disability income policy. Which of the following factors is most important to the insurer in underwriting her coverage?

Disability income policies replace income while an insured cannot work; therefore, Kara's occupation is the most important factor in underwriting the coverage. The correct answer is: Kara's occupation

The amount of periodic disability income benefits is based on the insured's:

Disability income policies replace income while an insured cannot work; therefore, benefits are based on a portion of the insured's earned income. The correct answer is: Earned income

What percentage of the insured's income is typically paid under disability income policies?

Disability income policies usually pay 60 to 70% of the insured's income. The correct answer is: 60 to 70%

The percentage of disability income benefits to the insured's income is:

Disability income policies usually pay 60% to 70% of the insured's income. The correct answer is: 60 to 70%

All of the following statements are true regarding disability income policies, EXCEPT:

Periodic income benefits are paid to the insured. Benefits are a stated dollar amount based on a percentage of the insured's lost income. Most disability income policies are guaranteed renewable to age 65. Benefits are paid after an elimination period or time deductible. The correct answer is: Most disability income policies are optionally renewable.

The cost of disability income policy coverage is based on all of the following, EXCEPT:

Premiums for disability income insurance are based on five factors: insured's occupation; insured's earned income; policy's definition of disability; length of the benefit period; and length of the elimination period. The correct answer is: Insured's marital status and number of dependents

Which of the following factors is not used to establish the cost (premiums) for disability income insurance?

Premiums for disability income insurance are based on five factors: insured's occupation; insured's earned income; policy's definition of disability; length of the benefit period; and length of the elimination period. The correct answer is: The insured's sexual orientation

All of the following are used to determine disability income premiums, EXCEPT:

The insured's life insurance policies are not considered in determining disability income policy premiums. The correct answer is: Life insurance policies

Which is not used to determine the premium an insured must pay for their disability income policy?

The insured's life insurance policies are not considered in determining disability income policy premiums. The correct answer is: Life insurance policies

Of the following definitions of total disability, which is the most beneficial to the insured?

The own occupation definition is more favorable because benefits are paid if the insured cannot perform the duties of their own occupation, not any occupation. The correct answer is: Own occupation

Which of the following definitions of total disability is most beneficial to the insured?

The own occupation definition is more favorable because benefits are paid if the insured cannot perform the duties of their own occupation, not any occupation. The correct answer is: Own occupation

Which definition of total disability is most restrictive?

The own occupation definition of disability is more lenient than the "any occupation" definition, and is reserved for individuals with specialized training, such as surgeons. The correct answer is: Any occupation

Disability income policies pay:

The purpose of disability income insurance is to provide disabled individuals with periodic income while they cannot work. The correct answer is: Replacement income when an individual cannot work because of a disability

James is buying disability income insurance. This insurance will _________________.

The purpose of disability income insurance is to replace an insured's lost income when they cannot work. The correct answer is: Replace his income

The purpose of disability income insurance is to:

The purpose of disability income insurance is to replace the insured's lost income when they cannot work. The correct answer is: Replace the insured's income

Susan receives income payments for a disability. Benefits are not based on Susan's ability to perform work duties. Which policy does Susan have?

Income replacement contract benefits are not dependent on the insured's inability to perform work duties. Instead, income replacement contracts replace a portion of the insured's lost income due to a covered accidental injury or sickness. The correct answer is: Income replacement

Benefits under a disability income policy are provided until the insured reaches the age of:

Most long-term disability income policies provide benefits until the insured reaches the age of 65. The correct answer is: 65