Chapter 12/3: Riders

Which of the following is not a use of disability income insurance?

Disability income insurance is not intended to pay medical expense bills. Instead, it is designed to provide a replacement income while the insured is disabled and cannot work. The correct answer is: Pay medical expenses

Which disability income rider automatically increases the insured's disability income benefits after the insured has been receiving benefits for at least 12 months?

The cost of living adjustment (COLA) rider automatically increases the insured's disability income benefits after the insured has been receiving benefits for at least 12 months. The correct answer is: Cost of living adjustment rider

Which policy feature waives the premium while the insured is receiving disability income benefits?

The waiver of premium feature waives policy premiums while the insured is disabled. The correct answer is: Waiver of premium

All of the following statements are false regarding the waiver of premium provision in a disability income policy, EXCEPT:

If the insured becomes disabled, the waiver of premium rider waives premiums beginning at the onset of the disability. This means any premiums paid during the elimination period will be refunded. Insurers typically require the disability be total and permanent. The correct answer is: An insured's policy is kept in force while the insured is disabled and cannot pay premiums.

All of the following describe the Social Insurance Supplement (SIS) in a disability income policy, EXCEPT:

The SIS pays a benefit equivalent to what Social Security disability would pay, but if Social Security actually begins to pay the insured, the SIS benefit is reduced by the amount of the Social Security benefit. The SIS pays benefits for the following scenarios: during the 5-month Social Security disability income waiting period; if the insured has been denied Social Security disability income benefits; or if the amount of the Social Security disability income benefit is less than what the SIS rider would pay. The correct answer is: The SIS is double what Social Security disability would pay.

Which of the following is a refund provision in disability income policies?

The cash surrender value rider refunds 60 to 80% of the insured's premiums in cases where premium payments far exceed claims paid. This benefit is only paid when the disability income policy is terminated. The correct answer is: Cash surrender value

The ________ provision refunds 60 to 80% of the insured's premiums and interest in cases where premium payments far exceed claims paid.

The cash value surrender rider refunds 60 to 80% of the insured's premiums and interest in cases where premium payments far exceed claims paid. This benefit is only paid when the disability income policy is terminated. The correct answer is: Cash surrender value

What is the purpose of the guaranteed insurability rider in a disability income policy?

The guaranteed insurability rider (GIR) allows the insured to buy additional disability income coverage without proving evidence of insurability. The insured is usually eligible to purchase additional coverages at certain ages specified in the policy, or upon life events, such as marriage or the birth of a child. The correct answer is: The insured may purchase additional coverage at certain points in time, or at certain ages.

The future increase option disability income rider is also referred to as the:

The guaranteed insurability rider (GIR), also referred to as the future increase option (FIO) rider, is similar to the provision found in life insurance. The GIR allows the insured to buy additional disability income coverage without proving evidence of insurability. The correct answer is: Guaranteed insurability rider

What is the single most important factor in underwriting disability income coverage?

The individual's occupation is the most important underwriting factor for disability income policies. Individuals with more hazardous occupations are charged higher premiums to account for the greater risk of disability. The correct answer is: The insured's occupation

All of the following are true regarding the future increase option rider, EXCEPT:

The insured's income must increase to justify the increase in disability income benefits. The correct answer is: The insured's income may or may not increase upon utilizing the future increase option.

Which disability income provision prolongs the disability income policy benefit period beyond the age 65 cutoff to the insured's entire life?

The lifetime benefits provision prolongs the disability income policy benefit period beyond the age 65 cutoff to the insured's entire life. The correct answer is: Lifetime benefits

Which disability income rider restricts the insured's disability income benefit to an amount based on earned income during the past two years?

The relation of earning to insurance provision restricts the insured's disability income benefit to an amount based on earned income during the past two years. The correct answer is: Relation of earnings to insurance rider

Which of the following disability income riders refunds premiums in cases where the premium payments far exceed claims paid on the policy?

The return of premium rider refunds premiums in cases where premium payments far exceed claims paid. The insurer returns premiums after a designated number of years. The correct answer is: Return of premium

All of the following are true regarding the AD&D rider for disability income policies, EXCEPT:

A disability income policy may include an AD&D rider that covers accidental injury. The rider functions just like a standalone AD&D policy, paying a principal sum for accidental death or loss of vision in both eyes, or loss of two or more limbs, and a capital sum for loss of one hand, one foot, or loss of vision in one eye. The correct answer is: The AD&D rider will pay a principal sum for accidental death or loss of one limb.

Which disability income rider allows the insured to buy additional disability income coverage without proving evidence of insurability?

The future increase option rider allows the insured to buy additional disability income coverage without proving evidence of insurability. The correct answer is: Future increase option rider

All of the following are true regarding the hospital confinement rider in disability income policies, EXCEPT:

The hospital confinement rider is an optional benefit that waives the elimination period if the insured requires inpatient hospitalization. The rider will pay the insured the total disability benefit while hospitalized during the policy's elimination period, and ceases once the insured is released from the hospital. The correct answer is: The rider will pay the insured the partial disability benefit while hospitalized during the policy's elimination period.

The nondisabling injury rider is also referred to as the:

The medical reimbursement benefit, also referred to as the nondisabling injury rider, pays medical expenses caused by an accidental injury that does not cause total disability. This benefit does not pay disability income benefits. The correct answer is: Medical reimbursement benefit

Of the following policy features, which waives the premium while the insured receives disability income benefits?

The waiver of premium feature waives policy premiums while the insured is disabled and receiving disability income benefits. The correct answer is: Waiver of premium

Of the following provisions, which protects against inflation?

The cost of living rider (COLA) allows the insured's disability income benefits to increase to offset the effect of inflation. The correct answer is: COLA rider

Which provision protects the insured against inflation?

The cost of living rider (COLA) allows the insured's disability income benefits to increase to offset the effect of inflation. The correct answer is: COLA rider

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

An impairment rider is added to disability income policies in which the insured has an existing medical condition. The impairment rider excludes coverage for that particular condition. This rider allows insureds to obtain coverage in cases where they would otherwise be denied because of their health conditions. The impairment rider is a permanent aspect of the policy. Unlike pre-existing condition exclusions, the impairment rider does not fall off the policy after a certain number of months or years. The correct answer is: The impairment rider drops off when the pre-existing condition exclusion period ends.

Which of the following does not correctly define the item as it pertains to disability income benefits?

Impairment riders do not cover existing conditions. The rider allows insureds to obtain coverage in cases where they would be denied because of their health condition. The rider excludes the condition. The correct answer is: Impairment riders cover existing conditions.

The waiver of premium feature in a disability income policy requires the insured's disability be:

Insurers typically require the disability be total and permanent for the waiver of premium feature to take effect. The correct answer is: Permanent and total

By what age must lifetime benefits for a total disability caused by sickness begin?

Policies that pay lifetime benefits for disability caused from sickness usually require that the disability occur prior to the insured reaching the age of 55. The correct answer is: 55

Lifetime benefits for total disability caused by sickness must begin prior to the insured reaching the age of:

Policies that pay lifetime benefits for disability caused from sickness usually require that the disability occur prior to the insured reaching the age of 55. The correct answer is: 55

Which disability income rider is an optional benefit which waives the elimination period if the insured requires inpatient hospitalization?

The hospital confinement rider is an optional benefit which waives the elimination period if the insured requires inpatient hospitalization. The correct answer is: Hospital confinement rider

All of the following are cash benefits of disability income policies, EXCEPT:

The impairment rider excludes coverage for a specified condition. The correct answer is: Impairment rider

All of the following are true regarding the lifetime benefits provision in disability income policies, EXCEPT:

The lifetime benefits provision prolongs the disability income policy benefit period beyond the age 65 cutoff to the insured's entire life. The provision usually requires that the insured is totally disabled prior to age 65. Some policies specify that the disability must be caused from accidental injury, while other policies include both accidental injury and sickness. Policies that pay lifetime benefits for sickness usually require that the disability occur prior to the insured reaching the age of 55. The correct answer is: The disability must be caused by accidental injury.

Which disability income cash benefit provides coverage of job training services to a totally disabled insured, so the insured can resume working at their prior employment or begin a new occupation?

The rehabilitation benefit provides coverage of job training services to a totally disabled insured, so the insured can resume working at their prior employment or begin a new occupation. The correct answer is: Rehabilitation benefit