Chapter 14 - Disability Insurance

Short-term group disability income benefits are

A percentage of weekly earning up to a stated maximum

Larry wants to purchase an individual disability income policy to provide continuous income while disabled. He is also covered by a two-month wage continuation benefit from his employer. What should the policy elimination period be for his individual policy?

60 days

Beth is a surgeon who has an own-occupation disability income policy. She was injured six months ago and has been unable to return to her practice. Her monthly benefit from the policy is $15,000. During this time, Beth has been working part-time at a local boutique and receives $2,000 monthly. What is her ongoing monthly benefit while she is unable to perform her surgical duties?

$15,000

An insured is covered under a group long-term disability policy. Under this type of policy, the definition of disability based on any occupation typically applies

After two years of disability

If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased

At least once per year from when benefits began

Pat is covered by a disability income insurance policy that covers disabilities arising from a work-related illness or injury. The amount of his disability income payments for an on-the-job injury may be reduced by

Benefits paid under workers compensation

What does the rehabilitation benefit cover in a disability income policy?

Covers the approved cost of the rehabilitation necessary to help a disabled insured return to work

Elimination periods typically apply to

Disability Policies

For purposes of disability income insurance, earned income would include all of the following EXCEPT

Dividends

Disability income policies provide protection for which of the following?

Economic Death

Which of the following would permit an insurer to delay a covered disability policy claim?

Elimination Period

Non-occupational disability coverage is designed for

Employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation

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

Guaranteed insurability rider

Dan owns a disability income insurance policy which provides ONLY nonoccupational coverage. Which of the following circumstances would likely NOT be covered under his plan?

He falls and breaks his hip at work

In a disability income contract, an insured is considered to be totally disabled under the presumptive disability provision if he/she

Loses the ability to speak

Each of the following will trigger a benefit under the presumptive disability provision, EXCEPT

Loss of any one limb

Which of these would NOT likely qualify as a presumptive disability?

Loss of sight in one eye

Which of the following statements accurately describes the financial impact of total disability?

May be worse than the financial impact of death

Jerome is covered by a disability income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?

Nonoccupational Coverage

How are the premiums for an individually-owned disability income policy treated for tax purposes?

Not tax-deductible at all

A policyowner suffers an injury that renders him incapable of performing one or more important job duties. Any decrease in income resulting from this injury would make him eligible for benefits under which provision?

Partial disability

Mark is covered by a policy that uses the regular occupation (own-occ) definition of total disability. Using this definition, he will be considered disabled if unable to

Perform the substantial and material duties of his regular occupation

A disability income insurance policy was recently issued with a rating. What does this mean?

Policyowner will be charged an additional premium

An insured covered under a Disability Income policy is disabled and collecting benefits for a period of two months. He returns to work and is again disabled from the same cause, whereupon benefits continue to be paid. This is an example of which of the following?

Recurrent Disability

Jim is covered under a disability income policy. He is hurt while engaged in an occupation that is more hazardous than the occupation he specified in the policy. What action will the insurer likely take?

Reduce the benefit level

The inability to perform SOME of the duties of one's own occupation is known as a

Residual disability

When issuing disability income coverage to a substandard risk, an insurance company may

Shorten the benefit period

Christine is receiving benefits provided from her disability income insurance. As compared to her previous earnings, the disability benefits should be

Somewhat less

Jonas is covered with disability insurance through his employer. The employer pays 75% of the premium, while Jonas pays the other 25%. What is Jonas' tax liability for any benefits paid from the disability plan?

Taxes must be paid on 75% of the benefits received

Which factor determines the maximum disability income benefit that can be purchased by an applicant?

The applicant's income

An insured, age 67, is covered under a disability income policy. What will the insurer normally require in order for the insured to continue coverage?

The insured must be actively at work for a specified number of hours per week

What is taken into consideration when defining "total disability" in a disability income insurance policy?

The insured's education, training, and experience

What is the elimination period of an individual disability policy?

Time period a disabled person must wait before benefits are paid

Which of the following BEST describes a "partial disability"?

Unable to perform one or more job duties

Which of the following best describes the presumptive disability provision?

Waives the typical total disability requirements