Disability Income Insurance

Frank is shopping for a disability income policy. Which of the following would have the HIGHEST premium? 14 day waiting period / 5 year benefit period 14 day waiting period / 10 year benefit period 28 day waiting period / 5 year benefit period 28 day waiting period / 10 year benefit period

14 day waiting period/10 year benefit period

A disability policyowner is injured and becomes totally disabled. The benefits pay for 2 years, starting from the date of the injury. What is this time period called? Recurrent period Probationary period Benefit period Elimination period

Benefit period

Which disability policy provision would address any concerns of the value of the benefits decreasing over time? Cost of living benefit Inflation rider benefit Policy enhancement benefit Interest sensitive benefit

Cost of living benefit

The monthly benefit for an individual disability income policy is usually limited to a percentage of the insured's income in order to avoid claims the elimination period over insurance adverse selection

Overinsurance

Chris is an insured bricklayer who severed his left hand in an automobile accident. Although his primary duty cannot be performed, Chris is also a substitute high school teacher. He collects a full disability income check every month. How does his policy define total disability? Recurrent Any occupation Own occupation Presumptive

Own occupation

Typically, Long-Term Disability benefits are coordinated with which benefit plan? Social Security Individual Retirement Account Life insurance Accrued sick time

Social Security

A disability elimination period is best described as a time deductible dollar deductible eligibility period probation period

time deductible

What percentage of a participant's income are group long-term disability benefit amounts typically limited to? 30% 40% 50% 60%

60%

The waiver of premium does NOT include which provision? All future premiums are waived if the insured recovers from the disability If the insured qualifies, the premiums are waived retroactively to the beginning of the disability The waiver of premium generally does not extend past the insured's age 60 or 65 The insured must be disabled for a set period of time before benefits begin

All future premiums are waived if the insured recovers from the disability

Loss of income insurance provides an individual the means to replace wages an individual the ability to collect workers' compensation an individual the ability to continue with medical coverage after a disability unlimited income replacement to a disabled person

An individual the means to replace wages.

The waiting period for a disability insurance policy excludes payments for a short-term illness or injury is the period of time that must elapse following the effective date of the policy before benefits are payable helps the insurer determine if the claim is legitimate allows the insurer to collect medical information on the policyowner

Excludes payment for a short-term illness or injury

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 Additional coverage rider Paid-up option rider Extended insurability rider

Guaranteed insurability rider

Tom has a rider on his disability income policy that guarantees the right to increase his benefits without a medical exam. What kind of rider is this? Waiver of premium rider Guaranteed benefit rider Payor benefit rider Guaranteed insurability rider

Guaranteed insurability rider

Which of the following statements regarding Group Disability Income insurance is TRUE? It pays 100% or more of an insured's income in the event of disability It provides benefits for nonoccupational illnesses and injuries It is generally more expensive than individual policies It usually pays for occupation-related disabilities

It provides benefits for nonoccupational illnesses and injuries

Which of these would NOT be considered a presumptive disability? Loss of vision and speech Loss of hearing Loss of a leg or arm Loss of a leg and arm

Loss of a leg or an arm

Coming from an insurance point of view, which of the following is the main risk associated with disability? Loss of limbs Loss of income Decreased work skills Decreased mobility

Loss of income

Tyler purchased a disability policy with a waiver of premium rider on April 1. He is disabled on May 1. On June 1, he receives proof of permanent and total disability, and submits a claim. He begins receiving benefits on June 15. When are his premiums waived? April 1 May 1 June 1 June 15

May 1

Which clause defines total disability as being unable to perform the major duties of the insured's regular occupation? Own occupation clause Any occupation clause Residual clause Presumptive clause

Own occupation

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 Nondisabling injury Presumptive disability Flat amount disability

Partial disability

In what form do disability income policies typically pay benefits? Lump sum Periodic income Tax credit Annuity

Periodic income

Which type of disability would be less than total impairment and equal to permanent impairment? Partial total disability Permanent partial disabilty Residual partial disability Temporary partial disability

Permanent partial disability

Claims payable to a Disability Income insured, even when the insured can continue to work, are the result of a Total disability Recurrent disability Presumptive disability Lengthy elimination period

Presumptive Disability-A presumptive disability provision specifies certain conditions that automatically qualify the insured for the full benefit because the severity of the conditions presumes the insured is totally disabled, even if the insured is able to work.

What is the purpose of a Disability Income Benefit? Provide money for living expenses Completely replace the insured's total income Reimburse for medical expenses related to a disability Pay for business overhead expenses if the owner becomes disabled

Provide money for living expenses

Jonas has disability insurance through his employer. The employer pays 75% of the premium, and Jonas pays the other 25%. What is Jonas's tax liability for any benefits paid from the disability plan? Taxes must be paid on all benefits received No taxes are payable on any benefits received Taxes must be paid on 25% of the benefits received Taxes must be paid on 75% of the benefits received

Taxes must be paid on 75% of the benefits received.

What is the elimination period of an individual disability policy? Time period an insured must wait before coverage begins Time period a disabled person must wait before benefits are paid Time period after the policy issue date in which the provisions are still contestable The point in time when benefits are no longer payable

Time period a disabled person must wait before benefits are paid

What is the primary factor that determines the benefits paid under a disability income policy? Education level Wages Type of occupation Age

Wages

The factor used most often when underwriting a disability income policy is annual earnings sex of the insured marital status occupation

annual earnings

A disability income policy can prevent an insured from earning a higher income than if he/she were working by utilizing elimination periods probationary periods benefit limits deductibles

benefit limits

An example of a presumptive disability would be a stroke deafness diabetes cancer

deafness

A rehabilitation benefit is intended to prepare the insured to return to employment minimize the insurer's liability give the insured time to find a new career increase the overall benefits given to the insured

prepare the insured to return to employment