Utah Life and Health Exam- Chapter 9: Disability Income and Related Insurance

In disability income insurance, another name for the waiting period is called the what? a- Elimination period. b- Eligibility period. c- Enrollment period. d- Probationary period.

a- Elimination period; The waiting period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start. This is also called the elimination period.

Which of the following factors does an insurer use the most to determine the extent of disability benefits that it will promise in a contract? a- The insured's moral history b- The insured's hobbies c- The insured's income d- The insured's marital status

c- The insured's income; The amount of disability benefits that will be offered to an insured is stated in the policy. It is usually limited to a percentage of the insured's income in order to prevent over-insurance.

Which of the following is NOT true regarding partial disability? a- The insured can still report to work and receive benefits. b- Benefit payments are typically 50% of the total disability benefit. c- An insured would qualify if he couldn't perform some of his normal job duties. d- This is a form of insurance that covers part-time workers.

d- This is a form of insurance that covers part-time workers; Partial disability covers full-time-working insureds who are unable to perform some, but not all, of their regular job duties or can no longer work full-time, which ultimately results in a loss of income. Payment from partial disability is typically 50% of the total disability benefit.

What type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities? a- Accidental Death & Dismemberment b- Medical Reimbursement Benefit c- Partial Disability d- Basic Accidental Injury

Medical Reimbursement Benefit; Medical Reimbursement Benefits help to pay medical costs for accidental injuries that are not considered to be disabling.

What is the elimination period for Social Security disability benefits? a- 12 months b- 3 months c- 5 months d- 6 months

c- 5 months; The elimination period for Social Security disability benefits is 5 months.

When an insurer combines two periods of disability into one, the insured must have suffered a... a- Recurrent disability. b- Partial disability. c- Residual disability. d- Presumptive disability.

a- Recurrent disability; Recurrent disability is the period of time (usually within 3-6 months) during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability.

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply? a- No coverage will apply, since the injury could have been foreseen. b- No coverage will apply, since disability income policies cover sickness only. c- Coverage will apply since the break was accidental. d- Coverage will apply, but will be reduced by 50%.

a- No coverage will apply, since the injury could have been foreseen; An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.

The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over what period of time? a- 18 months b- 2 years c- 6 months d- 1 year

b- 2 years; The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last 24 months.

Which rider, when added to a disability income policy, provides for changes in the benefits payable based on changes in the consumer price index? a- Guaranteed insurability rider b- Cost of living adjustment rider c- Waiver of premium rider d- Social Security rider

b- Cost of living adjustment rider; This rider allows for the indexing of benefits payable under a disability policy to changes in the Consumer Price Index.

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits? a- Full benefits until the blindness lifts b- No benefits c- Full benefits d- Partial benefits

b- No benefits; Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.

A 37-year-old owns a policy with a Guaranteed Insurability Rider. The policyowner would like to increase the benefit amount offered by the policy. What documentation will be required? a- Attending physician's report b- No documentation c- Proof of insurability d- Medical records

b- No documentation; Guaranteed Insurability Rider allows an insured to increase the benefit level to a specific predetermined amount at certain times or on certain occasions without proof of insurability.

Which of the following are the main factors taken into account when calculating residual disability benefits? a- Present earnings and standard cost of living. b- Present earnings and earnings prior to disability. c- Earnings prior to disability and the length of disability. d- Employee's full-time status and length of disability.

b- Present earnings and earnings prior to disability; Residual disability will help pay for loss of earnings by making up the difference between the employee's present earnings and what they were earning prior to disability.

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT? a- Fully insured status. b- Waiting period of 5 months. c- Being age 65. d- Inability to perform any gainful work.

c- Being age 65; The term fully insured refers to someone who has earned 40 quarters of coverage (the equivalent of 10 years of work), and is therefore entitled to receive Social Security retirement, Medicare, and survivor benefits. The waiting, or elimination period for Social Security disability benefits is 5 months.

After the elimination period, a totally disabled insured qualified and started receiving benefits from his disability income policy that has a waiver of premium rider. What will most likely happen to the premiums paid into the policy during the elimination period? a- Premiums will be prorated. b- Premiums will be waived. c- Premiums will be refunded. d- Premiums will be retained by the company, but no further premium will be required for the duration of the disability.

c- Premiums will be refunded; Premiums that were paid by the insured during the elimination period are usually refunded once the insured qualifies to begin receiving benefits.

While repairing the roof of his house an insured accidentally falls off and breaks his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death & Dismemberment Rider. What is the extent of benefits that he will receive? a- 50% of the Principal b- Reciprocal Amount c- Principal Sum d- Capital Sum

c- Principal Sum; If the insured dies, the insurer pays the full amount, also known as the "principal sum", which is also paid if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, usually 50%, which is called the "capital sum".

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives? a- Full b- 50% c- 25% d- None

d- None; General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

If an individual is covered by a policy that includes an Accidental Death & Dismemberment rider, what term describes the maximum benefits he will receive if he loses sight in both eyes as a result of a fire? a- Reciprocal amount b- Capital sum c- Percentage of full amount d- Principal sum

d- Principal sum; If the insured dies, the insurer pays the full amount, also known as the "principal sum". Principal sum will most likely be paid out if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, called the "capital sum."

All of the following benefits are available under Social Security EXCEPT? a- Old-age and retirement benefits. b- Disability benefits. c- Death benefits. d- Welfare benefits.

d- Welfare benefits; Social Security is an entitlement program, not a welfare program.

In a disability policy, the elimination (or waiting) period refers to the period between... a- During which any specific illness or accident is excluded from coverage. b- The first day of disability and the day the insured starts receiving benefits. c- The effective date of the policy and the date the first premium is due. d- Coverage under a disability policy and coverage under Social Security.

b- The first day of disability and the day the insured starts receiving benefits; The elimination, or waiting, period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start.

An insured has been injured in an accident. Although he is still receiving benefits from his disability income policy, he does not have to pay premiums. This means that the policy includes... a- Waiver of all payment. b- Waiver of premium feature. c- Return of premium rider. d- Benefit of payment clause.

b- Waiver of premium feature; Waiver of premium benefit allows the insured, when disabled, to forego paying the premiums once he/she qualifies for benefits.

A disability income policy is written with a 10-month benefit period, a 30-day elimination period, and a 30-day probationary period. If the insured becomes disabled due to illness 9 days after the effective date, the policy will pay benefits for a maximum of how many days? a- 21 days b- 6 months c- 10 months d- 270 days

c- 10 months; Benefit period refers to how long monthly disability benefit payments will last an elimination period has been satisfied.