1-8. Disability Income and Long-Term Care Insurance Flashcards
1
Q
1-8
- Disability does not usually result in severe financial loss.
A
False
- Rationale: Disability often results in devastating financial loss. A disabled individual often must continue to pay living expenses even though there may not be continued income.
2
Q
- The majority of disabilities last less than 90 days.
A
True
2.
3
Q
- Occupational classifications can be roughly categorized as blue collar, white collar, and professional.
A
True
3.
4
Q
- A client can purchase the amount of coverage needed to protect their full lifestyle as long as they are insurable.
A
False
- Rationale: Clients are limited to the amount of income they can protect to avoid moral hazard. Most disability policies replace approximately two-thirds of a client’s income
5
Q
- Generally, the more liberal a policy’s definition of disability, the higher the premium.
A
True
5.
6
Q
- Split definitions of disability are rare in group policies.
A
False
- Rationale: Split definitions are common in group policies. Disability may be defined as “own occ” for a period of time, after which a stricter “modified own occ” definition may be invoked.
7
Q
- The elimination period in a disability policy refers to the period of time after the disability occurs and before benefit payments begin.
A
True
7.
8
Q
- Group disability policies usually exclude bonuses and overtime when calculating maximum benefit payments.
A
True
8.
9
Q
- Group disability policies can normally be converted to individual policies when an employee changes jobs.
A
False
- Rationale: It is rarely the case that a group disability policy can be converted to an individual policy. Accordingly, leaving one’s employer normally results in a loss of coverage.
10
Q
- Disability waiver of premium benefits are nearly always included as standard provisions in disability income policies.
A
True
10.
11
Q
- Riders are specific provisions added to a contract to modify its coverage.
A
True
11.
12
Q
- Cost-of-living riders are generally inexpensive to add to disability policies.
A
False
- Rationale: Cost-of-living riders are one of the most expensive riders that can be added to a disability policy. The potential loss to an insurer is substantial when this rider is added.
13
Q
- A financial advisor who offers disability insurance advice in his or her domestic state may always give advice in other states.
A
False
- Rationale: In many states, offering disability insurance advice is prohibited to individuals not licensed in those states.
14
Q
- An insurer’s legal department interprets what is meant by the language used in disability contracts.
A
True
14.
15
Q
- Long-term care insurance is available only to people over 55 years old.
A
False
- Rationale: Many young people receive long-term care following accidents or some illnesses resulting in incapacity. Therefore, long-term care insurance coverage is also available to people younger than 55 years old.
16
Q
- Living benefit riders accelerate death benefits in cases involving terminal illness.
A
True
16.
17
Q
- LTC policy applications that do not ask extensive medical questions normally have comprehensive preexisting conditions
exclusion clauses.
A
True
17.
18
Q
- Respite care is one of the levels of care given to a person in a nursing home.
A
False
- Rationale: Respite care allows the primary caregiver a break, or “respite,” from the demands of caring for a client.
19
Q
- Long-term care premiums are not tax deductible.
A
False
- Rationale: Like all medical expenses, long-term care premiums may be tax deductible. Deductibility depends upon whether the policy is “qualified” as well as the status of the individual client’s tax situation.
20
Q
- Most long-term care policies contain waiver of premium provisions.
A
True
20.
21
Q
- Medicare generally does not provide substantial long-term care benefits.
A
True
21.
