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Z- ACCIDENT+SICKNESS (2022 LLQP) > A&S: DISABILITY (till pg 49?) > Flashcards

A&S: DISABILITY (till pg 49?) Flashcards

1
Q

Insurance needs pyramid (LCDLI)

A

TOP(least important) TO BOTTOM (most important):

  • LTC
  • CI
  • DI
  • LI
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2
Q

DISABILITY: capitalization of income def + formula

A

def: how much capital req to replace income indefinitely

required annual income / expected investment return

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3
Q

DISABILITY: job classifications risk class

A

top(best)…. bottom (worst/hiest risk)?:

4A (BEST): DOCTORS, LAWYERS, DENTISTS, SENIOR EXECUTIVES

3A
2A
A
B (WORST): MANUAL LABOURERS IN HIGH RISK JOBS, I.E CONSTRUCTION WORKERS

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4
Q

DISABILITY:Definition of disability (3) for individual policies

A
  1. Any occupation: worst form of coverage
  2. regular occ
  3. own occ (best)

note: definitions can be mixed, i.e own occ for 1 year, then any occ

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5
Q

DISABILITY: Any occupation definition of disability

A

disabled if unable to perform their OWN OCC or ANY OTHER OCC suited by education/experience

  • ## offered to WORST risk class (B)– i.e construction
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6
Q

DISABILITY: Regular occupation definition of disability

A
  • similar to own occ
  • disabled if unable to do ur regular occ
  • can CHOOSE (not forced) to work if diff occ w reduced/eliminated bens.
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7
Q

DISABILITY: Own occupation definition of disability

A
  • similar to regular occ
  • disabled if unable to do ur regular occ
  • can CHOOSE (not forced) to work in diff occ, BENEFITS WILL CONTINUE
  • Offered to BEST risk class (4A) – i.e doctors, lawyers
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8
Q

DISABILITY Occupational clause

A
  • if insured switches to riskier job: will adjust premium accordingly (more expensive)
  • if switches to less risky job: request downward adjustment (cheaper)
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9
Q

DISABILITY Elimination period (waiting period before benefits)

A
  • time period insured must be disabled before receiving benefits
  • shorter period= higher premium
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10
Q

DISABILITY Benefits Period

A
  • max time insured will receive benefits while disabled
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11
Q

DISABILITY: Renewability options- 3 types (NGC)

A
  • Non canelable– best
  • guaranteed renewable
  • cancelable —- worst
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12
Q

Non cancelable (Non- Can)

A
  • Insurer MUST RENEW policy to specific age as long as premium being paid
  • cannot change premium, amend benefits, or cancel policy
  • offered to BEST risk— 4A (doctors, lawyers)
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13
Q

Guaranteed Renewable

A
  • insurer CAN ALTER premium if doing so for entire class of policies
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14
Q

Cancelable

A
  • inurer can cancel or adjust premiums at any time

- worst policy, so offered to worst risk— class B (i.e construction workers)

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15
Q

insurable income (for disability coverage)

A
  • salary from work
  • biz income
  • Part time work income
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16
Q

UNinsurable income

A
  • pension income
  • investment income!!!!! (but can reduce amt of coverage)
  • trust fund income
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17
Q

Waiver of premium

A
  • standard in disability policies
  • when disabled, insured pays premium for 1st 90 days, afterwards premium waived (and refund premiums colleted)

waivede till:
insured no longer disabled
certain age
certain number of years

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18
Q

recurrent disability clause

A
  • if insured OFF disability, returns to work and suffers same/related disability withing a time frame (i.e 6 months) ===== continuation of benefits (deduct time already used on previous claim)
  • elimination period waived 2nd time and benefits restart right away
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19
Q

presumptive disability clause

A

if:

  • perm blind
  • perm hearing
  • loss of 2 limbs incl use of limbs

Assumes disbaled w/o proof
no elimination period
benefits start ASAP
no proof that stopped work

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20
Q

Common Exclusions for disability coverage

A
  • war/terrorism
  • self inflicited wounds/ suicide attempt
  • participating in illegal activities
  • normal pregnancy/delivery

insurer could also add specific exclusions relevant to insureds health conditions or high risk sports

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21
Q

disability Policy rider

A

an add on options added when policy purchased or adterwards

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22
Q

disability rider: Future Purchase Option (FPO)

A
  • Isured can add coverage in stated amounts on stated dates W/O MEDICAL underwriting but subject to FINANCIAL underwriting (need to proove income) + this increases premium
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23
Q

Disability RIder: Cost of Living Adjustment (COLA)

A
  • ADED TO DISABILITY POLICY
  • BENEFITS INCREASE YEARLY TO COMBAT INFLATION
  • 2 CALCULATION METHODS: SIMPLE METHOD OR COMPOUND METHOD
24
Q

COLA calculation : simple method

A
  • benefit oncreases by SAME % annually
25
Q

COLA calculation: Compound Method

A
  • coverage increased by rate of inflation as measured by consumer price index (CPI) up to a max amount
  • unused increase (less than max) can be carry fwd to future years
26
Q

Accidental death + Dismemberment (AD+D)

A
  • BENEFIT PAID IF DIES AS RESULT OF ACCIDENT (CAR ACCIDENT, FIRE, ETC) OR IF INSURED DISMEMBERED
  • NO MEDICAL UNDERWRITING, BC ITS AN ACCIDENT, NOT HEALTH
  • claim does not impact benefits to be received
27
Q

AD+ D exclusions

A
  • self inflicted injuries
  • suicide (or attemtped suicide)
  • Participation in dangerous sports
  • Flying plane (except passengers/ commercial airline)
28
Q

DISABILITY rider: partial and residual benefots

A

residual benefits: Income related

Partial benefits: job function related

29
Q

DISABILITY residual benefits definition

A
  • paid if: after being totally disabled, no work at all, insured can return to work at reduced capacity, making less then they were before
  • pays portion of benefits if able ti work p/t
  • reduftion of 20% pre- disability inc (cannot earn more than 80%) = partial benefits
  • if esrns LESS than 20%= full benefits paid
  • 20-80% = pro rated benefits
30
Q

DISABILITY residual benefits calculation 4 steps

A
  1. Income lost
  2. % of income lost
  3. 80/20 rule
  4. end benefit X % inc lost (if 80/20 rule doesnt apply)
31
Q

DISABILITY: residual benefits calculation (how to)

A
  1. Income lost: original monthly income - current monthly income= lost $
  2. % of income lost: lost $ / original monthly income= % lost
  3. 80/20 rule:
    lost more than 80%= full benefits
    lost less than 80% ==NO benefits
  4. full benefit X % inc lost = % of benefit he will receive
32
Q

DISABILITY partial Benefits

A
  • does not require period total disability
  • pyas partial benefit ( i.e 50% of full benefit)
  • pays if insured unable to do some substantial duties of job ORRRR can do all but only part time
33
Q

DISABILITY Rider: Return of Premium (ROP)

A
  • POLICY HOLDER receives part of premium back (tax free , W/O interest) under certain circumstances
  • total claims must not exfeed total premiums paid (premiums - total claims)
34
Q

DISABILITY RIDERS

A
  • PARTIAL BENEFITS
  • RESIDUAL BENEFITS
  • RETURN OF PREMIUM (ROP)
35
Q

Types of individual disability insurance policies (CNNGG)

A
  • C: Cancellable
  • N: non cancellable
  • N: non traditional
  • G: guaranteed renewal
  • G: guaranteed issue
36
Q

Mortgage insurance (vs individual DI ins) - Key word: less

A
  • ensures monthly mortgage (only) will be paid if disabled
  • less expensive
  • less underwriting
  • less flexible
37
Q

Individual disability policies (vs mortgage insurance) - key word: MORE

A
  • gets monthly pay outs, can use however u want incl pay mortgage
  • more expensive $$$
  • more underwriting
  • more flexible
38
Q

Guaranteed cacellable

A
  • ins co cannot cancel
  • premiums dont increase
  • benefits cannot be reduced or modified
39
Q

Guaranteed renewable

A
  • insurance must renew every yesr
  • insurer CAN change premiums
  • changes must be made to entire class of policies
40
Q

Canfellable policy

A
  • insurer can modify policy themself
  • insurer can cancel policy
  • changes nust be to entire class of policies
  • lower premoums
41
Q

Guaranteed issue

A
  • guaranteed standard risk or guaranteed issue
    Restrictions based on sise of group, occupational class (i.e 4a)
  • min annual premium
  • min avg age group for group memebrr
42
Q

Non traditional DI

A
  • not just for employees, also for self employed
43
Q

Individual DI policy premium factors

A 
Age
Gender
Health
Smoker status
Occupation
Definition of disability 
Claims history
Length if waiting and benefit period
44
Q

Definition of disability for Adi

A
  • own occ
  • regukwr occ
  • any occ
  • total disability
45
Q

DI riders

A
  • future purchase option (FPO)

- cost if living allowance (COLA)

46
Q

Residual Disability ben. : loss of income as %

A

Pre disability inc - p/t income / predisability income

%

47
Q

1st day hospitalization rider

A
  • bridges gap btwn 1st day hospital mised abd 1st day of benefits (i.e 90 days later)
  • no waiting period
  • min hospital stay : 18-72 hrs
48
Q

Hospitalization indemnity rider

A
  • daily benefit btwn $50-250 to cover hopital exp like parking, child care, etc…
  • stay of atleast 24hrs
  • benefit: 3-4 mths max
49
Q

Taxation of premiums and benefits

A
  • premiums paid not tax defugtible, benefits not incl in taxable invome
  • as long as emoloyer oays premiums + is beneficiary = valid biz exp, but not tax deductible
50
Q

Groupd disabilty insuranfe common traits

A

Same:

  • employer
  • industry
  • association
  • alumni
  • union
51
Q

Tyoes of group disability insurance policies

A
  • short rerm disability (STD)

- long term disability (LTD)

52
Q

Group DI: short term disability (STD)

A
  • aka weekly indemnity
  • short term disabilities (kess than 1 yr)
  • benefits based on % of salary: 70-75%
  • benefits start after 7 days
  • Max ben: 12 mths
  • own occ
53
Q

Group DI: long term DI

A
  • after STD
  • benefits between 50-60% previous income
  • benefits for : 2, 5,10 yrs or to age 65
  • own occ 1st 12 mths, the any occ
54
Q

Group DI: qualification period pg48

A
  • # days betweeen date of employment and date employee qualifies for group olan
  • usually 30-90 days (probation period?)
55
Q

Group DI: premium pmt

A

Non participating: employer makes 1 pmt to ins co/ mth on behalf of all group members

Participatinng (employee pays part of premium) : enployer collects premiums from oayroll deduction and remits 1 pmt to ins co for both employer/employee portions

56
Q

Group DI; terminsting membership pg49

A

May have optikn to convert to individual policy w/o medical, usually w/in 30 days

Z- ACCIDENT+SICKNESS (2022 LLQP) (11 decks)

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