Accident & Health Policies Flashcards
Partial Disability
Often defined as the inability to perform one or more of the regular duties of one’s own occupation or the inability to work on a full-time basis, which results in a decrease of income. Either paid in flat or residual amount.
Total Disability
Some policies use a relatively strict definition such as the “any occupation” definition, similar to social security. This definition requires the insured to be unable to perform any occupation for which he or she is reasonably suited by reason of education, training or experience. Other policies have a more liberal definition and defines it to be the “inability to perform the duties of one’s own occupation.”
Residual Disability
Provides benefits for loss of income when a person returns to work after a total disability, but is still not able to work as long or at the same level he/she worked before becoming disabled.
Presumptive Disability
Provision that is found in most policies which specifies conditions that will automatically qualify the insured for full disability benefits.
Recurrent Disability
Is generally expressed in a policy provision that specifies the period of time during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability.
Elimination Period
Is a waiting period that is imposed on the insured from the onset of the disability until the benefit payments commence. It is a deductible measured in days, instead of dollars. They can range from 30 to 180 days.
Probationary Period
Another type of waiting period that is imposed under some policies in addition to the elimination period. Can range from 10-30 days from policy issue date during which benefits will not be paid for illness-related disabilities. Only applies to sickness not injury. This helps guard the insurer against those trying to purchase disability income shortly after developing a disease or health condition.
Benefit Period
Length of time over which the monthly payments will last for each disability after the elimination period has been satisfied.
Injury
Accidental body injury - means damage to the body is unexpected and unintended (broader coverage). Accidental means - means cause of the accident must be unexpected and unintended.
Benefit Limitations
Usually 66% of the average earnings over the past two years prior to the disability.
Social Insurance Supplement (SIS) or Social Security Riders
Used to supplement or replace benefits that may be payable under social security disability.
Insured is eligible but before benefits begin, black out period if insured has been denied SS benefits, amount payable under SS is less than that of the rider.
Business overhead expense policy
BOE - sold to small business owners who must continue to meet overhead expenses following a disability. Does not cover loss of salary or compensation, elimination period of 15-30 days; limited to 1-2 years; premium is tax deductible; benefit payments are taxable.
Business Disability Buyout Policy
Just like a buy-sell agreement, specifies who will purchase the partner’s interest and legally obligates that person to buy upon disability. Long elimination period 1-2 years to determine if the disability is permanent; the premiums are not tax deductible but benefit is received tax free, usually lump-sum.
Group Disability Income Policy
Specify benefits based on a percentage of the worker’s income. Short-term plans provide maximum benefit periods of 13-26 weeks. Long-term plans provide maximum benefit periods of more than 2 years. Minimum participation requirements 30-90 days. Benefits are supplemental to other programs ie workers comp. Limit coverage to nonoccupational disabilities.
Medical Expense Insurance
Basic Medical Expense; basic medical expense; basic surgical expense; relative value; Major Medical Expense - more comprehensive (broader coverage); supplemental major medical - kicks in after basic medical policy; comprehensive major medical.
