CH 10 Disability Income and Related Insurance

Question 1

What are the four types of workers compensation benefits?

Answer 1

• Medical
• Income
• Rehabilitation and
• Death benefits

Question 2

What type of insurance covers an employee who is hurt on the job?

Answer 2

Workers compensation

Question 3

What type of health insurance is sold to small business owners to reimburse them for the overhead expenses?

Answer 3

BOE - Business Overhead Expense insurance

Question 4

After the elimination period, a totally disabled insured qualified for benefits from a disability income policy that has a waiver of premium rider. What will happen to the premium that was paid into the policy during the elimination period?

Answer 4

Premium will be refunded

Question 5

How does someone qualify for Social Security disability income benefits?

Answer 5

• The insured must have the proper insured status (such as fully insured)
• Meet the definition of disability
• Satisfy the waiting period

Question 6

What is the purpose of a buy sell agreement for health insurance policies?

Answer 6

To specify how the business will pass between owners when one of them dies or becomes disabled

Question 7

What type of disabilities will be covered by occupational coverage?

Answer 7

Disabilities that result from accident or sicknesses that occur on or off the job

Question 8

What is the own occupation disability?

Answer 8

Insureds inability to perform duties of his or her current job or an occupation for which the insured is educated and trained

Question 9

What does the amount of disability benefits that an insured can receive depend on?

Answer 9

The insureds income at the time of policy application

Question 10

What is the primary purpose of disability income insurance?

Answer 10

To replace income lost due to a disability

Question 11

What portion, if any, of the individual disability income policy benefits or tax to the insured?

Answer 11

Disability benefits are not income taxable

Question 12

With key person disability insurance, who pays the policy premiums?

Answer 12

The business (employer)

Question 13

What is the term for a period of time immediately following a disability during which benefits are not payable?

Answer 13

Elimination period

Question 14

What type of health insurance covers partners or corporate officers of a closely held business?

Answer 14

Disability buy sell

Question 15

What is presumptive disability provision

Answer 15

Provision found in most disability income policies that specifies the conditions that will automatically qualify for full disability benefits

Question 16

What entity regulates Worker’s Compensation benefits?

Answer 16

State government

Question 17

How can an AD&D policy be written?

Answer 17

As a rider to a health insurance policy, or as a separate policy

Question 18

A waiver of premium provision may be included with what type of health insurance policies

Answer 18

Disability income

Question 19

What is another name for old age, survivors, and disability insurance benefits?

Answer 19

Social Security

Question 20

What type of health insurance would pay for hiring a replacement for an important employee who becomes disabled?

Answer 20

Key person disability insurance

Question 21

What benefit is based on a primary insurance amount (PIA)?

Answer 21

Social Security disability benefit

Question 22

In which of the following health plans are benefit payments attributed to employer contributions taxable to the employee?

A) Group Disability Income
B) AD&D
C) Disability buy out
D) Medical expense

Answer 22

Group Disability Income

Question 23

If an insured worker has earned 40 quarters of coverage, the workers status under Social Security Disability is

A) Permanently insured
B) Fully insured
C) Partially insured
D) Correctly insured

Answer 23

Fully insured.

Question 24

Which of the following refers to “own occupation” disability?

A) Insured business owner is unable to perform the duties of any related business
B) Insured is unable to perform duties of the occupation for which he/she was educated and trained
C) Insured is unable to perform duties of any occupation
D) Insured business owner is unable to perform the duties of his/her own business

Answer 24

Insured is unable to perform duties of the occupation for which he/she was educated and trained.

Question 25

When a group disability insurance policy is paid entirely by the employer, benefits paid to disabled employees are

A) Deductible income to the employee
B) Deductible business expense to the employer
C) Taxable income to the employer
D) Taxable income to the employee

Answer 25

Taxable income to the employee.

Question 26

All of the following are true regarding key person disability income insurance EXCEPT

A) The employer receives the benefits if the key person is disabled
B) The employer pays the premiums
C) The employee is the insured
D) Premiums are tax deductible as a business expense

Answer 26

Premiums are tax deductible as a business expense.

Question 27

On a disability income policy that contains the “own occupation” definition of total disability, the insured will be entitled to benefits if they cannot perform

A) Any job that they are suited for by prior training
B) Any job that they are suited for by prior experience
C) Their regular job
D) Any job that they are suited for by prior education

Answer 27

Their regular job.

Question 28

Which of the following is NOT true regarding partial disability?

A) This is a form of insurance that covers part-time workers
B) The insured can still report to work and receive benefits
C) Benefit payments are typically 50% of the total disability benefit
D) An insured would qualify if he couldn’t perform some of his normal job duties

Answer 28

This is a form of insurance that covers part-time workers.

Question 29

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 insure’d moral history
B) The insured’s hobbies
C) The insured’s income
D) The insured’s marital status

Answer 29

The insured’s income.

Question 30

Benefit periods for individual short-term disability policies will usually continue from

A) 6 months to 2 years
B) 2 years to age 65
C) 1 week to 4 weeks
D) 3 months to 3 years

Answer 30

6 months to 2 years.

Question 31

An insured’s disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before social security benefits begin?

A) 5
B) 3
C) 2
D) 1

Answer 31

1 year.

Question 32

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an “own occupation” disability plan?

A) 1 month
B) She would not receive any benefits
C) 3 years
D) 2 years

Answer 32

2 years.

Question 33

Which of the following is considered a presumptive disability under a disability income policy?

A) Loss of hearing in one ear
B) Loss of one hand or one foot
C) Loss of two limbs
D) Loss of one eye

Answer 33

Loss of two limbs.

Question 34

A business wants to make sure that if a key employee becomes disabled, the business will be protected from any resulting loss. Which kind of insurance will protect the business?

A) Business Loss
B) Business disability
C) Individual disability
D) Management loss

Answer 34

Business disability.

Question 35

Which of the following is NOT a characteristic of a group long-term disability plan?

A) The benefit can be up to 66 and 2/3% of one’s monthly income
B) The benefit can be up to 50% of one’s yearly income
C) The elimination period is the same as in the short term plans benefit period
D) The benefit period may be to age 65

Answer 35

The benefit can be up to 50% of one’s yearly income.

Question 36

Income replacement contracts agree
A) To replace the insured’s income up to a stated percentage if the insured suffers a loss due to a covered accident or sickness
B) To replace income if the head of the household is the primary insured, and he/she loses income due to a lay-off
C) To cover any accident on the job, but not accidents outside of his/her job
D) To replace the insured for his/her company, including hiring and training wages

Answer 36

To replace the insured’s income up to a stated percentage if the insured suffers a loss due to a covered accident or sickness.

Question 37

Workers compensation insurance covers a worker’s medical expenses resulting from work related sickness or injuries and covers loss of income from

A) Plant or office closings
B) Temporary job layoffs
C) Work-related disabilities
D) Job termination

Answer 37

Work-related disabilities.