Ch 4 Disability Income and Related Insurance Flashcards
A period of time during which benefits are paid under the policy
Benefit period
A portion of the principal sum of a health insurance policy; paid for accidental dismemberment or loss of sight in one eye
Capital Sum
Salary, wages, or commissions; but not income from investments, unemployment benefits, and similar sources of income
Earned income
Insurance that exceeds in amount the actual value of the personal property insured or insurance in a greater amount than the insured can afford
Over insurance
The amount of coverage paid for an accidental death under a health insurance policy
Principal sum
Fully insured or currently insured, depending on the number of coverage credits earned
Social Security disability insured status
A qualified expense that may reduce the amount of income subject to taxation
Tax deductible
Subject to taxation
Taxable
Inability of the insured to perform any occupation for which he or she is reasonably suited by reason of education, training or experience
Total disability
Relinquishment of a right or interest
Waiver
True or False - considering a disabled insured is able to perform some duties of the occupation, coverage under the “any occupation” policy is more likely to be denied then under the “own occupation” policy.
True
_______________ policies which replace a certain percentage of the insurance income lost due to a covered accident or sickness, without first requiring a period of total disability.
Loss of Income (Income Replacement contrcts)
Inability to perform the duties of one’s own occupation.
Total disability
A person is considered totally disabled if the person is
- Not employed in a job for which he or she is qualified to education, training or experience
- Unable to perform all the material duties of his or her regular occupation
___________________ is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits
Presumptive disability
The presumptive disability benefit provides a benefit for dismemberment, total and permanent blindness, or loss of speech or hearing.
__________ is a ‘time’ deductible, designed to eliminate coverage for short term disabilities, and reduce the filing of excessive claims.
Elimination period
KT
______________ apply to sickness, not accidents or injury.
Probationary periods
The reoccurrence of an injury or illness will be considered as a continuation of a prior period disability is known as
Recurrent disability
Forgo paying the premiums once he/she qualifies for benefits.
Waiver of premium
KT
Principal sum = maximum payment for accidental death; capital sum = percentage of principle amount for accidental injury.
True
The purchasing power of disability benefits can be eroded by inflation. The ______________________ will help protect against inflation.
Cost of Living Adjustment (COLA) Rider
KT
Partial disability covers a partial loss of income for disabled insureds who are unable to perform some, but not all, of the regular job duties
True
_______________ will help pay for loss of earnings. If the person can only work part-time or at a lesser paying position, _______________ will make up the difference between their present earnings and what they were earning prior to disability.
Residual disability
KT
Residual disability is calculated as a percentage, determined by current earnings and earnings prior to disablement.
True
_____________ provides benefits for illness, injury or disability resulting from accidents or sicknesses that occur on or off the job.
Occupational coverage
_____________ coverage on the other hand, only covers claims that result from accidents or sicknesses occurring off the job.
Non-occupational
It is assumed that accidents or injuries occurring on the job will be covered by Worker’s Compensation coverage.
KT
Group disability plan benefits are based on a percentage of the workers income; individual policies specify a flat amount.
True
KT
Key person disability insurance, the person is the contract owner, premium payer, and beneficiary.
True
Places lost income in the event of disability
Disability income insurance
Insured must be unable to perform occupational duties
Maximum benefit an insurer is willing to accept for an individual risk; based on percentage of insured’s past earnings
Benefit limitations
Supplement or replace benefits payable under Social Security disability
Social insurance supplement (SIS) or Social Security riders
Specifies who will purchase a business partners interest in case of disability
Business disability buy-sell agreement
Covers the potential loss of business income and the expense of hiring and training a replacement for a key person
Key person disability
Business owns the contract, pays the premium, and is the beneficiary
Benefit period no longer than two years
Short term disability (STD)
Elimination period may last as long as the benefit period for STD, benefit period may last until age 65, usually reserved for management employees
Long term disability (LTD)
OASDI
Old age, survivors, and disability insurance
Provides disability income benefits
Individual must meet proper insured status, definition of disability, and waiting period requirements
Social Security benefits
Qualifying for Disability Benefits
Social Security Benefits
- Fully insured: 40 quarters of coverage (10 yrs of work)
- Currently insured
- 5 month waiting period
- Benefits based on PIA
What type of plan can an individual have during the time of disability?
Disability income insurance
What plan can help the company recover from the loss should an employee become permanently disabled
Key person disability
What federal programs can lend her long-term assistance if the disability will prevent her from working for years?
Social Security disability
