Ch 4 Disability Income and Related Insurance

Question 1

A period of time during which benefits are paid under the policy

Answer 1

Benefit period

Question 2

A portion of the principal sum of a health insurance policy; paid for accidental dismemberment or loss of sight in one eye

Answer 2

Capital Sum

Question 3

Salary, wages, or commissions; but not income from investments, unemployment benefits, and similar sources of income

Answer 3

Earned income

Question 4

Insurance that exceeds in amount the actual value of the personal property insured or insurance in a greater amount than the insured can afford

Answer 4

Over insurance

Question 5

The amount of coverage paid for an accidental death under a health insurance policy

Answer 5

Principal sum

Question 6

Fully insured or currently insured, depending on the number of coverage credits earned

Answer 6

Social Security disability insured status

Question 7

A qualified expense that may reduce the amount of income subject to taxation

Answer 7

Tax deductible

Question 8

Subject to taxation

Answer 8

Taxable

Question 9

Inability of the insured to perform any occupation for which he or she is reasonably suited by reason of education, training or experience

Answer 9

Total disability

Question 10

Relinquishment of a right or interest

Answer 10

Waiver

Question 11

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.

Answer 11

True

Question 12

_______________ 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.

Answer 12

Loss of Income (Income Replacement contrcts)

Question 13

Inability to perform the duties of one’s own occupation.

Answer 13

Total disability

Question 14

A person is considered totally disabled if the person is

Answer 14

1. Not employed in a job for which he or she is qualified to education, training or experience
2. Unable to perform all the material duties of his or her regular occupation

Question 15

___________________ 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

Answer 15

Presumptive disability

The presumptive disability benefit provides a benefit for dismemberment, total and permanent blindness, or loss of speech or hearing.

Question 16

__________ is a ‘time’ deductible, designed to eliminate coverage for short term disabilities, and reduce the filing of excessive claims.

Answer 16

Elimination period

Question 17

KT

______________ apply to sickness, not accidents or injury.

Answer 17

Probationary periods

Question 18

The reoccurrence of an injury or illness will be considered as a continuation of a prior period disability is known as

Answer 18

Recurrent disability

Question 19

Forgo paying the premiums once he/she qualifies for benefits.

Answer 19

Waiver of premium

Question 20

KT

Principal sum = maximum payment for accidental death; capital sum = percentage of principle amount for accidental injury.

Answer 20

True

Question 21

The purchasing power of disability benefits can be eroded by inflation. The ______________________ will help protect against inflation.

Answer 21

Cost of Living Adjustment (COLA) Rider

Question 22

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

Answer 22

True

Question 23

_______________ 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.

Answer 23

Residual disability

Question 24

KT

Residual disability is calculated as a percentage, determined by current earnings and earnings prior to disablement.

Answer 24

True

Question 25

_____________ provides benefits for illness, injury or disability resulting from accidents or sicknesses that occur on or off the job.

Answer 25

Occupational coverage

Question 26

_____________ coverage on the other hand, only covers claims that result from accidents or sicknesses occurring off the job.

Answer 26

Non-occupational

It is assumed that accidents or injuries occurring on the job will be covered by Worker’s Compensation coverage.

Question 27

KT

Group disability plan benefits are based on a percentage of the workers income; individual policies specify a flat amount.

Answer 27

True

Question 28

KT

Key person disability insurance, the person is the contract owner, premium payer, and beneficiary.

Answer 28

True

Question 29

Places lost income in the event of disability

Answer 29

Disability income insurance

Insured must be unable to perform occupational duties

Question 30

Maximum benefit an insurer is willing to accept for an individual risk; based on percentage of insured’s past earnings

Answer 30

Benefit limitations

Question 31

Supplement or replace benefits payable under Social Security disability

Answer 31

Social insurance supplement (SIS) or Social Security riders

Question 32

Specifies who will purchase a business partners interest in case of disability

Answer 32

Business disability buy-sell agreement

Question 33

Covers the potential loss of business income and the expense of hiring and training a replacement for a key person

Answer 33

Key person disability

Business owns the contract, pays the premium, and is the beneficiary

Question 34

Benefit period no longer than two years

Answer 34

Short term disability (STD)

Question 35

Elimination period may last as long as the benefit period for STD, benefit period may last until age 65, usually reserved for management employees

Answer 35

Long term disability (LTD)

Question 36

OASDI

Answer 36

Old age, survivors, and disability insurance

Question 37

Provides disability income benefits

Individual must meet proper insured status, definition of disability, and waiting period requirements

Answer 37

Social Security benefits

Question 38

Qualifying for Disability Benefits

Social Security Benefits

Answer 38

• Fully insured: 40 quarters of coverage (10 yrs of work)
• Currently insured
• 5 month waiting period
• Benefits based on PIA

Question 39

What type of plan can an individual have during the time of disability?

Answer 39

Disability income insurance

Question 40

What plan can help the company recover from the loss should an employee become permanently disabled

Answer 40

Key person disability

Question 41

What federal programs can lend her long-term assistance if the disability will prevent her from working for years?

Answer 41

Social Security disability