Ch 4 Quiz

Question 1

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently losing the use of his legs and his rendered completely blind. The blindness improves a month later. To what extent will he receive presumptive disability benefits?
A partial benefits
B full benefits until the blindness leaves
C no benefits
D full benefits

Answer 1

C no benefits

Presumptive disability plans offer full benefits for specified conditions. These policies typically requires a loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insurance blindness was only temporary and the loss of use in only one leg, he does not qualify for presumptive disability benefits.

Question 2

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the stairs and breaks his ankle. What coverage will apply?
A coverage will apply, but will be reduced by 50%
B no coverage will apply, since the injury could have been foreseen
C no coverage will apply, since disability income policies cover sickness only.
D coverage will apply since the break was accidental

Answer 2

B no coverage will apply, since the injury could have been foreseen

An accidental means clause states that if the insured meant to do whatever caused the injury, no coverage applies since the resulting injury should have been foreseen.

Question 3

All of the following apply to short-term disability plans EXCEPT
A individual plans can provide benefit periods of up to two years
B a benefit period of 26 weeks is most common for group plans
C both group and individual plans are renewable capital
D group plans can provide benefit periods of up to 52 weeks.

Answer 3

C both group and individual plans are renewable capital

Short term disability plans are not renewable

Question 4

Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situation illustrates this?
A a construction worker pays a higher premium and receives a poorer classification of disability
B a stunt person pays low premium and receives a superior classification of disability
C in attorney pays a higher premium and receives a poor classification of disability
D a secretary pays a higher premium and receives a superior classification of disability

Answer 4

A a construction worker pays a higher premium and receives a poorer classification of disability

The more hazardous the applicants occupation, the higher the premium insurance company will charge.

Question 5

A client has a new individual disability income policy with a 20 day probationary period and a 30 day elimination period. 10 days later, the client breaks her leg and is off work for 45 days. How many days a disability benefits will the policy pay? 
A 10 days 
B 15 days 
C 25 days 
D 45 days

Answer 5

B 15 days

Question 6

A disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability? 
A statutory 
B own occupation 
C any occupation 
D typical

Answer 6

C any occupation

The ‘any occupation’ definition states that an insured is disabled if they cannot perform any job that they are suited for by prior education, training or experience. The ‘own occupation’ definition states that an insured is disabled if they cannot perform their own job, whatever that may be.

Question 7

An insured was involved in an accident and could not perform her current job for three years. If he should reasonably perform another job utilizing similar skills after one month, for how long will the insured be receiving benefits under an on occupation disability plan?
A 2 years
B one month
C the insured would not receive any benefits
D 3 years

Answer 7

A 2 years

Question 8

Insurance that will pay for hiring a replacement for an important employee who becomes disabled is called
A blanket disability insurance
B long-term disability
C business overhead expense disability insurance
D key employee disability insurance

Answer 8

D key employee disability insurance

Question 9

All of the following are true about group disability income insurance EXCEPT
A the longer the waiting period, the lower the premium
B coverage applies both on and off the job
C benefits are usually short term
D the waiting period starts at the onset of injury or sickness

Answer 9

B coverage applies both on and off the job

Employees who are injured on the job are covered by Worker’s Compensation insurance. Group disability income insurance is designed to cover employees only while they’re off the job, so the coverage is considered to be non-occupational in nature.

Question 10

In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least 
A 24 months 
B until age 65
C for life 
D 12 months

Answer 10

D 12 months

Social Security disability benefits are paid to claim it as disability is expected to last at least 12 months or lead to death

Question 11

Under a disability income policy, the insurance does not pay a monthly benefit that is equal to the insured previous income. The reason for paying the benefit amount that is less than the insurance income is to:
A enable the insured to reduce variable cost
B prevent over utilization and malingering
C prevent the insured from obtaining excess insurance
D enable the insurance provide affordable coverage

Answer 11

B prevent over utilization and malingering

The insurer wants the insured to have a financial incentive to return to work

Question 12

A brain surgeon has an accident and develop tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses?
A any occupation – more restrictive than other definitions
B own occupation – less restrictive than other definitions
C own occupation – more restrictive than other definitions
D any occupation – less restrictive than other definitions

Answer 12

B own occupation – less restrictive than other definitions

In theory, the brain surgeon could find other work, but because her disability income policy specifies that she is covered for her own occupation she would be wholly covered

Question 13

Which of the following refers to own occupation disability?
A insured is unable to perform duties of any occupation
B insured business owner is unable to perform the duties of their own business capital
C insured business owner is unable to perform the duties of any related business
D insured is unable to perform duties of the occupation for which they were educated and trained

Answer 13

D insured is unable to perform duties of the occupation for which they were educated and trained

Question 14

Insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This would indicate that his policy was written with a 30 day 
A elimination period 
B blackout period 
C probationary period 
D disability period

Answer 14

A elimination period

Question 15

Which of the following definitions would make it easier to qualify for total disability benefits? 
A the more strict own occupation 
B the more liberal own occupation 
C the more strict any occupation 
D the more liberal any occupation

Answer 15

B the more liberal own occupation

Total disability is defined differently under some disability income policies. The more liberal ‘own occupation’ definition of a disability makes it easier to qualify for benefits.

Question 16

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled? 
A proprietary transfer a 
B absolute assignment 
C transfer of ownership 
D disability buy-sell

Answer 16

D disability buy-sell

Question 17

If employer provides long-term group disability insurance for employees, what percentage of monthly wages are lower paid employees eligible to collect? 
A 33 and 1/3% 
B 50% 
C 66 and 2/3% 
D 90%

Answer 17

C 66 and 2/3%

If an employer provides long-term group disability insurance for employees, the benefit parade may be limited to age 65, and benefits will be limited to 50% of the monthly wages for higher paid employees and 66 and 2/3% of the monthly wages for lower paid employees.

Question 18

In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition will provide the coverage that is 
A more limited in general 
B more limited duration 
C broader in duration 
D broader in general

Answer 18

D broader in general

A policy that uses the accidental bodily injury definition will provide broader coverage in a policy that uses the accidental means definition

Question 19

Which of the following are the main factors taken into account when calculating residual disability benefits?
A present earnings and standard cost of living
B present earnings and earnings prior to disability
C earnings prior to disability and the length of disability
D employees full-time status and length of disability

Answer 19

B present earnings and earnings prior to disability

Residual disability will help pay for loss of earnings by making up the difference between the employees present earnings and what they were earning prior to disability

Question 20

If an individual is covered by a policy that includes an accidental death and dismemberment rider, what term describes the maximum benefits he will receive if he loses sight in both eyes as a result of a fire? 
A percentage of full amount 
B principal sum 
C reciprocal amount 
D capital sum

Answer 20

B principal sum

Question 21

Which of the following would best describe total disability?
A a persons inability to perform one of the regular duties of his/her occupation
B a persons total loss of income
C a persons in ability to qualify for insurance coverage
D a persons ability to work is significantly reduced or eliminated for the rest of his/her life

Answer 21

D a persons ability to work is significantly reduced or eliminated for the rest of his/her life

Well different policies might find total disability differently, any definition would imply that under a total disability a persons ability to work is significantly reduced or eliminated for the rest of his/her life.

Question 22

Social security was created to provide all of the following benefits EXCEPT
A Retirement income 
B unemployment income 
C survivors benefits 
D disability income

Answer 22

B unemployment income

Social Security is designed to provide protection against financial loss due to old age, disability, or death. It also provides income during retirement.

Question 23

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe? 
A residual disability 
B presumptive disability 
C dismemberment disability 
D partial disability

Answer 23

B presumptive disability

Presumptive disability is a provision that is found in most disability income policy which specifies the conditions that will automatically qualify the insured for full disability benefits.