Ch.2- Sources Of Income Protection

Question 1

Individual disability insurance

Answer 1

• direct btwn applicsnt/insured/life insured
• PH is usually premium payor, life insured, AND beneficiary
• premiums: not deductible for tax

Question 2

Group disability ins

Answer 2

• provided to many ppl (plan members) in same group
• employer = PH
• employee = life ins + Ben

Question 3

Creditor insurance

Answer 3

• offered by commercial lenders (creditors) to make loan pmts in case borrower becones disabled/cant work
• usually thru lending inst (mortgagee) on life of borrower (mortgagor) to ensure monthly pmts

Question 4

Mortgage ins VS individual ins

Answer 4

Mortgage ins:
- ensures mthly mortgage pmts
- LESS: expensive /underwriting/ flex (only for mort.)

Individual ins:
- gets mthly pmt to pay for things
- MORE: expensive/ underwriting/ flex.

Question 5

Types of individual policies (CNNGG)

Answer 5

C- Cancellable
N- Non Cancellable
N- Non traditional
G- Guaranteed Renewable
G- Guaranteed Issue

Question 6

Cancellable (type of individual policy)

Answer 6

• Fewest guarantees
• can be modified, benefits reduced, premiums increased by insurers anytime w/o consent
• lower oremium
• for high risk occ or ppl declined

Question 7

Non-Cancellable (tupes of individual policy)

Answer 7

• also called “guarsnteed renewable”
• highest level of guarantees
• INSURER CANNOT: cancel policy, inc premium, benefits reduced/modified
• insurer myst renew till age 65
• @65 PH can convert to guarantee renewable w/o medical

Question 8

Non traditional (types of individual policies)

Answer 8

• mostly for self employed/ contract workers
• a+s is seperares in policy – gets 1 or other not both
• definition of disability: inability to perform soecified functions, inability to ear a % of regular income
• unemployed: inability to seek new contracts

Question 9

Guaranteed renewable (types of individual policies)

Answer 9

• insurer mustvrenew policy till maturity of policy
• Insurer CAN modify premiums w/o consent
• changes apply to whole group

Question 10

Guaranteed issue (types of individual policies)

Answer 10

-groups in low risk occ
- restrictions based on size of group, occ class of group, min premium, avg age of group
- 2 forms:
1.) guaranteed std risk: issues coverage w/o restrictions /ratings
2.) guaranteed to issue : will issue some coverage even if isnt exact what applied for, full medical, may have rstings and exclusions

Question 11

Individual policy benefits

Answer 11

Risk: insured will act diff bc has ins (i.e wont go back to work

Minimize risk: ensure that insured wont be better off financially when file claim, dont pay more rhan 60% of net pre tax pre disability income , and ongoing unearned income reduces benefits

Waiting period: 90 days
Benefit period: each instance of disability treated diff, full benefit could apply to each

Question 12

Exusions /limitations (WTSSIP) - individual policy benefits

Answer 12

War
Terrorist acts
Self inflicted injuries
Suicide attempts
Illegal activities
Pregnancy

Question 13

Denial of benefits MFAAD ( individual policy benefits)

Answer 13

• Misstatement of material fact
• Fraud
• Absence of LOSS
• Absence of PROOF
• delay in filing claim

Question 14

Misstatement of marerial fact (reasons for denial)

Answer 14

• contestanility period/ w/in 2 yrs, policy can be voided if discovered insured made false stmt or dailed to share info

Question 15

Fraud (reaons for denial)

Answer 15

Purposely misstated ot failed to disclose to rey and deceive ins co

Uns co can void policy anytime

Question 16

Absence of LOSS (reaons for denial)

Answer 16

No evidence of loss of income

Question 17

Absence of PROOF

Answer 17

Disability must be proven medically from a doctor

Question 18

Delay in filing claim (reasons for denial)

Answer 18

Usually must be filled w/in 90 days of disabling condition

Question 19

Rehanbilitstion benefit

Answer 19

Includes but not limited to:
- physio
Occupational training
Medical treatment
Psychotherapy
Etc