chap.4 Flashcards
Q: What entity regulates workers compensation benefits?
A: State government
Q: What type of health insurance covers partners or corporate officers of a closely held business?
A: Disability buy-sell
Q: What is the primary purpose of disability income insurance?
A: To replace income lost due to a disability
Q: What are the four types of workers compensation benefits?
A: Medical, income, rehabilitation and death benefits
Q: What type of health insurance is sold to small business owners to reimburse them for the overhead expenses?
A: BOE - Business Overhead Expense insurance
Q: What type of insurance covers an employee who is hurt on the job?
A: Workers compensation
Workers compensation insurance covers a worker’s medical expenses resulting from work related sickness or injuries and covers loss of income from
Work-related disabilities.
Q: What does the amount of disability benefit that an insured can receive depend on?
A: The insured’s income at the time of policy application
Q: What is the purpose of a buy-sell agreement for health insurance policies?
A: To specify how the business will pass between owners when one of them dies or becomes disabled
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
Disability Buy-Sell
Q: With key person disability insurance, who pays the policy premiums?
A: The business (employer)
Q: What benefit is based on a primary insurance amount (PIA)?
A: Social Security disability benefit
Q: How can an AD&D policy be written?
A: As a rider to a health insurance policy, or as a separate policy
Q: What type of disabilities will be covered by occupational coverage?
A: Disabilities that result from accidents or illnesses that occur on or off the job
Q: What portion, if any, of the individual disability income policy benefits are taxed to the insured?
A: Disability benefits are not income taxable.
Q: What type of health insurance would pay for hiring a replacement for an important employee who becomes disabled?
A: Key-person disability insurance
Q: What is another name for Old Age, Survivors, and Disability Insurance benefits?
A: Social Security
What is the official name for the Social Security program?
Old Age Survivors Disability Insurance
Q: What is the term for a period of time immediately following a disability during which benefits are not payable?
A: Elimination period
Q: A waiver of premium provision may be included with what type of health insurance policies?
A: Disability Income
Q: 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?
A: Premium will be refunded
Q: How does someone qualify for Social Security disability income benefits?
A: The insured must have the proper insured status (such as fully insured), meet the definition of disability, and satisfy the waiting period
Q: What is a presumptive disability provision?
A: Provision found in most disability income policies that specifies the conditions that will automatically qualify for full disability benefits
Q: What is your own occupation disability?
A: Insured’s inability to perform duties of his or her current job or an occupation for which the insured is educated and trained
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?
6 credits
An insured owns a medical expense policy that he purchased for his family. The insured’s employer purchased a Group Disability Income policy for the insured and all eligible employees. The insured subsequently suffered an accident on the job that left him unable to work for four months. If the insured receives benefits from his disability income policy, which of the following would be true?
Benefits received that are attributable to employer contributions are fully taxable to the employee as income.
In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is
Broader in general.
An insured severely burns her hand, but is not classified as disabled. Which of the following types of coverage would cover at least a portion of the insured’s medical expenses?
Medical reimbursement benefit
Under a disability income policy, the insurer does not pay a monthly benefit that is equal to the insured’s previous income. The reason for paying a benefit amount that is less than the insured’s income is to
Prevent overutilization and malingering.
All of the following statements concerning workers compensation are correct EXCEPT
A worker receives benefits only if the work related injury was not his/her fault.
Benefit periods for individual short-term disability policies will usually continue from
6 months to 2 years.
What is the number of credits required for fully insured status for Social Security disability benefits?
40
In which of the following cases would an “any occupation” disability income policy pay the benefits?
The insured is unable to perform any jobs in the field related to the insured’s education and experience.
In which of the following health plans are benefit payments attributed to employer contributions taxable to the employee?
Group Disability Income
Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen?
The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment.
An insured has a Social Insurance Supplement rider in her disability income plan. Following a disability, she begins receiving benefit payments from the insurer. She then begins receiving Social Security benefits that are smaller than the SIS benefit payments. At that point, her insurer ends the SIS benefit payments. Which of the following best describes the situation?
The insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit.
A small business owner is the insured under a disability policy that funds a buy-sell agreement. If the owner dies or becomes disabled, the policy would provide which of the following?
Cash to the owner’s business partner to accomplish a buyout
What is the shortest possible elimination period for group short-term disability benefits provided by an employer?
0 days
If an insured worker has earned 40 quarters of coverage, the worker’s status under Social Security disability is
Fully insured.
An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?
Full benefits
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?
2 years
Under which of the following disability income plans would the benefits be subject to income tax?
Group
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
Have attained fully insured status
All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT
Being age 65.
In the event of a loss, business overhead insurance will pay for
Rent.
Any occupation disability typically means that an individual is unable to perform the duties of the occupation for which he/she is suited by all of these EXCEPT
Preference.
A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?
Business overhead expense policy
Which of the following statements regarding Business Overhead Expense policies is NOT true?
Benefits are usually limited to six months.
Income replacement contracts agree
To replace the insured’s income up to a stated percentage if the insured suffers a loss due to a covered accident or sickness.
Income benefits in a disability income policy are characterized by all of the following EXCEPT
The amount to be paid is unlimited.
Which statement accurately describes group disability income insurance?
The extent of benefits is determined by the insured’s income.
A Waiver of Premium provision may be included with which kind of health insurance policy?
Disability Income
The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called
Cost of Living (COLA).
A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called
Business Overhead Expense.
If an individual is covered by a policy that includes an Accidental Death & Dismemberment rider, what term describes the maximum benefits he will receive if he loses sight in both eyes as a result of a fire?
Principal sum
What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider?
1 year
If an employer provides long-term group disability insurance for its employees, what percentage of monthly wages are lower-paid employees eligible to collect?
66 and 2/3%
Which of the following is considered a presumptive disability under a disability income policy?
Loss of two limbs
How is the amount of Social Security disability benefits calculated?
It is based upon the worker’s Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years.
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?
Presumptive disability
A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?
15 days
Under workers compensation, which of the following benefits are NOT included?
Legal benefits
If a business wants to buy a disability income policy on a key employee, which of the following is considered the beneficiary?
The employer
Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this?
A construction worker pays a higher premium and receives a poorer classification of disability.
In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least
12 months.
Which of the following statements about occupational vs. nonoccupational coverage is TRUE?
Disability insurance can be written as occupational or nonoccupational.
All of the following benefits are available under Social Security EXCEPT
Welfare benefits.
Which of the following occupations would have the lowest disability insurance premiums?
Personal Trainer
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?
Business Disability
Social Security was created to provide all of the following benefits EXCEPT
Unemployment income.
According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase an insured’s benefit level?
Death of a spouse
