Chapter 10: Disability Income Insurance Flashcards
The purpose of ______ ________ insurance is to provide disabled individuals with periodic income while they cannot work. This insurance prevents individuals from depleting their personal savings to afford the normal costs of living in addition to the medical expenses associated with disability.
disability income
TF: Disability income insurance covers individuals with earned income and their families
False - ONLY covers the income earning individual
Four characteristics of disability income coverage?
Periodic income benefits are paid to the insured.
Benefits are a stated dollar amount based on a percentage of the insured’s lost income.
Most disability income policies are guaranteed renewable to age 65.
Benefits are paid after an elimination period or “time deductible.”
Two most important factors in underwriting disability income policies?
The insured’s occupation
The insured’s earned income
Premiums for disability income insurance are calculated using _______ _______ that predict the frequency and length of claims.
Morbidity tables
5 factors affecting disability premiums? (gender and age matter two, but these 5 are different)
Insured’s occupation
Insured’s earned income
Policy’s definition of disability
Length of the benefit period
Length of the elimination period
The amount of each disability income benefit is based on a percentage of the insured’s income earnings, usually around ____ to _____
60% to 70%
TF: The benefits are not 100% of the income earnings because that would adversely motivate the insured to remain disabled.
True
To be eligible for disability benefits, a person must be?
Unable to perform their work duties
TF: To be eligible for disability benefits, a person must be under the care of a physician at the time the claim is made.
True
TF: the insurer may reject a claim if the policy calls for “appropriate” care and the insurer finds that the care was not sufficiently appropriate for the disability.
True
____ ____ of ______, or “income replacement contracts,” pays the insured a portion of their earned income while disabled.
Pure Loss of Income
TF: Income replacement contracts require the insured to endure a period of total disability before benefits are paid.
false - they do NOT
TF: Tom’s disability causes him to lose 20% of his income earnings for a month. The pure loss of income disability policy will compensate Tom for this 20% loss of income.
True
______ _______ is a condition in a disability income policy that permits the insured to be automatically eligible for total disability income benefits, regardless of their ability to work.
Presumptive Disability
These are all examples of ______ ______:
Loss of vision in both eyes,
Loss of use or dismemberment in any two limbs, or
Complete loss of hearing or speech.
Presumptive Disability
Two terms used to establish total disability?
Own Occupation
Any Occupation
_____ ______ disability income policies pay benefits when the insured cannot perform the duties of their own occupation. Coverage is limited to the first two years after the disability begins.
Own Occupation
_____ ______ disability income policies are more restrictive, requiring the insured to be unable to perform the duties of any occupation for which they are qualified based on education, practical experience or training.
Any Occupation
TF: Some disability income policies define total disability in terms of whether it came about due to an accidental injury or a sickness.
True
TF: Disability income policies use the medical definition of total disability that requires the insured to be confined to their home and under a physician’s care.
True
The amount of periodic disability income benefits is based on the insured’s:
Select one:
a. Medical conditions
b. Earned income
c. Place of residence
d. Dependents
B
The percentage of disability income benefits to the insured’s income is:
Select one:
a. 30 to 40%
b. 50%
c. 60 to 70%
d. 100%
C
Which of the following factors is not used to establish the cost (premiums) for disability income insurance?
Select one:
a. The insured’s occupation
b. The insured’s earned income
c. The policy’s benefit period
d. The insured’s sexual orientation
D
Which definition of total disability is most restrictive?
Select one:
a. Own occupation
b. Any occupation
c. All occupations
d. They are equivalent.
B
James is buying disability income insurance. This insurance will _________________.
Select one:
a. Pay death benefits
b. Pay medical providers
c. Pay medical expenses
d. Replace his income
D
The purpose of disability income insurance is to:
Select one:
a. Replace the insured’s income
b. Pay medical expenses
c. Pay medical providers
d. Pay death benefits
A
Which of the following definitions of total disability is most beneficial to the insured?
Select one:
a. Any occupation
b. Own occupation
c. Accidental means
d. Not enough information provided
B
Benefits under a disability income policy are provided until the insured reaches the age of:
Select one:
a. 59 1/2
b. 61
c. 62
d. 65
D
Susan receives income payments for a disability. Benefits are not based on Susan’s ability to perform work duties. Which policy does Susan have?
Select one:
a. Any occupation
b. Own occupation
c. Residual disability
d. Income replacement
D
Which is not used to determine the premium an insured must pay for their disability income policy?
Select one:
a. Life insurance policies
b. Earned income
c. Length of elimination period
d. Occupation
A
