Chapter 16 Flashcards
Accidental Means
This describes an unforeseen, unexpected, or unintended event that results from an action that was not deliberately undertaken.
Accidental Results (Accidental Bodily Injury)
This is an unintended consequence of an action that the insured takes, even if undertaken voluntarily. Policies that use the accidental bodily injury provision are referred to as ‘accidental results’ policies because they only require for the result of the injury to be unexpected and unintended.
Additional Monthly Benefit (AMB)
The AMB rider can supplement employer-provided disability benefits, cover gaps in Social Security Disability Insurance (SSDI), or help pay for extra initial expenses if a person becomes disabled.
Any Substantial Gainful Work
This phrase is an essential part of the Social Security definition of disability. The law defines disability as the inability to do any substantial gainful work due to any medically determinable physical or mental impairment which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months.
Any Occupation
For a policy to provide disability income benefits, the definition of total disability requires the insured to be unable to perform any job for which that insured is ‘reasonably suited by reason of education, training, or experience.’
Benefit Period
This is the maximum length of time during which a benefit can be paid. The longer the benefit period, the higher the cost (premium) of the policy.
Business Overhead Expense (BOE) Insurance
This form of insurance reimburses the insured company for business expenses and payroll costs if the business owner/operator becomes disabled.
Capital Sum
This is the accidental death and dismemberment policy benefit that’s paid if the insured suffers a dismemberment.
Cash Surrender Value Rider
This rider returns all premiums to the policy owner at age 65 if no claims have been made.
Change of Occupation Provision
This provision allows the insurer to reduce the maximum benefit that’s payable under the policy if the insured switches to a more hazardous occupation without informing the insurer.
Concurrent Disability
This applies when multiple events are involved in causing the same disability. A person may also experience a loss that fits more than one definition of disability.
Confined Disability
Some disability policies may differentiate benefits based on whether the insured is confined at home or in a hospital.
Coordination of Benefits
This is the process that’s used to determine the order in which insurance companies pay a claim.
Cost of Living Adjustment (COLA) Rider
This rider provides an automatic increase in benefits (typically tied to the Consumer Price Index, or CPI) in order to offset the effects of inflation.
Credit Disability Insurance
This type of policy makes payments on a loan when an insured borrower becomes disabled.
Decreasing Term Disability Policy
These contracts cover a fixed period that starts on the date they’re issued. As the time elapses, the remaining number of potential monthly benefit payments also decreases until it reaches zero.
Delayed Disability Provision
This provision applies to a disability income policy which allows a certain amount of time after an accident for a disability to result, during which the insured remains eligible for benefits.
Disability Buyout Plan
This is a form of a buy-sell agreement that’s funded by insurance policies.
Disability Income Rider
On a life insurance policy, this rider converts 1% of the policy face amount into a disability benefit, which is payable if the insured becomes totally disabled.
Elimination Period
This is a duration of time between the beginning of an insured’s disability and the commencement of the period for which benefits are payable.
Federal Insurance Contributions Act (FICA) Taxes
These are payroll taxes that are paid by both employees and their employers and are used to fund Social Security.
Flat Amount Approach
With this approach, even if the insured’s earnings change, the policy benefit remains the same unless the insured purchases a rider that can be used to change the benefit.
Fully Insured
This term is used by the Social Security Administration to describe individuals who are eligible for Social Security retirement and disability benefits.
Guaranteed Insurability Rider
This rider guarantees an insured’s insurability and gives the insured the right to buy additional amounts of disability income coverage at predetermined times in the future without proof of good health.
Guaranteed Renewable
This provision states that the insurer must renew an insurance policy up to the established termination age unless the insured fails to pay the premium.
Hospital Confinement Rider
This rider pays an additional benefit for each day that an insured is in the hospital over and above the basic policy benefit.
Impairment Waiver
This rider is also referred to as a waiver for impairments.
Income Replacement Contract
This contract defines disability as a loss of income and uses that method to determine disability.
Key Employee Insurance Policy
This type of policy indemnifies an employer if it loses a key employee’s services.
Lifetime Extension Rider
This rider extends the benefit period beyond the age of 65.
Long-Term Disability Insurance Policy
This is a disability income insurance policy that’s characterized by monthly benefit payments and a benefit period of two or more years.
Loss of Earnings Test
This test requires a loss of income for there to be a compensable claim.
Material Duties
This refers to the actual tasks or activities that a person must complete in the course of doing her job.
Morbidity
This measures the risk of becoming disabled and can factor in personal as well as occupational circumstances.
Natural Group
This is a group that’s formed for a legitimate purpose other than to purchase group insurance.
Non-Cancelable
This provision states that the insurer must renew an insurance policy up to the established termination age unless the insured fails to pay the premium.
Non-Disabling Injuries
This benefit applies to injuries, which may have been the result of an accident, but are not necessarily disabling.
Non-Occupational Coverage
This is coverage that is provided by a disability income policy that doesn’t provide benefits for losses occurring due to the insured’s employment.
Occupational Coverage
A disability income insurance policy that provides occupational coverage will pay a monthly benefit for job-related disabilities as well as non-occupational losses.
Own Occupation
This term applies when determining a person’s disability.
Partial Disability
This occurs when an illness or injury prevents an insured from performing one or more (but not all) of the key duties of the insured’s own occupation.
Percentage of Earnings Approach
This approach is most commonly used in group insurance contracts.
Permanent Disability
This term is used in Workers’ Compensation to describe a condition that’s considered to be permanent in nature.
Presumptive Disability
This is a disability that provides for the payment of disability benefits if an insured experiences the level of direct physical harm that’s specified in the policy.
Primary Insurance Amount (PIA)
This is the basic monthly benefit that’s available to covered individuals.
Principal Sum
This is the accidental death and dismemberment policy benefit that’s paid if the insured dies due to a covered accident.
Probationary Period
This is a specified number of days (typically from seven to 30) beginning on the effective date of an insurance policy.
Pro-Rata
This refers to the ways that multiple insurers share responsibility for a claim they both cover.
Recurrent Disability Provision
This is a disability income policy provision that specifies a period during which the reoccurrence of a disability is considered a continuation of a prior disability claim.
Rehabilitation Benefit
This benefit facilitates vocational training to prepare an insured for a new occupation.
Relation of Earnings to Insurance
This clause applies when a person has more than one policy that covers the same disability claim.
Residual Disability
This is related to the proportional disability benefit that a person collects while working less than full time and suffering an income loss of at least 20%.
Return of Premium Rider
This rider refunds the insured’s premiums (dollar for dollar without interest) if the insured doesn’t file a claim.
Short-Term Disability Insurance
This is a disability income insurance policy that’s characterized by weekly benefit payments and a benefit period of no more than two years.
Social Security Disability Income (SSDI)
This is available to individuals who meet the definition of being fully insured and qualify for Social Security Disability Income benefits.
Social Security Rider (Social Insurance Supplement or Social Insurance Substitute)
This supplement pays a monthly disability benefit when the insured applies for social insurance, and the social insurance benefit is either delayed, denied, or less than the amount of the rider.
Substantial Duties
This refers to a person’s essential capabilities which make it possible to do her job.
Temporary Disability
This is used in Workers’ Compensation to describe a condition that’s considered to be potentially temporary in nature unless re-evaluated at the end of the prescribed temporary benefit period under state law.
Waiver of Premium
This is activated when an insured is disabled and begins receiving benefits.
Workers’ Compensation
This is a form of liability insurance that provides benefits to workers who are harmed by work-related occurrences.
