Chapter 3: Disability Income Insurance

Question 1

An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT:

Answer 1

medical history
gross income
occupation
**spouse’s occupation

Question 2

A physician opens up a new practice and qualifies for a $7,000/month disability income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?

Answer 2

Guaranteed insurability option rider

Question 3

In a disability income policy, which of these clauses acts as a deductible?

Answer 3

elimination period

Question 4

When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?

Answer 4

Residual disability

Question 5

D is an architect receiving disability income benefits who is not able to return to work full time, but can work on a part time basis. Which of these features would allow D to continue receiving benefits?

Answer 5

residual benefit clause

Question 6

B is a teacher who was injured in a car accident and cannot work. She is now receiving monthly benefits as a result of this accident. Which type of policy does B have?

Answer 6

disability income

Question 7

Which of these statements concerning an individual disability income policy is TRUE?

Answer 7

Normally includes an elimination period

Question 8

Z owns a disability income policy with a 30 day elimination period. Z contracts pneumonia that leaves him unable to work 1/1 until 1/15. Z then becomes disabled from an accident on 2/1 and the disability lasts until 7/1 the same year. Z will become eligible to receive benefits starting on

Answer 8

March 1

Question 9

What is the elimination period of an individual disability policy?

Answer 9

time period a disabled person must wait before benefits are paid

Question 10

T was insured under an individual disability income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?

Answer 10

The insurer will rescind the policy, deny the claim, and recover all payments made

Question 11

Disability policies do NOT normally pay for disabilities arising from which of the following?

Answer 11

War

Question 12

An insured owns a disability income policy with a 30 day elimination period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3.5 months, what is the MAXIMUM amount he would receive for an approved claim?

Answer 12

$1,250

Question 13

When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?

Answer 13

recurrent disability

Question 14

N is covered under an individual disability policy with a 30 day elimination period and a monthly benefit of $500. N is totally disabled for 3.5 months. N’s total benefit received on this claim is:

Answer 14

$1,250

Question 15

R becomes disabled and owns an individual disability income policy. When is R eligible to receive disability benefits?

Answer 15

Upon satisfying the elimination period requirement

Question 16

R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?

Answer 16

residual disability