Chapter 4

Question 1

Total Disability

Answer 1

For the first 24 months after a loss, the insured is unable to perform all the duties of their occupation

Question 2

Own Occupation

Answer 2

Insured is unable to perform any duties of their occupation due to sickness/accident

Question 3

Any occupation

Answer 3

Inability to perform any duties for which the insured is reasonably suited by education, training, or experience

Question 4

Presumptive Disability

Answer 4

Specifies conditions that will automatically qualify the insured for full disability benefits; provides benefits for dismemberment (loss of 2 limbs, vision, hearing, speech)

Question 5

Probationary Period for Disability Income

Answer 5

Waiting period from the policy issue date during which benefits will not be paid for illness related disabilities

Question 6

Elimination Period for Disability Income

Answer 6

Longer elimination period = lower premiums

Question 7

Additional Monthly Benefit

Answer 7

Approximately what Social Security would pay; lasts a year

Question 8

Social Insurance Supplement (SIS)

Answer 8

Pays a benefit in the amount that Social Security would pay but if Social Security does pay, SIS is reduced dollar for dollar by the Social Security benefit payment

Question 9

Occupational Coverage

Answer 9

Provides benefits for illness, injury, or disability resulting from accidents or sicknesses that occur on/off the job

Question 10

Nonoccupational Coverage

Answer 10

Only covers claims that result from accidents or sicknesses occurring off the job

Question 11

Partial Disability

Answer 11

The inability to perform one or more of the regular duties of one’s own occupation or the inability to work on a full-time basis resulting in a decrease of income

Question 12

Residual Disability

Answer 12

The type of disability income policy that provides benefits for loss of income when a person returns to work after a total disability, but is still not able to work the way they did prior to the disability; pays loss of earnings

Question 13

Future Increase Option/Guaranteed Insurability

Answer 13

Allows insured to increase benefit level to a specific predetermined amount at certain times or on certain occasions without proof of insurability

Question 14

Relation to Earnings

Answer 14

Benefits can be limited based on the average income over the last 24 months

Question 15

Accidental Death & Dismemberment

Answer 15

Pays for accidental losses only

Question 16

Group Disability Income Insurance

Answer 16

Disability benefit payments that are attributed to employee contributions are not taxable but benefit payments that are attributed to employer contributions are taxable to the employee; premium is deductible to employer

Question 17

Short-Term Disability

Answer 17

Elimination period could be as short as 0 days and the benefit period would be no longer than 2 years

Question 18

Long Term Disability

Answer 18

Lower wage employees are usually limited to 66 and 2/3% of monthly wage

Question 19

Business Overhead Expense

Answer 19

Does not compensate for salary, only income loss; elimination period of 15-30 days and benefit payments limited to 1 or 2 years; premiums tax deductible to business as a business expense; benefits received are taxable to the business

Question 20

Fully insured

Answer 20

40 quarters (10 years of work)

Question 21

Currently/Partially Insured

Answer 21

6 credits during 13 quarter period; benefits covered are death, entitled to disability insurance benefits, entitled to old age insurance benefits

Question 22

Waiting Period for SS

Answer 22

5 months for disability benefits; benefits begin at the beginning of the 6 month