Chapter 4 - Disability Income and Related Insurance Flashcards
A period of time during which benefits are paid under the policy
Benefit period
A portion of the principal sum of a health insurance policy; paid for accidental dismemberment of loss of sight in one eye
Capital Sum
Salary, wages, or commissions; but not income from investments, unemployment benefits and similar sources of income
Earned Income
Insurance that exceeds in amount the actual value of the person or property insured or insurance in a greater amount than the insured can afford
Overinsurance
The amount of coverage paid for an accidental death under a health insurance policy
Principal Sum
Fully insured or currently insured, depending on the number of coverage credits earned.
Social Security Disability Insured Status
A qualified expense that may reduce the amount of income subject to taxation
Tax Deductible
Subject to taxation
Taxable
Inability of the insured to perform any occupation for which he or she is reasonable suited by reason of education, training, or experience
Total disability
Relinquishment of a right or Interest
Waiver
Replaces lost income in the event of disability and no longer being able to work
Disability Income
Disability Income benefits are based on a _____ of past income. Typically an average wage of 24 months from time of incident.
Percentage
Disability income benefits pay at a percentage (never in full) of current income to incentivize you to _____
return to work
Total disability will have varying descriptions from one ______ to a next
company
Inability to perform either any gainful occupation or the major duties of the insured’s regular occupation or an occupation for which the insured is qualified by education or experience
Total Disability
a disability policy that is more favorable to the insured
any occupation
A disability policy that reduces the insurers liability
own occupation
Inability to perform on or more of the regular duties of ones occupation or inability to work on a full-time basis
Partial disability
Partial disability benefits are typicall ___ % of total disability benefit
50
Partial disability is limited to a certain _______ of _____
Period of time
Partial disability benefits are paid in a ____ of _____ amount
flat or residual
specifies conditions that will automatically qualify the insured for full disability benefits
- provides benefits for dismemberment
- Total and permanent blindness
- loss of speech
- loss of hearing
Presumptive disability
loss of use of any two limbs
dismemberment
It is presumed that this disability will not be reversed and waives the need to go see a doc every 6 months to determine continued disability
presumptive disability
specifies conditions that will automatically qualify the insured for full disability benefits
Presumptive disability
specifies the period of time during which the recurrence of an injury or illness will be considered a continuation of a prior period of disability.
- requiring no new elimination period
- Usually 3-6 months
Recurrent disability
Provides benefits for loss of income when a person returns to work after a total disability but is unable to work as long or at the same level as he or she could before becoming disabled
Residual Disability
When does disability begin?
on the date of the event the caused the disability
The period of time you must wait before you begin to get paid on your disability
elimination (waiting) period
Longer elimination period = _____ premium
lower
Longer benefit period = ______ premium
higher
Are there benefits for short term disability within disability income policy?
No
Disability income policy will pay to a ____ years or the the age of _____
limited or maximim / 65
in the event of a permanent or total disability, premiums will be _____ for the duration of the disability
Waived
How long must you typically be disabled to receive waiver of premium
usually 3-6 months
Waiver of premium is ______ if necessary. The premium paid during the waiting period must be paid but then is reimbursed.
retroactive
a feature Included with guaranteed renewable and noncancellable disability income policies
Waiver of premium
If you qualify for ssi your waiting period is
5 months
social security benefit is base on your _____
PIA - principal insurance amount
Social security disability benefits _____ when you either retire, benefits start or when your disability ends.
stop paying
Business disability that covers expenses for hiring and training replacement - Business is owner and beneficiary.
Key Person
Business disabiliity specifies how the business will pass between owners in the event of disability of one owner / lump-sum benefit for a buyout
disability buy-sell
business disability that pays for rent, utlities, employee, salaries, etc. - meant for small business
business overhead expense
What portion, if any, of the individual disability income policy benefits are taxed to the insured?
disability benefits are not income taxable
Provision found in most disability income policies that specifies the conditions that will automatically qualify for full disability benefits
presumptive disability provision
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?
Premium will be refunded
What does the amount of disability benefit that an insured can receive depend on?
The insured’s income at the time of policy application
With key person disability insurance, who pays the policy premiums?
The business / employer
What type of health insurance would pay for hiring a replacement for an important employee who becomes disabled?
key-person disability insurance
What type of health insurance is sold to small business owners to reimburse them for the overhead expenses?
BOE - Business overhead expense insurance
Insured’s inability to perform duties of his or her current job or an occupation for which the insured is educated and trained.
Own Occupation Disability
What type of disabilities will be covered by occupation coverage
Disabilities that result from accidents or sickness that occur on or off the job
What type of insurance covers an employee who is hurt on the job?
Workers compensation
What is the term for a period of time immediately following a disability during which benefits are not payable?
Elimination period
What entity regulates workers compensation benefits?
State government
Specifies how the business will pass between owners when one of them dies or becomes disabled.
Buy-Sell agreement
What benefit is based on a primary insurance amount (PIA)
Social Security disability benefit
What is another name for Old Age, survivors, and disability insurance benefits?
Social Security
A waiver of premium provision may be included with what type of health insurance policies?
Disability Income
How can an AD&D Policy be written?
As a rider to a health insurance policy, or as a separate policy
How can an AD&D Policy be written?
As a rider to a health insurance policy, or as a separate policy
What are the four types of workers compensation benefits?
Medical
income
rehabilitation
death benefits
How does someone qualify for social security disability income benefits?
The insured must have the proper insured status (such as fully insured), meet the definition of disability, and satisfy the waiting period
What is the primary purpose of disability income insurance?
To replace income lost due to disability
specifies period of time during with the recurrence of an injury or illness will be considered a continuation of a prior disability
recurrent disability
Period after the policy starts during which benefits wont be paid for illness related disabilities
probationary period
Length of time monthly disability benefit payments last
benefit period
Maximum benefits an insurer is willing to accept for an individual risk; based on a percentage of insured’s past earnings
benefit limitations
What are the two types of group dissability
Short term disability and long term disability
benefit period no longer than 2 years
short term disability
elimination period may last as long as the benefit period for short term.
- benefit period may last until age 65
- usually reserved for management employees
Long term disability
to qualify for social security benefits must have ___ credits in the ___ quarter period
6 / 13
To qualify for social security benefits there is a ___ month waiting period
5
to be covered by workers comp you must work in an occupation that is ______
covered by workers comp
benefits paid in response to work related injuries
workers comp
fault or negligence may not be a factor in being eligible for ____
workers comp
what 4 kind of benefits are paid out by workers comp
medical, income, death, and rehab
In disability income insurece, the own occupation definition of disability applies for the first ______ of a disability
2 years
coverage will apply only if the insured cannot find any means of income whatsoever. This is more or less strict than the other option.
Any Occupation - More strict
When a person merely has to prove that they cannot perform the job for which they were previously trained
Own occupation - less strict
In a plan funded entirely by the employer, income benefits are included in the employee’s _______ and taxed as ordinary _____
gross income; income
coverae provided by a disability income policy that does not pay benefits for losses occuring as the result of the insureds employment
nonoccupational coverage
if a policy is rated-up the _____ increases
premium
What is the maximum period that an insurer would pay benefits in accordance with an additional monthly benefit rider?
1 year
Stipulates that the insurer will pay benefits comparable to what social security would pay. After a years’ time the insurer ends the benefit and assumes that social security will then begin benefit payment.
additional monthly benefit rider
True or False: Group disability income coverage applies both on and off the job
False; employees on the job are covered by workers comp.
A worker is _____ insured under social security if the worker has accumulated the required number of credits based on his/her age
fully
A provision that is found in most disability income policies that specifies conditions that will automatically qualify the insured for full disability benefits, such as the loss of two limbs
presumptive disability
Under own occupation, if the insured cannot perform his or her current job for a period of up to ______, disability benefits will be issued, even if the insured would be capable of performing similar job during that two year period. After that, if the insured is capable of performing another job utilitzing similar skills, benefits will not be paid.
own occupation
True or False: General disability policies covers losses caused by war, military service, intentional self inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit suicide
False
