Chapter 7

Question 1

what 3 types of disability benefits that can typically be provided by an insurance company?

Answer 1

1. waiver of premium for disability benefit
2. waiver of premium for payor benefit
3. disability income benefit

Question 2

what is the most common supplemental benefit that may be added? define it

Answer 2

waiver of premium for disability benefit.
The insurer promises to give up (waive) its right to collect premiums that become due while the insured is totally disabled. Note there is typically a 3-6 month period between the moment of disability and the time in which you can claim the benefit.

Question 3

define disabled in terms of a total disability claims

Answer 3

the inability to preform the essential duties of her own occupation or any other occupation for which she is reasonable suited by education, training or experience.

Question 4

Do total disability waivers come with universal and variable universal life insurance policies

Answer 4

No, since the premiums vary. It typically has a waiver of cost of insurance benefit- (monthly deduction waiver benefit) that waives most periodic charges.

Question 5

what is a waiver of premium for payor benefits?

Answer 5

Designed for third-party policies. Which provides that the insurance company will waiver its right to collect a policy’s renewal premium if the policy owner dies or becomes disabled.

Question 6

when is a waiver of premium for payor benefit usually added?

Answer 6

usually as a rider to a juvenile insurance policy, where its paid on the child by the parent. In this case the premium is usually only waived until 18 or 21.

Question 7

a waiver of premium for payor benefit generally includes a two-part definition of total disability. define this.

Answer 7

during first two years, the owner is considered totally disabled if she is unable to perform the essential duties of occupation. After, the owner is considered totally disabled if she is unable to preform the essential duties of nay occupation for which she is reasonably suited for.

Question 8

what is the disability income benefits?

Answer 8

provide monthly income benefit to the policy-owner if he becomes totally disabled while the policy is in force.

Question 9

how is the disability income benefit typically calculated?

Answer 9

its a stated percentrage of the policy’s face amount. Some state a maximum benefit amount payable or maximum benefit period, or both.
Typically the premiums charged for the income disability benefit and the WP, are both waived during the total disability period.

Question 10

What is an accidental death benefit ?

Answer 10

A supplemental benefit that provides a death benefit in addidion to the policies basic benefit if the insured dies as a results of an accidnet.
typically expired @ 65-70

Question 11

What is the term used when the faceamount of the Accidental benefit is the same as the basic death benefit?

Answer 11

Double indemnity benefit.

Question 12

there are some typical exclusions to the accidental death benefit. What are certain accidents not typically covered?

Answer 12

1. self-inflicted injuries
2. war-related accidents
3. aciation-related accident, if the insured acted in a capacity other than passanger.
4. accidents occurred during the acts of a crime.

Question 13

what is an accidental death and dismemberment benefit? (ADD)

Answer 13

an accidental benefit that also provides a dismemberment benefit payable if an accident causes the insured to lose any two limbs or sight in both eyes. Sometimes half the payout is available if the insured loses one eye or limb.

Question 14

Define the term loss of limb in terms of ADD benefits?

Answer 14

the actual physical loss of the limb or as the loss of the use of the limb.

Question 15

what is an accelerated death benefit? (living benefit)

Answer 15

provides that a policy owner may elect to receive all or part of the polcy’s death benefit before the insured death if certain conditions are met.
- the amount is deducted from the death benefit, and is usually only available on large face amount policies

Question 16

what are the 3 commonly ordered types of accelerated death benefits?

Answer 16

1. terminal illness benefit
2. dread disease benefit
3. long-term care benefit

Question 17

Define the terminal illness benefit

Answer 17

the insurer pays a portion of the policy’s death benefit to a policy-owner who suffers from a terminal illness and has a physician-certified life expectancy of less than a stated time (12-24 months).

Question 18

what is the payout on a terminal illness benefit

Answer 18

generally the maximum TI benefit is a percentage (25-75) of the faceamount up to a stated maximum. Usually the payment is paid in a lump sum.

Question 19

does the payment on a TI benefit have to be used for medical expenses?

Answer 19

no

Question 20

how is the premium for a TI benefit calculated?

Answer 20

usually paid for by an administrative charge that the insurer assesses when a policy owner elects to exercise the benefit.

Question 21

what is a dread disease benefit (DD)>

Answer 21

its also known as a CI benefit (critical illness). its an acelerated death benefit under which the insurere agrees to pay a portion of the policies face amount to the policy ownder if the insured suffers from one of a number of specified diseases.

Question 22

what typical insurable events qualify under the DD benefit?

Answer 22

1. life-threatening cancer
2. coronary artery bypass
3. MI
4. stroke
5. end-stage renal failure
6. AIDS
   - may include vital organ transplant and alzheimers disease.

Question 23

Define the long-term care insurance benefit (LTC)

Answer 23

accfelerated death benefit under which the insurer agrees to pay a montly benefit to a policy owner if the insured requires constant care for a medical condition.

Question 24

what is the payout on a LTC benefit?

Answer 24

the payment is generally equal to the stated percentage of the policies facfe amount. The premiums are typically waived on both thye LTC and the basic life policy during the Long term care period.

Question 25

is there a waiting period in terms of payout on LTC benefits?

Answer 25

yes, generally 90 days, some benefits also require that the LTC coverage must be in force for a given period of time, usually 1 year or more, before they can qualify for the LTC benefit.

Question 26

what is a spouse insurance ride?

Answer 26

supplemental benefit that provides term life insurance coverage on the spouse. Usually sold on the basis of coverage units, (5K$).. Some one usually can buy 5-10 units per person (~25-50K)

Question 27

define a childrens insurance tider

Answer 27

supplemental benefit that provides term insurance on the children. Like the spouse insurance rider, coverage is sold on units (1k-2k).

Question 28

what term is given to the insurance rider that offer spouse and children coverage on a base plan?

Answer 28

family insurance rider, or spouse and children rider

Question 29

what is the premium on a child insurance rider?

Answer 29

the premium charged for each coverage unit is a stated amount, regardless of the number of children covered.

Question 30

what is the time period (ages) in which a typical child insurance rider is offered

Answer 30

15 days- 21 or 25 years old. but some will coffer conversion priviledges that allow children to convert to term when they become policy owners.

Question 31

what is a second insured rider? (optional insured rider)

Answer 31

a supplemental life insurance policy benefit that provides term insurance coverage on the life of a person other than the policy insured.
-covered under the insured and is usually a spouse or another relative, or business partner. These people are individually assessed by u/w

Question 32

what options are available to policy owners who would like to increase the amount of his insurance but is no longer insurable at that time.

Answer 32

two additional benefits that are available without having to provide evidence at the time of purse. Guarenteed insurability and paid0ip additional options benefit.

Question 33

what is the guaranteed insurability benefit (GI/ GIO)?

Answer 33

give policy-owner the right to purchase additional insurance at the same type as the basic life insurance policy for an additional premium amount on specified option dates during the life of the policy without having to provide evidence.

Question 34

How is the premium calculated for a GI or GIO?

Answer 34

based on the insured attained age when the additional insurance is purchased.
The amount of coverage is usually limited to the policy facfeamount or to an amount specified on the rider. (whichever is less) .

Question 35

is their an expiry to a GIO benefit?

Answer 35

usually is exercised only until the insured reaches age 40.

Question 36

what is a paid-up additions option benefit?

Answer 36

allows the owner of a whole life policy to purchase sinfle-premium paid-up additions to the policy on stated dates in the future without providing evidence of the insured insurability.

Question 37

how are the premiums for a paid-up addition option benefit calculated?

Answer 37

bawsed on the insured attained age at the time the paid-up options are purchased. usually if the option is not exercised for a number of stated years, then the rider will terminate. At the time, the ones purchased stay in place, but the owner can no longer exercise the option to buy new ones.