Disability Flashcards
How do qualify for disability generally?
You have to meet the definition of the contract specifically - diff contracts use diff definitions
Any-Occupation
very restrictive - same as SS definition - only if you’re disabled severely enough that you cannot work “any occupation”
Any Occupation example
if a surgeon owns an 80% any occupation policy, injures his finger - he can still work as a consultant etc. so he wouldn’t qualify for “any occupation” coverage
Own Occupation
allows payment if you’re unable to do your own occupation
Own Occupation Example
Surgeon has 80% own occupation policy - injured finger. Say salary is 1 mil a year - can receive 800k as long as he is unable to perform his occupation
What happens after Own Occupation stops paying?
Benefits would only continue if you’re also unable to do a job you have the training/education/experience for
Presumptive Disability
presumes total disability even if you’re able to return to work a new job - these are major injuries - blindness, deaf, loss of hearing, loss of hands, feet or both
How do you qualify for presumptive disability?
You have to have a major injury like go blind, deaf, can’t hear, loss of hand/foot or both
Partial Disability
unable to do part of your job or do the job extremely slow - more severe the limitations the higher the $
Short Term Disability Insurance Policy
-usually 6 months or less
-most short term plans have no probationary period or if they do its 3 months or less
Long Term Disability Policy
-extended benefits, possibly lifetime
-usually disabled for longer than 6 months
-probationary period of 3 months to 1 year
Sick Leave Policy
-100% of pay - rarely exceeds 6 months
-say workers comp covers 60% - sick leave policy would cover the other 40%
Elimination period for short term plan
-typically 1-7 days
-benefits usually max 2 years
Elimination for long term plan
-typically 3-6 months
-benefits 2 years or longer, possibly lifetime
Can you get disability if you’re retired or unemployed?
No
How do you determine how much short/long term disability you need?
Needs analysis
Disability Coordination with Other benefits
To minimize you earning more than what you were being paid - coordination with other benefits like workers comp, SS, other insurance plans
Disability COLA
policy w/inflation adjustment - prevents erosion of purchasing power
What should you do as your income increases re:disability policies
Purchase new ones
If co has more than 15 employees what are they required to include in disability policies
pregnancy
Grace period for a disability policy to be reinstated automatically
15 days
How does age factor into premium payments on disability
the lower the age the lower the premiums can be locked in
Are premiums deductible in an individual disability policy?
No
Are individual disability benefits taxed?
Benefits are not taxed and premiums are not deductible
With option A universal life, what does the death benefit include?
the cash accumulation fund
With option A Universal life, mortality charges are based on what
Net amount at risk
What is the net amount at risk in universal life option A
face amount of the policy minus the accumulation fund
How long must you own a policy before you can get a viatical settlement?
2 years
What must you give the company access to if you apply for a viatical settlement?
Access to your medical records
If dividends received exceed the premiums paid for a life insurance policy, how are they taxed?
Ordinary income
Partial loans and surrenders of MECS are taxable on what basis?
LIFO
Partial loans and surrenders on non-MECs are taxed how?
FIFO
Once a life insurance policy becomes a MEC, how can you convert it to a Non-MEC?
You can’t, there is no way to reverse the tax treatment
What are 2 types of buy sell agreements?
Cross purchase, entity purchase
2 ways to calculate an individuals insurance needs
Human life value method
needs analysis method
Restrictive underwriting results in higher or lower claims?
Lower, think restrictive, lower
Residual disability provision covers what
if you have to work fewer hours due to partial disability
