Disability

Question 1

Conditionally Renewable

Answer 1

A provision of disability policies that give the insurer the right to non-renew a policy . Ex. policy may say that insurer may not renew contract if the insured is not employed at age 65.

Question 2

Convertability

Answer 2

A provision of disability policies where a group policy may be converted into an individual policy without having to prove insurability. Could happen if the group plan is terminated or the individual leaves the group.

Question 3

Stock Redemption Policy

Answer 3

Disability policy where the business buys the deceased or disabled stockholder’s shares. Benefit is used by the business to pay for the specific stockholder’s share’s upon disability/death. Contrasted with Cross Purchase Plans, Wait and See Plans, and Third Party Buy-Out plans.

Question 4

Cross Purchase Plans

Answer 4

Remaining partners or owners buy the disabled/deceased owner’s shares of the business. Each owner has a policy on the other owners.

Question 5

Wait and See Plans

Answer 5

Order for purchasing remaining shares of the deceased/disabled owner. Business can buy shares, and then individual owners/shareholders are given option.

Question 6

Determining Gross Earnings for a Disability Policy

Answer 6

Generally between 50-80% of gross earnings. Most policies do not allow the policy to pay more than 80%. Average earnings of the prior 6-12 months are used.

Question 7

Work Credits Needed for Social Security

Answer 7

40 work credits needed, 20 of which have to come in last 10 years. 4 credits max can be earned in a year.

Question 8

Social Insurance Substitute Benefit Provision

Answer 8

Rider of a income disability insurance policy that pays an additional benefit on top of what is already being paid by the total disability benefit, aka an AMB (additional monthly benefit). Once social insurance starts, the AMB is reduced by however much the social insurance pays.

Question 9

Recurring Disability Provision

Answer 9

A provision of disability income policies where disabilities that arise from the same condition within a specific period are treated as the same disability.

Question 10

Timeframes for Short Term vs. Long Term Disability

Answer 10

Short Term: Pays benefits for 13 weeks - 2 years

Long Term: Pays benefits for 2 years - life

Question 11

Business Overhead Expense Disability Policy

Answer 11

Policy utilized by businesses to ensure the business can function if an owner or key employee becomes disabled so that the business can pay their overhead costs. Policy pays a monthly benefit to the business so that they can meet their overhead.

Question 12

Presumptive Disabilities

Answer 12

Conditions that are automatically considered total disability under DII policies

Question 13

Elimination/Waiting Period

Answer 13

The length of time after disability occurs that benefits begin to be paid.

Question 14

Accidental Death or Dismemberment Policy

Answer 14

Policy that pays a lump sum in the case of accidental death or loss of body members due to accidental injury. Principal sum = lump sum paid for accidental death. Capital sum = portion of the lump sum for dismemberment from accidental injury.