Disability And Long Term Care Insurance Flashcards
What is any occupation disability insurance?
Unable to engage in any occupation which which they are qualified by training, experience, education.
- this is also called modified any occupation or modified own occupation
- some policies use split definition
Own occ 2-10 years, Any occ to age 65. - this is the most likely to pay out, and the best answer on the exam
What does it mean to be totally disabled?
Reflects SS rules.
- if unable to engage in any substantial gainful activity, which is expected to result in death or expected to last for 12 months or more
What is a loss of income policy?
Abandons effort to define disability. Pays benefits based on economic loss following a physical disability. Partial disability is covered.
Define the non cancelable continuance provision
Individual can keep policy in force by paying premium. Premium won’t increase. Normally renewable to 65. Most expensoive
What is the guaranteed renewable disability, continuance provision?
Guarantees that the individual can keep the policy in force by paying the premium… but premium may increase on a class basis, not an individual basis. Renewable to age 65.
— lower premiums than noncancellable.
What is the conditionally renewable policy?
Allows a noncancelable or guaranteed renewable policy to continue beyon age 65. Usually has a 2 year benefit and premium is adjusted for benefits and age. Can only be extended i the insurances is still an active employee
Least expensive
What is presumptive disability clause?
Total disability benefits will be paid if the insured loses sight, hearing, speech, both hands, both feet, or one hand and one foot. Policies could cover partial, some could require loss to be permanent or temporary
Rider: partial disability
Many carriers add at no cost
- encourage insured to resume employment as soon as possible
-benefits usually start after a period of total disability and last up to 6 months
- usually 50% of the benefit for total disability
Rider: residual disability (proportional)
Expensive- own occ only
- payable for the max benefit period under basic contract
-paid in proportion to the insured’s reduced earnings (20-80%) range
Rider: Guaranteed insurability option
Additional premiums
-permits an insured the right to purchase additional amounts of coverage without new proof of insurability
-subject to financial underwriting
Rider: COLA
Additional premium
- COLA benefit increases could be floating or inflation index
Rider: social Insurance Substitute Benefit (SIS)
For total disability, the monthly benefit will be equal to the SIS benefit shown on the policy schedule less any SS disability payment. If the person receives a SS disability benefit, the SIS benefit is terminated or reduced.
- 5 month waiting period under SS
-generally must wait for 12 months because SS will not pay if disability doesnt last 12 months— then you get back pay
Connie buys a disability policy with a base benefit of 5000, and an SIS benefit of 1200. Connie becomes disabled and ultimately receives 600 in SS disability benefits. HOw much benefit does she receive from her policy when SS pays $600.
A 600
B 5000
C 5600
D 6200
C $5600
How are the premium and benefits taxed if:
Premium is paid by employee
owned by employee.
Benefits: Tax Free
Not deductible
How are premium and benefits taxed if:
Paid by employer under bonus arrangement on W-2
Owned by employee
Benefits tax free
benefits always tax free unless group plan
Deductible to employer as bonus to employee