Disability Income Insurance Flashcards
Work can be categorized as:
-one’s own occupation
-any occupation
Under the own occupation definition, disability is defined as:
An insured’s inability to perform any or all of the duties of their occupation at the time the disability begins
Under the any occupation definition, an insured is disabled if:
They are unable to perform the duties of any occupation for which they are reasonably qualified by education, training, or experience
Pays a benefit if the insured experiences a loss of income as a result of suffering a covered illness or injury. The benefit trigger is the amount the insured is receiving at the time of the claim
Income replacement contract
_________ ___________ is a condition that automatically qualifies insureds for disability benefits whether or not they can work
Presumptive disability
Conditions generally considered to be presumptive disabilities include:
-loss of or loss of use of any 2 limbs
-total and permanent blindness in both eyes
-total loss of speech
-total loss of hearing in both ears
The loss of earning test
The insured’s level of earnings before disability is compared to the level of earnings after disability. If post-disability earnings fall below pre-disability earnings by a given percentage, the insured is considered totally disabled and eligible for a full benefit even if he or she is earning some income
Medically defined disability
-physician care requirement
-some older policies required that the insured be confined to the house and under treatment of a doctor
Disability income plans pay a monthly amount to make up for lost earnings. The benefit is referred to as an __________-it returns the insured to to their original financial condition before the loss
Indemnity
Th time the insured must be disabled before benefits begin
Elimination or waiting period. “Time deductible”
Waiver of premium
-eliminates the need to pay premiums during any period of disability
-becomes effective after the waiting period is satisfied
-refunds any premiums paid during the waiting period (usually 90 days)
Additional monthly benefit rider
-pays an additional benefit during first 6-12 months
-pays even if the insured receives government benefits
Social insurance supplement (SIS) rider
-pays when social benefits are not being paid
-makes up the difference between the government benefit and the amount of the rider
-pays only during the policy benefit period
The partial disability benefit is __% of the total disability benefit
50
Partial disability benefits are usually no longer than:
3-6 months
Residual disability
-paid whether insured is able to work full or part time
-benefit based on reduction of income
-pays as long as the reduction in income continues
Recurrent disability
-condition recurs after returning to work
-doesn’t have to wait to start receiving benefits
-conditions must recur within a certain time frame after returning to work
Typically, cost-of-living adjustments are made every ___ months for as long as the insured receives disability benefits
12
Future Increase Option (FIO) Rider
-allows insured to increase policy benefits
-no evidence of insurability required
-the insured’s income must have increased
Relation of earnings to insurance provision
-allows insurer to change policy benefit if insured’s income has decreased
-portion of the premium will be refunded
Pays for vocational training to prepare insureds for a new occupation when they are totally disabled and unable to return to their normal occupation
Rehabilitation benefit
Return of premium rider
Provides for the return of a percentage of premiums paid (usually 80%) for a stated time period (usually every 10 years). The amount of any benefits paid during that period is subtracted from the refund amount
The common exclusions for disability income policies are:
-war or military service
-attempted suicide and other self-inflicted injury
-non-commercial aviation
-commission of a felony
-living overseas
Short term disability: ___ to ___ months
6; 24
Long term disability: ___ years to age ___
2; 65
The purpose of a Business Overhead Expense policy is to:
Cover certain overhead expenses that continue when the business owner is disabled
Business uses of disability insurance
-key person
-business overhead expense
-disability buy sell
Currently insured status with Social Security disability benefits
Someone must have paid Social Security Payroll (FICA) taxes to earn at least 6 credits during the last 13 quarters
Fully insured social security disability benefit status
Achieved when someone has paid into social security for 10 years, earning 40 credits
Social security disability waiting period
5 months
Social security’s definition of totally and permanently disabled:
-the person is unable to perform the duties of any occupation
-the disability is expected to last at least 12 months or end in death or total blindness
Worker’s compensation benefits cover:
-medical treatment
-rehabilitation
-income lost due to disability
-income lost due to death
