Individual Disability income Insurance basics Flashcards
Disability income policies typically only cover nonoccupational disabilities because?
b/c workers comp insurance covers occupational disabilities.
When would DI policies cover occupational disabilities?
A self employed person without workers comp insurance.
Why are DI policy benefits never more than the insured’s income or earnings?
Prevents malingering…Insurers do not want the insured to get more income while “disabled” than while working. Encourages person to go back to work.
Own occupation definition of total disability favors which party? The insured or insurer?
The insured.
This policy pays requires only the inability to do one’s own job. Most common with professional jobs.
Own occupation
Any occupation definition of total disability favors who?
The insurer..b/c the chance of paying a loss is lower.
This policy requires the insured the inability to do any job for which a person is suited. Blue collar workers typically use this policy.
Any occupation definition.
Own occupation is normally only available in policies sold to professional employees, such as?
Lawyers, doctors, engineers
What is Presumptive total disability?
No chance of recovery or going back to work. Ex-blindness, loss of two limbs, loss of speech.
This benefit is paid to insured’s who have been getting benefits for total disability and are now returning to work on a partial basis. Benefits are continued, but on a reduced amount.
Partial disability also called recovery benefit
This benefit is paid if the insured has a less-than-total disability that leads to reduced employment and earnings.
Residual disability benefit
With residual disability-when the insured’s income loss is less than what percent of pre-disability earnings, residual benefits usually end.
20 percent
Insured’s who qualify for presumptive disability benefits do not need what?
They do not need to be under a physicians care or give periodic proof of loss to the insurer.
The percent-of-earnings approach for disability benefits, is typically used in group or individual policies?
Group policies
In what ways does a DI’s policy’s elimination period serve the same purpose as a medical insurance policy’s deductible?
1.It helps to avoid small claims
2.The applicant chooses the length of time (DI) or deductible amount(Medical insurance)
3.Premium control- Longer the elimination period (or higher the deductible) = means a lower premium
What is the key difference between a Short term disability policy and a long term disability policy?
STD benefit period is two years or less.
LTD benefit period is longer than two years
DI policy provision that covers the relapse of the same disability. No new elimination period and resumes the benefit period where the first disability left off.
Recurrent disability provision
What could be a possible down side to the Recurrent disability provision?
It continues the same benefit period, so there is no chance of a higher benefit paid.
This provision pays a benefit to help cover medical expenses if a serious injury occurred as opposed to an income losing disability.
Nondisabling injury provision
This provision the insurer pays for rehabilitation to facilitate the insured’s return to work.
Rehabilitation provision or return-to-work provision.
The benefit period for DI ends when the insured’s disability ends or?
When the maximum benefit period ends. Whichever one comes first
What is the term for an attachment to an insurance policy that changes its coverage by limiting or expanding it?
A policy rider
DI policy rider that the insurer waives the premium if the insured becomes totally disabled. The insured pays the premium during the elimination period and gets it back if still disabled at the end of the elimination period.
Waiver of premium rider
DI policy rider that adjust the benefit according to changes in consumer price index (CPI). During inflation the benefits are increased and deflation benefits are decreased. Typically for people who need to live off of their DI benefits for many years.
Cost-of-living adjustment rider
DI policy rider that pays benefits during the qualification and waiting period for social security disability benefits to begin.
Social insurance supplement rider also known as social security rider
It is not easy to qualify for social security disability benefits. They do not begin until the person has been disabled for how long?
at least 5 months
DI policy rider that lets the insured periodically buy more coverage under the policy without having to provide evidence of insurability.
Future increase option rider also called guaranteed insurability rider.
What is a stipulation under the future increase option rider?
Insured’s can only exercise this option at specific times. use it or lose it
