NY Chapter 3- Disability Income Insurance Flashcards
Any Occupation
is total disability that requires that for disability income benefits to be payable, the insured must be unable to perform any job for which the insured is “reasonably suited by reason of education, training, or experience.”
Own Occupation
is total disability that requires that in order to receive disability income benefits the insured must be unable to work at the insured’s own occupation.
coverage provided by a Disability Income policy that does not provide benefits for losses occurring as the result of the insured’s employment.
Nonoccupational coverage
a disability income policy benefit that provides that if an insured experiences a specified disability, such as blindness, the insured is presumed to be totally disabled and entitled to the full amount payable under policy, whether or not the insured is able to work.
- include total blindness, total deafness, loss of speech, and loss of two or more limbs.
Presumptive Disability
an Illness or injury preventing insured from performing at least one or more, but not all, of the insured’s occupational duties or the inability to work at that job on a full-time basis, either of which result in a decrease in income.
Partial Disability
a disability income payment based on the proportion of income the insured has actually lost, taking into account the fact that the insured is able to earn some income.
Residual Amount Benefit
Accidental Means
the unforeseen, unexpected, unintended cause of an accident.
- The cause of the mishap must be accidental for any accident-based policy claim to be payable.
are policies that use the accidental bodily injury provision (results provision) required that the result of the injury has to be unexpected and accidental.
Accidental Results
Probationary Period
a specified number of days after an insurance policy’s issue date during which coverage is not afforded for sickness.
- The probationary period typically does NOT apply to accidents
- goal: to prohibit people from buying insurance only when they need it and immediately filling a claim, otherwise known as adverse selection.
a duration of time between the beginning of an insured’s disability and the start of the period for which benefits are payable.
- is often considered the “deductible” for a disability policy and is directly correlated to the premiums of the policy.
Elimination Period
- If an insured wants a lower premium, they will need to settle for a longer elimination period. If an insured want’s a shorter elimination period, they will have higher premiums.
Benefit Period
the maximum length of time during which a benefit is paid.
- The longer the benefit period, the higher the cost (premium) of the policy.
- Instead of charging additional premiums or excluding coverage when issuing a disability income policy to a substandard risk, an insurer may shorten the benefit period.
Delayed Disability Provision
a disability income policy provision that allows a certain amount of time after an accident for a disability to result, and the insured remains eligible for benefits.
Recurrent Disability Provision
a disability income policy provision that specifies the period of time during which the reoccurrence of a disability is considered a continuation of a prior disability.
- During that time period, the insurer will then pay benefits without a new elimination period.
- If the recurrence takes place after that period it is considered a new disability. This means it will be subject to a new elimination period.
provides for the payment of additional income when the insured is eligible for social insurance benefits but those benefits have not yet begun, have been denied, or have begun in an amount less than the benefit amount of the rider
The Social Security Rider
a rider available with some policies that provides for an automatic increase in benefits (typically tied to the Consumer Price Index), offsetting the effects of inflation.
Cost of Living Adjustment Rider
an arrangement, usually provided by rider, whereby additional insurance may be purchased at various times without evidence of insurability.
- This rider guarantees the insureds insurability giving them the right to purchase additional amounts of disability income coverage at predetermined times in the future without proof of good health.
Guaranteed Insurability Rider
facilitates vocational training to prepare insured for a new occupation.
- With some disabilities, insureds may not be able to return to their normal occupation but still be able to work at some kind of job.
- the insurer will pay the approved cost to help the disabled return to work.
Rehabilitation Benefit
Percent-of-Earnings Approach
determines the benefit using a percentage of the insured’s pre-disability earnings and takes into account other sources of disability income.
specifies a stable income benefit amount that will be paid if the insured becomes totally disabled. Normally, this amount is payable regardless of any other income benefits the insured may receive. This amount is usually 50% of the full disability benefit.
Flat Amount Approach
Change of Occupation Provision
allows the insurer to reduce the maximum benefit payable under the policy if the insured switches to a more hazardous occupation or to reduce the premium rate charged if the insured changes to a less hazardous occupation.
- If the insured changes to a less hazardous job, the insurer will return any excess unearned premium.
Nondisabling Injuries
are injuries that may have resulted from an accident but are not necessarily disabling.
- Many disability policies include a provision for medical expense benefits that pay the actual cost of medical treatment for nondisabling injuries that result from an accident.
Elective Indemnity Options
may be selected by the insured when applying for a disability policy. These are typically for short-term disability income policies and provide for an optional lump sum payment for certain named injuries.
The Waiver of Premium Rider
allows the policyowner to waive premium payments during a disability and keeps the policy in force.
- The disability must be total and permanent and have sustained through the waiting period (90 days or 6 months)
- After a certain age (usually 60 or 65), the waiver of premium rider is void.
