Unit 15: Disability Income Insurance

Question 1

disability

Answer 1

inability to work

work:
1. one’s own occupation
2. any occupation

Question 2

own occupation disability

Answer 2

more liberal definition

inability to perform any or all of the duties of insured’s normal occupation

Question 3

any occupation disability

Answer 3

more restrictive definition

any occupation for which the insured is qualified by training education and experience
more difficult to qualify

Question 4

income replacement

Answer 4

pays a benefit if loss of income is a result of suffering a covered illness

a reduction in income triggers payment

Question 5

presumptive disability

Answer 5

condition that automatically qualifies insureds for disability benefits where or not they can work

ex:
- loss of/loss of use of any two limbs
- total and permanent blindness in both eyes
- total loss of speech
- total loss of hearing in both ears

Question 6

physician care requiremtn

Answer 6

some old policies require that the insured by confined to the house and under treatment of a doctor

medically defined disability

Question 7

indemnity

Answer 7

a method of paying health policy benefits to insured based on a predetermined, fixed rate set for the medical services provided, regardless of the actual expenses occurred.

Question 8

elimination period/waiting period

Answer 8

time period an insured must be disabled before benefits begin.

may be thought of as a kind of deductible - TIME DEDUCTIBLE

when ________ is satisfied, benefits begin and they are not paid retroactively

typical _______ may be 30, 60, 90, or 180 days or longer, depending on the time period selected

a longer one reduces the insurance premium and makes the disability income policy more affordable

Question 9

benefit period

Answer 9

benefits are paid during the disability period or until the end of a specified period of time

typical ______ are one year, two years, five years, and to the age of 65

the higher the _____ the higher the policy premium

Question 10

waiver of premium

Answer 10

waives further premium payments after initial waiting period

refunds any premiums paid during the waiting period (usually 90 days)

Question 11

Additional Monthly Benefit (AMB)

Answer 11

workers’ compensation and other government programs

pays an additional benefit during the first six to twelve months

pays even if the insured receives government benefits

Question 12

Social Insurance Supplement

Answer 12

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

Question 13

partial disability benefits

Answer 13

person can perform some, but not all, of the essential duties of his or her occupation.

50%

returns to work in a reduced capacity

usually pays 50% of total benefit

usually no longer than three to six months

Question 14

residual disability

Answer 14

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

Question 15

recurrent disability

Answer 15

encourages employees to return to work

condition recurs after returning to work

doesn’t have to wait to start receiving benefits

conditions must be recur within a certain time frame after returning to work

Question 16

cost-of-living-adjustment (COLA) rider

Answer 16

typically _____are made every 12 months as long as the insured receives disability benefits

increases benefits while receiving disability

based on the Consumer Price Index

Adjustments usually made every 12 months

Question 17

Future Increase Option (FIO) Rider

Answer 17

allows insured to buy additional amounts of disability income insurance coverage at stated future times without having to provide proof of insurability ..
allows insured to increase policy benefits

no evidence of insurability required

the insured’s income must have increased

Question 18

relation of earnings

Answer 18

allows insurer to change policy benefit if insured’s income has decreased

portion of the premium will be refunded

Question 19

rehabilitation benefit

Answer 19

designed for a total disability

helps insured train for occupation

pays as long as inured is disabled and stays in the program

Question 20

medical reimbursement

Answer 20

designed for non-disabling injuries

helps pay medical bills for a non-disabling injury

Question 21

return of premium

Answer 21

provides for the return of a percentage of premiums paid (usually 80%) for a stated time period (usually every 10 years).

the amount any benefits paid during that period is subtracted from the refund amount

the refund is made every 10 years and at age 65 or the date of death

Question 22

Short-Term Disability (STD)

Answer 22

very short elimination periods
benefit period is normally 6 to 24 months
generally 60%-70% of the employee’s compensation

Question 23

Long-Term Disability

Answer 23

2 years until the age of 65

elimination period usually the benefit period of STD

Question 24

Social Security Disability

Answer 24

to qualify for ____ someone must have paid social security payroll (FICA) taxes to earn at least 6 credits during the last 13 quarters to be completely insured

fully insured status is achieved when someone has paid into social security for 10 years, earning 40 credits

once a person becomes eligible for disability there is a five month waiting period to receive benefits

not paid retroactively

disability must last 12 months

amount of benefit based upon the persons Primary Insurance Amount

Spouse and children may receive benefits

Question 25

Primary Insurance Amount (PIA)

Answer 25

calculated using percentages of the person’s income over his or her working years

not designed to replace a worker’s total earnings

the total family benefit is caped by a maximum family benefit amount based on average earnings