Unit 15 Disability Income Insurance Flashcards
____ is defined as the inability to work.
Work can be categorized as:
- One’s own occupation, or
- ____ occupation
Disability
Any
Under the ____ 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.
Own Occupation
With the ____ 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.
Any Occupation
Is Own Occupation or Any Occupation harder to qualify for?
Any Occupation
Some policies use both definitions - own occupation for a few years, then any occupation for the remainder of the disability period.
An ____ contract 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 of income the insured is receiving at the time of the claim.
Income Replacement Contract
____ disability is a condition that automatically qualifies insureds for disability benefits whether or not they can work. Conditions generally considered to be presumptive disabilities include: (4)
- Loss of or 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
Presumptive disability may also be determined using the loss of earnings 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 certain ____, the insured is considered totally disabled and eligible for a full benefit even if they are earning some income.
Percentage
Some older policies required that the insured be confined to the house and under the treatment of a doctor. This is called ____ disability.
Medically defined disability
The ____ or ____ is the time period an insured must be disabled before benefits begin. This period may be thought of as kind of deductible - a TIME deductible rather than a dollar deductible. This period keeps the insurance company from paying claims for short term or temporary disabilities. When this period is satisfied, benefits begin and they are NOT paid retroactively.
These periods may be 30, 60, 90, or 180 days or longer, depending on the time period selected. A longer ____ period would reduce the insurance premium.
Elimination or Waiting Period
Benefits are paid during the disability period or until the end of a specified period of time called the ____ period. Typically, these periods are ____ year(s), ____ year(s), ____ year(s), and to age ____.
Benefit Period
1 Year
2 Years
5 Years
65
The ____ feature eliminates the need to pay premiums during any period of disability. This feature becomes effective after the waiting period is satisfied. The waiver premium is retroactively effective to the beginning of the waiting period and any premium paid during this period of time will be refunded once benefit payments begin.
Waiver of Premium
Disabled insureds may also receive benefits from Workers’ Compensation or other government programs. During the planning process, the agent/producer must account for the possibility of an insured receiving too many benefits because this can encourage ____. The other possibility is receiving benefits that do not meet the individual’s income needs.
Malingering
Government programs have long waiting periods and take a long time to process disability claims. The ____(AMB) rider pays an additional benefit amount with the regular monthly benefit for a limited period of time, usually ____ or ____ months. This additional benefit is paid even if the insured is getting government benefits during that period of time.
Additional Monthly Benefit Rider
6 or 12 Months
The ____ rider is a monthly benefit. For those receiving a benefit for total disability, this rider pays for additional benefits, less any legislated benefits like Social Security or Workers’ Compensation for the same period of time. The payment is in addition to other benefits payable under the insurance policy.
Translation:
-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.
Social Insurance Supplements (SIS) Rider
____ - both job-related and non-job-related coverage.
____ - only non-job-related coverage.
Occupational
Non-occupational
Insurers offer ____ benefits for individuals who are impaired, but not totally disabled, and return to work.
Reduced
____ disability means the person can perform some, but not all, of the essential duties of his or her occupation. The partial disability benefit is ____% of the total disability benefit. These benefits are commonly paid for ____ or ____ months. An individual may qualify for these benefits either as a result of suffering a partially disabling illness or injury and returns to work in a reduced capacity.
Partial Disability
50%
3 or 6 Months
____ disability benefits are another alternative for partial disability. These benefits are paid when the insured cannot perform some of the duties of their occupation and are based on the amount of income lost. To receive these disability benefits, the insured’s earnings must be reduced by a stated percentage due to the disability. If the reduced income is less than the stated percentage, no benefit is payable. If earnings meet or exceed the stated percentage, then the loss is multiplied by the total disability benefit to determine the benefit payment. For example, if earnings are reduced by 40% and the monthly disability benefit is $1000, the insured would receive $400 each month.
Residual Disability
Residual disability benefits can be paid if the insured is working full-time, however, income needs to be reduced.
The ____ disability provision protects employees who return to work but become disabled again for the same or a related cause. If this situation occurs within a certain period of time, the insured is considered still disabled from the ____ disability and is not subject to a new elimination period. This provision encourages employees to return to work without fear of losing benefits if their disability continues.
Recurrent Disability
Original Disability
Inflation will impact the purchasing power of disability benefits over time and for this reason most insurers offer an optional ____(COLA) rider. The benefit received by a disabled insured is increased automatically to match increases in the CPI. Typically, cost-of-living adjustments are made every ____ months for as long as the insured receives disability benefits.
Cost-Of-Living Adjustment Rider
12 Months
The ____(FIO) rider allows insureds to buy additional amounts of disability income insurance coverage at stated future times without having to provide evidence of insurability. The rate for the additional coverage will be based on attained age. The insured is able to only buy a predetermined amount of additional coverage at each option date. The Insured’s income must have increased to the point that additional coverage is needed.
The number of purchase option dates is also limited. Usually, the rider provides option dates every ____ years from ages ____ to ____.
Future Increase Option Rider
3 Years
25 to 50
Under the ____ insurance provision, the insurer can reduce the benefit paid to a disabled insured if the insured’s income is less than when they bought the policy. The insurer will base the amount of the benefit on the insured’s average income over a previous ____ month period.
Benefit Reductions are made in proportion to the drop in the insured’s earnings. If earnings have fallen by 20% that’s how much the benefits will be reduced. The insurer will refund a portion of the insured’s premium representing the decrease in coverage.
Relation of Earning to Insurance Provision
24 Months
The ____ rider pays the principal sum, the full benefit, if the insured dies or loses two limbs or the sight in both eyes in an accident. The capital sum, one-half of the principal sum, is paid if the insured loses one limb or the sight in one eye.
When attached to a disability income insurance policy, the benefit is usually expressed as a multiple of the monthly indemnity amount. For example, the death benefit might be stated as a sum equal to 48 times the monthly disability benefit.
The Accidental Death and DSismemberment Rider (AD&)
The ____ benefit pays for vocational training to prepare insureds for a new occupation when they are totally disabled and unable to return to their normal occupation.
If the insured decides to get into an insurer-approved vocational program, then total disability benefits will continue as long as the insured actively participates in the program and remains disabled.
Rehabilitation Program
