Unit 15 Disability Income Insurance

Question 1

own occupation

Answer 1

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

Question 2

any occupation

Answer 2

more difficult to qualify. inability to perform the duties o any occupation for which they are reasonably qualified

Question 3

income replacement

Answer 3

a reduction in income triggers payment
pays a benefit if the loss of income of income is a result of suffering a covered illness or injury

Question 4

presumptive disability

Answer 4

automatic qualification if conditions are met
loss of, or loss of use of, any two limbs
total and permanent blindness in both eyes
loss of speech
total and permanent loss of hearing in both ears

Question 5

basic total disability plans

Answer 5

indemnity benefit
elimination/ waiting period (must be disabled for this length of time before benefits begin)
benefit period (length of time benefits will be paid)

Question 6

waiver of premium

Answer 6

waives further premium payments after an initial waiting period
refunds any premiums paid during the waiting paid (usually 90 days)

Question 7

additional monthly benefit rider

Answer 7

pays an additional benefit during first 6-12 months
pays even if the insured receives government benefits (workers’ comp or other government programs)

Question 8

social insurance supplement

Answer 8

pays when social benefits are not being paid
makes up the difference bettween the government benefit and the amount of the rider
pays only during the policy benefit period

Question 9

occupational

Answer 9

both-job related and non-job related

Question 10

nonoccupational

Answer 10

only non-job related

Question 11

partial disability

Answer 11

returns to work in a reduced capacity
usually pays 50% of the total benefit
usually no longer than 3-6 months

Question 12

residual disability

Answer 12

paid whether the 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 13

recurrent disability

Answer 13

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
encourages employees to return to work without fear or losing benefits if the disability continues

Question 14

cost of living rider (COLA)

Answer 14

increases the benefit while receiving disability
based on the consumer price index
adjustments are usually made every 12 months

Question 15

future increase option rider (FIO)

Answer 15

allows insured to increase policy benefits
no evidence of insurability required
the insured’s income must have increased

the rate for the additional coverage is based on the insured’s attained age, not the original issue age

Question 16

relation of earning to insurance

Answer 16

allows insurer to change policy benefit if insured’s income has decreased
portion of the premium will be refunded

Question 17

accidental death and dismemberment (AD&D)

Answer 17

amount of the rider is the principal sum (100% of the benefit)
paid in the case of accidental death. usually a multiple of the monthly disability benefit
loss of sight in both eyes or loss of two limbs

capital sum (50%) if loss of sight in one eye or loss of one limb

Question 18

rehabilitation benefit

Answer 18

designed for total disability
helps the insured train for a new occupation
pays as long as the insured is disabled and stays in the program

Question 19

medical reimbursement

Answer 19

helps pay medical bills for a nondisabling injury

Question 20

return of premium

Answer 20

refunds a stated percentage of the premium after a stated time
benefits paid are subtracted from the refund amount

Question 21

exclusions

Answer 21

common exclusions found in disability income policies are losses arising from war or military service, suicide and other self-inflicted injury, non-commercial aviation, commission of a felony, and living overseas

Question 22

disability underwriting

Answer 22

occupation
benefit limits
policy issuance alternatives (increased premium or impairment rider)

impairment rider is a rider that eliminates coverage for a particular condition that makes the individual uninsurable

Question 23

group disability

Answer 23

usually a percentage of pay instead of a stated benefit
short term: 6-24 months, very short elimination period if any
long term: 2 years-age 65. elimination period usually the benefit period of STD

Question 24

business uses of disability

Answer 24

key person
business overhead expense
disability buy-sell

Question 25

social security disability

Answer 25

person must have at least 6 credits in the last 13 quarters
number of credits required increases with age up to age 62 - fully insured, earned 40 credits
5-month waiting period for benefits
not retroactive to cover the first 5 months
disability must last 12 months
amount of benefit is based upon the person’s primary insurance amount
spouse and children may receive benefits

Question 26

worker’s compensation

Answer 26

medical treatment
rehabilitation
income lost due to disability and
income lost due to death