Unit 18

Question 1

Assume the insurer will issue a maximum monthly disability income benefit of $5,000, provided the total of such benefits payable by all companies does not exceed 60% of the insured’s regular monthly income. Ted earns $4,500 per month and has no existing disability income policy. The maximum monthly disability income benefit this insurer would issue to Ted is:

(A) $2,500
(B) $2,700
(C) $4,500
(D) $5,000

Answer 1

(B) $2,700

Question 2

Which of the following is NOT a basis for occupational suitability when determining total disability?

(A) Education
(B) Training
(C) Experience
(D) Job interest

Answer 2

(D) Job interest

Question 3

Which of the following statements about elimination periods in disability income policies is NOT correct?

(A) Elimination periods may apply to disabilities due to sickness and not accidents.
(B) Benefits are not payable during an elimination period but are paid retroactively to the beginning of the period if the ensured remains disabled throughout the period.
(C) An elimination period follows the start of a disability.
(D) Elimination periods help keep premiums down.

Answer 3

(B) Benefits are not payable during an elimination period but are paid retroactively to the beginning of the period if the ensured remains disabled throughout the period.

Question 4

Which of the following riders provides for changes in the benefit payable based on changes in the Consumer Price Index (CPI)?

(A) Guaranteed insurability rider
(B) Cost-of-living adjustment rider
(C) Social Security rider
(D) Waiver of premium rider

Answer 4

(B) Cost-of-living adjustment rider

Question 5

Benefit periods for individual short-term disability policies typically vary from:

(A) 1 to 12 months
(B) 3 months to 3 years
(C) 6 months to 2 years
(D) 1 to 5 years

Answer 5

(C) 6 months to 2 years

Question 6

Which of the following statements about waiver of premium in health insurance policies is NOT correct?

(A) It exempts an insured from paying premiums during periods of permanent and total disability.
(B) It may apply retroactively.
(C) It generally drops off after the insured reaches age 60 or 65.
(D) It normally applies to both medical expense and disability income policies.

Answer 6

(D) It normally applies to both medical expense and disability income policies.

Question 7

Which of the following terms relates to disability income insurance?

(A) Service basis
(B) First-dollar
(C) Residual amount benefit
(D) Coinsurance

Answer 7

(C) Residual amount benefit

Question 8

Which definition of total disability is more favorable to the insured?

(A) “Own occupation” is more favorable
(B) “Any occupation” is more favorable
(C) They are the same in terms of benefits to the insured
(D) There is no way to determine from the information provided

Answer 8

(A) “Own occupation” is more favorable

Question 9

Sidney has a monthly benefit of $2,500 for total disability under a residual disability income policy. If Sidney suffers a 40% loss of his predisability income, how much will his benefit be?

(A) $0
(B) $1,000
(C) $1,500
(D) $2,500

Answer 9

(B) $1,000

Question 10

What is the initial period of time specified in a disability income policy that must pass, after a policy is in force, before a loss due to sickness can be covered?

(A) Preexisting term
(B) Probationary period
(C) Temporary interval
(D) Elimination period

Answer 10

(B) Probationary period