The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the:
A) Insuring Clause
The Insuring Clause is a provision on the first page of the policy which states the coverage and when it applies.
Ben buys a disability policy May 1st with a waiver of premium rider and then becomes disabled June 1st. It is determined he is permanently totally disabled on July 1st and he receives his first benefit payment on July 15th. When does the waiver of premium provision start:
A) June 1st
The waiver of premium provision is retroactive to the date of disability once the waiting period has been satisfied. Since the insured is determined to be permanently totally disabled the waiting period will be met, regardless of the length, and therefore, the waiver of premium would start June 1st, the date of disability.
Group short term disability policies generally include a coverage period which can be a maximum of:
C) 18 months
Coverage periods available under a group short term disability policy are generally six to 18 months. Coverage periods available for group long term disability policies are similar to those available for individual policies.
In a disability policy, the Probationary Period Provision refers to the period:
C) During which a pre-existing illness is excluded from coverage
The elimination period (also called the waiting period) is like a deductible. It starts at the onset of an illness or injury. Don't confuse it with the probationary period, which limits coverage on new policies for certain pre-existing conditions.
The coverage provided by a Disability Income policy that does not pay benefits for losses occurring as the result of the insured's employment is called:
A) Non-occupational coverage
Most group Disability Income is non-occupational coverage, covering you only off the job. The employer carries Workers' Compensation for on the job injuries or sickness.
When an insurer combines two periods of disability into one, the insured must have suffered a:
B) Recurrent disability
When a second period of disability later arises due to the same cause as a prior disability, it is called a "recurrent" disability. If the insured, after returning to work for less than a certain period of time (usually 90 days), suffers a recurrence of the same disability, it will be treated as a continuation of the prior claim and no new waiting period will apply.
All of the following are true regarding key person disability income insurance, EXCEPT:
A) Premiums are tax deductible as a business expense
The premiums paid by an employer for key person disability insurance are not tax deductible, but benefits paid are not taxable.
Which statement is true about Partial Disability benefits:
D) Payment may be based on loss of time, income or function
A partial disability following a period of total disability is usually covered as a percentage of the total (usually 50%) until the insured fully recovers.
On a disability income policy that contains the "own job" definition of total disability, the insured will be entitled to benefits if they cannot perform:
B) Their regular job
If a disability income policy contains the "own" or "regular" job definition, then the insured will be considered to be disabled if they cannot perform that particular job, regardless of other jobs that they may be able to do. However, some policies contain the "any" job definition, which states that the insured is not considered to be disabled unless they cannot perform any job for which they are suited for based upon prior education, training or experience.
What is the most important factor to consider when writing individual disability income insurance:
B) Wages
The purpose of disability income insurance is to replace lost wages, so they are the most important factor to consider.
Which of the following would be considered a presumptive disability:
D) Loss of sight
A presumptive disability would include loss of sight, hearing, speech or two limbs.
A policy available to business owners that will provide payment for normal business expenses in the event that the owner is disabled, best describes:
D) Business Overhead Expense
Business Overhead insurance is often purchased by small employers to pay the ongoing business expenses (such as payroll) in the event the owner of the business becomes disabled. Premiums paid are tax deductible as a business expense, but proceeds paid are taxable as income.
In a disability policy, an Elimination (waiting) Period Provision refers to the period:
D) Between the first day of disability and the day to which the disability must continue before it can result in the insured receiving benefits
The Elimination (waiting) Period is similar to a deductible on a Disability Income policy. The longer it is the lower the premium. It is selected by the insured and varies from seven to 180 days. Do not confuse it with the Probationary Period or Pre-Existing Condition Clause which starts at policy inception or reinstatement.
Carlos Rivera is involved in a two-car accident in which he is disabled, and his passenger and the other driver are injured. Which would most likely be covered by his Disability Income policy:
D) His lost income
Injuries to the other driver and passenger would be covered by Mr. Rivera's auto liability insurance. His medical bills would be covered by his Medical Expense policy and/or his Auto Medical. His disability insurance would cover his loss of net earned income due to his inability to work.
A Business Overhead Expense policy will pay all of the following if a business owner becomes totally disabled, EXCEPT:
A) Loss of the owner's income
If the business owner wants coverage for the loss of their own income due to total disability, they need to purchase a separate individual disability income policy.
If a disability income policy has a seven-day elimination period and the insured is sick for 15 days, they will receive benefits for ____ days:
A) 8
The elimination period is also known as the waiting period, and it starts at the onset of the insured's sickness or accident. Since benefits are not retroactive, this insured would only be entitled to benefits for eight days. The longer the waiting period is, the lower the premium will be. It is like a deductible, except it is stated in time instead of dollars.
To be eligible for benefits under the Waiver of Premium Provision, the insured must:
D) Be under a physician's care
Under Waiver of Premium, which is a rider that will pay your premium while you're disabled, you must have a doctor certify that you meet the definition of disability as contained in the rider.
If an insured who is covered by a disability income policy that contains an "accidental means" clause exits the bus by jumping down the steps and breaks their ankle:
A) No coverage will apply, since disability income policies cover sickness only
B) Coverage will apply, but will be reduced by 50%
C) No coverage will apply, since the injury could have been foreseen
D) Coverage will apply since it was accidental
C ) No coverage will apply, since the injury could have been foreseen
An "accidental means" clause is very restrictive. It states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen. Most policies contain an "accidental injury" clause, which states that coverage will apply if the injury is accidental, regardless.
All of the following are true regarding disability income insurance, EXCEPT:
A) The elimination period is another name for the probationary period
On disability income insurance, the elimination period is another name for the waiting period.
A policyholder has which of the following rights under a disability policy:
D) Return of unearned premiums
Most policies are cancelable, which means the insurer may cancel at any time with proper notice while retaining any earned premium. Only unearned premiums must be refunded.
Which of the following is an eligibility requirement for Social Security Disability Income benefits:
A) Fully insured status
Although Social Security offers many benefits, such as retirement, survivors and Medicare, only those who have attained fully insured status are eligible for Disability Income benefits. Contributing to Social Security for 40 quarters (10 years) attains fully insured status.
Which statement is usually true about the benefits of a group Short-term Disability Income policy:
B) They are not payable for accidents covered by Workers' Compensation
Most group disability policies are purchased as a fringe benefit for employees by employers. Any benefits payable to employees are taxable. Coverage is usually non-occupational since the employer also carries Workers' Compensation as required by state law.
If an insured is disabled and receiving benefits under a disability policy that provides payment to the insured for at least two years, at what intervals must the insured provide notice of continuing loss:
C) Six months
Proof of continuing disability on a long-term disability policy must be resubmitted at least every six months to continue to receive benefits.
Which of the following is true about a presumptive disability:
D) It is a disability that generally will cause the insured to no longer have to prove total disability.
A presumptive disability is a continuing total disability that is presumed in cases involving loss of sight, hearing, speech or the loss of any two limbs. Under these circumstances, the insurance company does not require the insured to submit to periodic examinations to prove continuing disability.
If an individual becomes totally and permanently disabled, Social Security Disability benefits may begin after:
A) Five months
There is a five-month waiting period on Social Security Disability Income benefits. To be eligible, the disability must be expected to last at least 12 months or result in death. Claimants must also have fully insured status.
All of the following are a requirement of eligibility for Social Security disability income benefits, EXCEPT:
A) Being age 65
Attaining age 65 is not a requirement for Social Security disability income coverage. In fact, you must be under age 65 in order to receive disability income benefits. You must also have attained fully insured status. Your disability must be expected to last at least 12 months, or to result in your death. You must also be unable to perform any gainful work (any job).
Author
EdiesTeam
ID
317790
Card Set
D3. Disability Income and Related Insurance
Description
Disability Income and Related Insurance HEALTH AND DISABILITY PORTION
