Life and Health Insurance

If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased

a. at the insurer's discretion

b. at least once per year from policy issue

c. at least once per year from when benefits begin

d. based on the performance of the S&P

A disability income insurance policy was recently issued with a rating. What does this mean?

a. Policyowner will be charged an additional premium

b. Policy will have specific illnesses excluded from coverage

c. Policyowner will be charged a reduced premium

d. Policy will have a longer waiting period

What is taken into consideration when defining "total disability" in a disability income insurance policy?

a. Number of days spent in the hospital

b. The amount of additional coverage the insured has

c. The insured's education, training, and experience

d. The elimination period

Which of the following would permit an insurer to delay a covered disability policy claim?

a. Probationary period

b. Service Waiting period

c. Elimination period

d. Grace period

An insured covered under a Disability Income policy is disabled and collecting benefits for a period of two months. He returns to work and is again disabled from the same cause, whereupon benefits continue to be paid. This is an example of which of the following?

a. Presumptive disability

b. Concurrent disability

c. Residual disability

d. Recurrent disability

Short-term group disability income benefits are

a. always paid income-tax free to the employee

b. a percentage of weekly earnings up to to a stated maximum

c. only payable if the disability was work-related

d. taxable to the employee when the plan is fully contributory

Beth is a surgeon who has an own-occupation disability income policy. She was injured six months ago and has been unable to return to her practice. Her monthly benefit from the policy is $15,000. During this time, Beth has been working part-time at a local boutique and receives $2,000 monthly. What is her ongoing monthly benefit while she is unable to perform her surgical duties?

a. $13,000 

b. $17,000 

c. $15,000 

d. Nothing

Jonas is covered with disability insurance through his employer. The employer pays 75% of the premium, while Jonas pays the other 25%. What is Jonas' tax liability for any benefits paid from the disability plan?

a. Taxes must be paid on all benefits received 

b. No taxes are payable on any benefits received 

c. Taxes must be paid on 25% of the benefits received 

d. Taxes must be paid on 75% of the benefits received

Which of the following BEST describes a "partial disability"?

a. Becoming deaf in one ear

b. Unable to perform all job duties due to a short-term disability

c. Unable to perform one or more job duties

d. When a disability recurs from a previous illness or accident

Jerome is covered by a disability income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?

a. Limited coverage

b. Workers' Compensation coverage

c. Occupational coverage

d. Nonoccupational coverage

An insured, age 67, is covered under a disability income policy. What will the insurer normally require in order for the insured to continue coverage?

a. The insured must submit to a physical examination on an annual basis

b. The insured must be actively at work for a specified number of hours per week

c. The insured must remain in the same occupation

d. The insured must continue working for the same employer

Which of these would NOT likely qualify as a presumptive disability?

a. Loss of sight in one eye 

b. Loss of both hands 

c. Loss of hearing 

d. Loss of speech

A policyowner suffers an injury that renders him incapable of performing one or more important job duties. Any decrease in income resulting from this injury would make him eligible for benefits under which provision?

a. Partial disability 

b. Nondisabling injury 

c. Presumptive disability 

d. Flat amount disability

Mark is covered by a policy that uses the regular occupation (own-occ) definition of total disability. Using this definition, he will be considered disabled if unable to

a. perform the substantial and material duties of his regular occupation

b. work in any career field

c. perform the duties of any occupation that matches his skill level and experience

d. earn less than half his normal income

What is the elimination period of an individual disability policy?

a. Time period an insured must wait before coverage begins

b. Time period a disabled person must wait before benefits are paid

c. Time period after the policy issue date in which the provisions are still contestable

d. The point in time when benefits are no longer payable

Which of the following best describes the presumptive disability provision?

a. Reduces the incontestability period

b. Increases the monthly benefits stated in the policy

c. Waives the typical total disability requirements

d. Assumes all injuries result in total disability

Pat is covered by a disability income insurance policy that covers disabilities arising from a work-related illness or injury. The amount of his disability income payments for an on-the-job injury may be reduced by

a. medical expenses covered under Pat's employer-sponsored group health insurance

b. benefits paid under workers compensation

c. income earned by Pat's spouse

d. a deductible stated in the policy's provisions

Which of the following disability income provisions allows two periods of disability to be counted as one?

a. Residual disability 

b. Rehabilitative disability 

c. Recurrent disability 

d. Repetitive disability

In a disability income contract, an insured is considered to be totally disabled under the presumptive disability provision if he/she

a. loses hearing in one ear

b. loses the use of one hand

c. loses the sight in one eye

d. loses the ability to speak

Elimination periods typically apply to

a. hospital policies 

b. short-term policies 

c. disability policies 

d. blanket policies

Disability income policies provide protection for which of the following?

a. Economic death 

b. Physical death 

c. Hospital expense 

d. Custodial care

Dan owns a disability income insurance policy which provides ONLY nonoccupational coverage. Which of the following circumstances would likely NOT be covered under his plan?

a. He is injured in an automobile accident while driving to work

b. He suffers third-degree burns while on vacation

c. He falls from the roof of his personal residence while replacing shingles

d. He falls and breaks his hip at work

How are the premiums for an individually-owned disability income policy treated for tax purposes?

a. Amount spent on premiums over 7.5% of gross income is tax deductible

b. Partially tax deductible

c. Fully tax deductible

d. Not tax-deductible at all

Which factor determines the maximum disability income benefit that can be purchased by an applicant?

a. The applicant's income

b. The applicant's age

c. The applicant's health

d. The applicant's credit score

Each of the following will trigger a benefit under the presumptive disability provision, EXCEPT

a. Loss of hearing 

b. Loss of any one limb 

c. Loss of sight 

d. Loss of speech

An insured is covered under a group long-term disability policy. Under this type of policy, the definition of disability based on any occupation typically applies

a. only to part-time employees

b. only to white collar employees

c. during the probation period

d. after two years of disability

Jim is covered under a disability income policy. He is hurt while engaged in an occupation that is more hazardous than the occupation he specified in the policy. What action will the insurer likely take?

a. Decrease the premium 

b. Reduce the benefit level 

c. Increase the benefit level 

d. Increase the premium

Which of the following waiting periods would result in the lowest premium for a disability income policy?

a. 30 days 

b. 60 days 

c. 90 days 

d. 180 days

The inability to perform SOME of the duties of one's own occupation is known as a

a. Recurrent disability 

b. Total and permanent disability 

c. Residual disability 

d. Presumptive disability

Non-occupational disability coverage is designed for

a. 24 hour protection

b. those who are exempt from Workers' Compensation coverage

c. sole proprietors and self-employed individuals

d. employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation

Larry wants to purchase an individual disability income policy to provide continuous income while disabled. He is also covered by a two-month wage continuation benefit from his employer. What should the policy elimination period be for his individual policy?

a. 30 days 

b. 60 days 

c. 90 days 

d. 120 days

Christine is receiving benefits provided from her disability income insurance. As compared to her previous earnings, the disability benefits should be

a. the same

b. less than 50%

c. somewhat less

d. somewhat more

What does the rehabilitation benefit cover in a disability income policy?

a. Covers the cost of all out-of-pocket expenses while a disabled worker is unable to work

b. Covers the approved cost of the rehabilitation necessary to help a disabled insured return to work

c. Covers the cost of inpatient rehabilitation for alcohol and drug dependency

d. Pays a lump-sum indemnity to cover all out-of-pocket expenses

When issuing disability income coverage to a substandard risk, an insurance company may

a. raise the deductible

b. shorten the benefit period

c. raise the benefit limits

d. reduce the premium

For purposes of disability income insurance, earned income would include all of the following EXCEPT

a. Salary 

b. Commissions 

c. Bonus 

d. Dividends

Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?

a. Guaranteed insurability rider 

b. Additional coverage rider 

c. Paid-up option rider 

d. Extended insurability rider

Which of the following statements accurately describes the financial impact of total disability?

a. May be worse than the financial impact of death

b. With the right insurance coverage, the potential exists to make more money than while working

c. The financial impact is usually minimal

d. No negative impact because of programs like Social Security and Workers Compensation