Questions and Answers
What is the main risk associated with disability from an insurance point of view?
What is the purpose of a rehabilitation benefit?
Prepare the insured to return to employment.
Why is the monthly benefit for an individual disability income policy usually limited to a percentage of the insured's income?
To avoid over insurance.
Long-term Disability benefits are typically coordinated with which benefit plan?
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What specifies that certain conditions automatically qualify the insured for full benefits?
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What does the waiver of premium NOT include?
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Which disability income policy would have the highest premium?
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What type of rider guarantees the right to increase benefits without a medical exam?
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What is Jonas's tax liability for benefits paid from the disability plan if his employer pays 75% of the premium?
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Group Disability Income insurance provides benefits for nonoccupational illness and injuries.
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Which type of disability is less than total impairment and equal to permanent impairment?
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What does loss of income insurance provide?
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How does Chris's policy define total disability if he cannot perform his primary duty as an insured bricklayer?
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Group Disability Income insurance provides benefits for occupational illness and injuries.
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What is the purpose of a Disability Income Benefit?
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What is the time period called during which benefits are paid starting from the date of injury?
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Which of these would NOT be considered a presumptive disability?
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An example of a presumptive disability would be?
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What kind of rider allows Bryce to purchase additional coverage without providing evidence of insurability?
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Study Notes
Disability Income Basics
- The main risk associated with disability from an insurance perspective is loss of income.
- Rehabilitation benefits aim to prepare the insured for a return to employment.
Policy Provisions
- Monthly benefits for individual disability income policies are limited to a percentage of the insured's income to prevent over-insurance.
- Long-Term Disability benefits are often coordinated with Social Security benefits.
Claims and Disabilty Types
- Claims payable despite the insured being able to work fall under presumptive disability, which automatically qualifies the insured for full benefits due to the severity of certain conditions.
- Permanent partial disability refers to a type of disability that is less than total impairment but equates to permanent impairment.
Waiver of Premium
- The waiver of premium does not include provisions for waiving all future premiums if the insured recovers; premiums are typically waived retroactively and have age limits.
Premium Considerations
- A disability income policy with a 14-day waiting period and a 10-year benefit period would incur the highest premiums.
Riders and Coverage
- A guaranteed insurability rider allows policyholders to increase benefits without a medical exam.
- Group Disability Income insurance provides benefits for nonoccupational illnesses and injuries, while occupational conditions are typically covered by worker's compensation.
Tax Implications
- If an employer pays 75% of the premium for disability insurance, the insured must pay taxes on 75% of the benefits received.
Definitions of Total Disability
- Total disability is often defined by an "own occupation" standard, meaning the insured cannot perform their specific occupation due to accident or sickness.
Benefit Utilization
- Disability Income Benefits are designed to provide funds for living expenses.
- The duration benefits are paid, such as 2 years post-injury, is referred to as the benefit period.
Presumptive Disability Criteria
- Examples of presumptive disability include loss of vision, speech, or hearing, but not loss of one leg or arm.
- Deafness is recognized as a presumptive disability.
Additional Coverage Options
- Riders allowing the purchase of additional coverage without evidence of insurability also fall under guaranteed insurability riders.
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Test your knowledge on disability income insurance with these flashcards. The quiz covers essential concepts such as risks associated with disability and rehabilitation benefits. Perfect for anyone studying insurance or related fields.
