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Questions and Answers
What does loss of income insurance provide?
What does loss of income insurance provide?
What kind of rider guarantees Tom's right to increase his benefits without a medical exam?
What kind of rider guarantees Tom's right to increase his benefits without a medical exam?
When are Tyler's premiums waived under his disability policy?
When are Tyler's premiums waived under his disability policy?
Which type of disability would be less than total impairment and equal to permanent impairment?
Which type of disability would be less than total impairment and equal to permanent impairment?
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What is the elimination period of an individual disability policy?
What is the elimination period of an individual disability policy?
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Which of the following would have the HIGHEST premium?
Which of the following would have the HIGHEST premium?
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Which of these would NOT be considered a presumptive disability?
Which of these would NOT be considered a presumptive disability?
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The monthly benefit for an individual disability income policy is usually limited to a percentage of the insured's income in order to avoid what?
The monthly benefit for an individual disability income policy is usually limited to a percentage of the insured's income in order to avoid what?
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What is the purpose of a Disability Income Benefit?
What is the purpose of a Disability Income Benefit?
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What is the primary factor that determines the benefits paid under a disability income policy?
What is the primary factor that determines the benefits paid under a disability income policy?
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Study Notes
Disability Income Insurance Overview
- Loss of income insurance aids individuals in replacing lost wages during disability.
- This insurance does not provide unlimited income replacement.
Riders in Disability Policies
- A guaranteed insurability rider allows policyholders to increase benefits without medical examinations.
- Waiver of premium rider enables premium payments to be waived during periods of disability, starting from the date of disability.
Claim Process and Premium Waivers
- For Tyler, premiums are waived starting from the day he becomes disabled (May 1), not on the policy purchase date or claim submission date.
Types of Disabilities
- Permanent partial disability refers to a situation where there is less than total impairment that is ongoing.
- Temporary partial disability indicates a short-term inability to work with the expectation of recovery.
Elimination Period in Disability Policies
- The elimination period denotes the time an insured individual must wait before benefits commence after proving disability.
Premium Factors in Disability Income Policies
- Shorter waiting periods and longer benefit durations tend to lead to higher premium costs.
- A policy with a 14-day waiting period and a 10-year benefit period incurs the highest premiums.
Presumptive Disabilities
- Presumptive disabilities include severe impairments such as total loss of vision or loss of a leg and an arm.
- Loss of a single leg or arm does not qualify as presumptive disability.
Benefit Limitations
- Monthly benefits for individual disability income policies are capped to a percentage of the insured's income to prevent over insurance.
Purpose of Disability Income Benefits
- Disability income benefits primarily provide financial support for living expenses rather than fully replacing lost income or covering medical expenses.
Determining Factors for Disability Benefits
- The primary factor influencing disability benefit amounts is the insured’s wages, which determines the benefit cap.
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Description
Test your knowledge on Disability Income Insurance with these flashcards from Chapter 3. Each card presents a question related to loss of income insurance and key concepts. Perfect for anyone studying this significant aspect of personal finance.
