Questions and Answers
What does loss of income insurance provide?
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?
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?
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Which of the following would have the HIGHEST premium?
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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?
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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?
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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.
