Disability Income Insurance Flashcards - CH. 3
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Questions and Answers

What does loss of income insurance provide?

  • An individual the means to replace wages (correct)
  • An individual the ability to continue with medical coverage after a disability
  • Unlimited income replacement to a disabled person
  • An individual the ability to collect workers' compensation
  • What kind of rider guarantees Tom's right to increase his benefits without a medical exam?

  • Waiver of premium rider
  • Guaranteed insurability rider (correct)
  • Guaranteed benefit rider
  • Payor benefit rider
  • When are Tyler's premiums waived under his disability policy?

  • May 1 (correct)
  • April 1
  • June 15
  • June 1
  • Which type of disability would be less than total impairment and equal to permanent impairment?

    <p>Permanent partial disability</p> Signup and view all the answers

    What is the elimination period of an individual disability policy?

    <p>Time period a disabled person must wait before benefits are paid</p> Signup and view all the answers

    Which of the following would have the HIGHEST premium?

    <p>14 day waiting period / 10 year benefit period</p> Signup and view all the answers

    Which of these would NOT be considered a presumptive disability?

    <p>Loss of hearing</p> Signup and view all the answers

    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?

    <p>Over insurance</p> Signup and view all the answers

    What is the purpose of a Disability Income Benefit?

    <p>Provide money for living expenses</p> Signup and view all the answers

    What is the primary factor that determines the benefits paid under a disability income policy?

    <p>Wages</p> Signup and view all the answers

    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.

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