Disability Income Insurance Quiz

Questions and Answers

What is the term for a situation where a disability is covered without a new elimination period if it is due to the same cause as a previous disability?

Recurrent Disability provision

Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase?

Applicant's monthly income (correct)

Applicant's age

Applicant's health status

Applicant's savings

What factor limits the monthly benefit amount for a Disability Income policy?

income

What is the term for when a disabled person returns to work but cannot earn as much as before?

Residual disability Signup and view all the answers

What kind of rider guarantees the option of purchasing additional amounts of coverage without providing proof of insurability?

Guaranteed insurability rider Signup and view all the answers

A spouse's occupation is required information for a Disability Income insurance application.

False Signup and view all the answers

Non-occupational disability coverage is designed for whom?

employees who suffer non-work related disabilities Signup and view all the answers

What is the elimination period in a Disability Income policy?

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

What is a disability elimination period best described as?

time deductible Signup and view all the answers

What kind of rider should a physician add to a Disability Income policy to increase benefits as their practice grows?

Guaranteed Insurability Option rider Signup and view all the answers

What type of policy does a teacher who is injured and receiving monthly benefits have?

Disability Income Signup and view all the answers

What is owed to the estate of a deceased person with a Disability Income policy that has earned but unpaid benefits?

Earned, but unpaid benefits Signup and view all the answers

If T has a Disability Income policy that pays a monthly benefit of $5000 and becomes partially disabled, what can he likely expect?

Less than $5,000 per month benefit regardless of the cause Signup and view all the answers

What are the limits placed on the monthly benefit amount for a Disability Income policy based on?

gross income at the time of purchase Signup and view all the answers

The Elimination Period in a Disability Income policy acts as a deductible.

True Signup and view all the answers

What would a second period of disability from the same cause as a prior disability be regarded as?

A recurrent disability Signup and view all the answers

What does a Guaranteed Insurability rider provide a Disability Income policyowner?

The ability to periodically increase the amount of coverage without evidence of insurability Signup and view all the answers

What type of policy will pay monthly benefits to a personal assistant who suffers injuries at home?

Disability Income Signup and view all the answers

What feature allows a partially disabled architect to continue receiving benefits?

Residual Benefit clause Signup and view all the answers

What coverage does a Disability Income policy that does NOT provide benefits for employment-related losses provide?

Nonoccupational coverage Signup and view all the answers

Study Notes

Disability Income Insurance Overview

Disability Income insurance provides financial support to individuals unable to work due to disability, ensuring income continuity.

Definitions

Recurrent Disability Provision: Covers subsequent disabilities arising from the same cause within a specified time, without requiring a new elimination period.
Applicant's Monthly Income: The primary factor in determining the amount of Disability Income coverage needed.
Income as Limiting Factor: The maximum monthly benefit amount an applicant can buy is restricted by their income.

Disability Types

Residual Disability: Occurs when a person returns to work but earns less due to partial disability, enabling benefits based on the income lost.
Non-Occupational Coverage: Designed for employees suffering from disabilities that are not work-related; does not cover work-related injuries (which are insured under Workers' Compensation).

Policy Features

Elimination Period: The waiting period before disability benefits are paid, considered a time deductible.
Guaranteed Insurability Rider: Allows policyholders to purchase additional coverage in the future without medical underwriting, aligning coverage with income changes.

Claims and Benefits

Disability Income Policy: Provides monthly monetary benefits to individuals unable to work due to injuries or illnesses (e.g., car accidents or illnesses).
Earned but Unpaid Benefits: If a disabled insured passes away, their estate receives any benefits that have accrued but remain unpaid at the time of death.
Residual Benefit Clause: Allows individuals to receive benefits while working part-time, continuing support during partial disabilities.

Important Considerations

Wages as Determining Factor: The benefits paid under a Disability Income policy largely depend on the insured's earnings.
Application Requirements: Typically does not require information about the spouse's occupation, focusing instead on the applicant's personal income details.

Additional Concepts

Guaranteed Insurability Option Rider: Especially valuable for professionals whose income or practice may grow, allowing flexibility in benefit increases without additional evidence of insurability.
Nonoccupational Coverage: Essential for individuals to protect against disabilities not resulting from their job, separating personal and occupational hazards.

Summary of Different Policies

Disability Income Policies: Address both full and partial disabilities, with specific provisions for recurrent disabilities and different coverage limitations based on the relatedness to work injuries.

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Description

Test your knowledge on Disability Income Insurance with this concise quiz. Covering key provisions like Recurrent Disability, this quiz helps reinforce your understanding. Perfect for anyone studying insurance principles or preparing for exams.