Disability Income Insurance Quiz & Flashcards

Questions and Answers

Which of the following is NOT a provision in a disability income policy?

Replacement provision

Renewability provision

Deductible and coinsurance provision (correct)

Waiting period

Which type of disability would be less than total impairment and equal to permanent impairment?

Permanent partial disability

The waiver of premium does NOT include which provision?

All future premiums are waived if the insured recovers from the disability (correct)

Premiums are waived upon death

Premiums are deferred until recovery

Premiums are waived during the period of disability

Which of these statements is NOT true concerning recurrent disabilities?

The insurer continues coverage after a new elimination period Signup and view all the answers

Which of the following could lower the premium of a proposed disability income policy?

Increasing the elimination period Signup and view all the answers

An individual covered under a disability income policy may be eligible for a partial disability benefit if:

The insured can perform some of their job activities on a part-time basis Signup and view all the answers

Kim is insured under a disability income insurance policy with an own-occupation clause. She was recently injured in an automobile accident and can no longer perform the tasks of her job. Kim is now considered to be:

Totally disabled Signup and view all the answers

A rehabilitation benefit is intended to:

Prepare the insured to return to employment Signup and view all the answers

A policyholder suffers an injury that renders him incapable of performing one or more important job duties. Any decrease in income resulting from this injury would make him eligible for benefits under which provision?

Partial disability Signup and view all the answers

Tom has a rider on his disability income policy that guarantees the right to increase his benefits without a medical exam. What kind of rider is this?

Guaranteed insurability rider Signup and view all the answers

A disability policyholder is injured and becomes totally disabled. The benefits pay for 2 years, starting from the date of the injury. What is this time period called?

Benefit period Signup and view all the answers

Manuel is considered to be a disabled person as defined by the Americans with Disabilities Act (ADA). As such, he is unable to perform any of the following life activities EXCEPT:

Driving 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:

Overinsurance Signup and view all the answers

Coming from an insurance point of view, which of the following is the main risk associated with disability?

Loss of income Signup and view all the answers

What is the purpose of a Disability Income Benefit?

Provide money for living expenses Signup and view all the answers

The factor used most often when underwriting a disability income policy is:

Annual earnings Signup and view all the answers

Typically, Long-Term Disability benefits are coordinated with which benefit plan?

Social Security Signup and view all the answers

Allen has a disability income policy with a $2,500 monthly benefit and a 30-day elimination period. He is unable to work 90 days following an automobile accident. What will the policy pay?

$5,000 Signup and view all the answers

Which of the following statements regarding Group Disability Income insurance is TRUE?

True Signup and view all the answers

Claims payable to a Disability Income insured, even when the insured can continue to work, are the result of a:

Presumptive disability Signup and view all the answers

In what form do disability income policies typically pay benefits?

Periodic income Signup and view all the answers

The elimination period in a disability income policy serves the same purpose as:

A deductible Signup and view all the answers

The waiting period for a disability insurance policy:

Excludes payments for a short-term illness or injury Signup and view all the answers

Which of these would NOT be considered a presumptive disability?

Loss of a finger Signup and view all the answers

An example of a presumptive disability would be:

Deafness Signup and view all the answers

What are residual disability income insurance payments based on?

The amount of the insured's income is reduced by the disability Signup and view all the answers

A disability income policy can prevent an insured from earning a higher income than if he/she were working by utilizing:

Benefit limits Signup and view all the answers

What is the elimination period of an individual disability policy?

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

Loss of income insurance provides:

An individual the means to replace wages Signup and view all the answers

Which clause defines total disability as being unable to perform the major duties of the insured's regular occupation?

Own occupation clause Signup and view all the answers

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

Wages Signup and view all the answers

Frank is shopping for a disability income policy. Which of the following would have the HIGHEST premium?

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

What percentage of a participant's income are group long-term disability benefit amounts typically limited to?

60% Signup and view all the answers

Which disability policy provision would address any concerns of the value of the benefits decreasing over time?

Cost of living benefit Signup and view all the answers

A disability elimination period is best described as a:

Time deductible Signup and view all the answers

Study Notes

Disability Income Policy Provisions

Deductible and coinsurance provisions are NOT typically included in a disability income policy.
Recurrent disabilities no longer require a new elimination period for coverage continuation.

Understanding Types of Disabilities

Permanent partial disability represents impairment that is less than total; it is considered a long-term effect.
Total disability is defined as being unable to perform the main duties of one’s regular occupation, as seen in own-occupation clauses.

Premiums and Benefits

Increasing the elimination period can lower premium costs for disability income policies.
Disability income policies often limit monthly benefits to a percentage of the insured's income to prevent over insurance.

Financial Aspects of Disability

The primary risk of disability from an insurance standpoint is the loss of income.
Disability income benefits are intended to cover living expenses when the insured is unable to work.

Claims and Definitions

Partial disability benefits apply if the insured can perform some job activities part-time but faces an income decrease.
Presumptive disability applies when a claim is payable even if the insured can continue working; examples include total deafness.

Waiting Period and Claims

The elimination period, similar to a deductible, is the waiting time before benefits are paid out for a disability.
Residual disability income insurance payments are calculated based on the decrease in the insured’s earnings due to disability.

Additional Considerations

Long-term disability benefits usually coordinate with Social Security plans to ensure comprehensive coverage.
Cost of living benefits address potential depreciation of benefits over time.

Miscellaneous Facts

A disability elimination period functions as a time deductible, impacting when benefits begin.
Group long-term disability benefits are typically capped at 60% of a participant's income.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on disability income policies with this quiz. It covers important concepts such as provisions, types of disabilities, and premiums. Perfect for students or professionals looking to reinforce their understanding of disability insurance.

Disability Income Insurance Quiz