Coming from an insurance point of view, which of the following is the main risk associated with disability?
Loss of limbs
Loss of income
Decreased work skills
Decreased mobility
answer
Loss of income
question
Jonas has disability insurance through his employer. The employer pays 75% of the premium, and Jonas pays the other 25%. What is Jonas's tax liability for any benefits paid from the disability plan?
Taxes must be paid on all benefits received
No taxes are payable on any benefits received
Taxes must be paid on 25% of the benefits received
Taxes must be paid on 75% of the benefits received
answer
Taxes must be paid on 75% of the benefits received.
question
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
Additional coverage rider
Paid-up option rider
Extended insurability rider
answer
Guaranteed insurability rider
question
In what form do disability income policies typically pay benefits?
Lump sum
Periodic income
Tax credit
Annuity
answer
Periodic income
question
An example of a presumptive disability would be
a stroke
deafness
diabetes
cancer
answer
deafness
question
A disability elimination period is best described as a
time deductible
dollar deductible
eligibility period
probation period
answer
time deductible
question
A disability policyowner 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?
Recurrent period
Probationary period
Benefit period
Elimination period
answer
Benefit period
question
What is the primary factor that determines the benefits paid under a disability income policy?
Education level
Wages
Type of occupation
Age
answer
Wages
question
Claims payable to a Disability Income insured, even when the insured can continue to work, are the result of a
Total disability
Recurrent disability
Presumptive disability
Lengthy elimination period
answer
Presumptive Disability-A presumptive disability provision specifies certain conditions that automatically qualify the insured for the full benefit because the severity of the conditions presumes the insured is totally disabled, even if the insured is able to work.
question
Loss of income insurance provides
an individual the means to replace wages
an individual the ability to collect workers' compensation
an individual the ability to continue with medical coverage after a disability
unlimited income replacement to a disabled person
answer
An individual the means to replace wages.
question
What percentage of a participant's income are group long-term disability benefit amounts typically limited to?
30%
40%
50%
60%
answer
60%
question
Frank is shopping for a disability income policy. Which of the following would have the HIGHEST premium?
14 day waiting period / 5 year benefit period
14 day waiting period / 10 year benefit period
28 day waiting period / 5 year benefit period
28 day waiting period / 10 year benefit period
answer
14 day waiting period/10 year benefit period
question
Which of these would NOT be considered a presumptive disability?
Loss of vision and speech
Loss of hearing
Loss of a leg or arm
Loss of a leg and arm
answer
Loss of a leg or an arm
question
Which clause defines total disability as being unable to perform the major duties of the insured's regular occupation?
Own occupation clause
Any occupation clause
Residual clause
Presumptive clause
answer
Own occupation
question
Typically, Long-Term Disability benefits are coordinated with which benefit plan?
Social Security
Individual Retirement Account
Life insurance
Accrued sick time
answer
Social Security
question
Which disability policy provision would address any concerns of the value of the benefits decreasing over time?
Cost of living benefit
Inflation rider benefit
Policy enhancement benefit
Interest sensitive benefit
answer
Cost of living benefit
question
What is the purpose of a Disability Income Benefit?
Provide money for living expenses
Completely replace the insured's total income
Reimburse for medical expenses related to a disability
Pay for business overhead expenses if the owner becomes disabled
answer
Provide money for living expenses
question
The waiver of premium does NOT include which provision?
All future premiums are waived if the insured recovers from the disability
If the insured qualifies, the premiums are waived retroactively to the beginning of the disability
The waiver of premium generally does not extend past the insured's age 60 or 65
The insured must be disabled for a set period of time before benefits begin
answer
All future premiums are waived if the insured recovers from the disability
question
What is the elimination period of an individual disability policy?
Time period an insured must wait before coverage begins
Time period a disabled person must wait before benefits are paid
Time period after the policy issue date in which the provisions are still contestable
The point in time when benefits are no longer payable
answer
Time period a disabled person must wait before benefits are paid
question
Chris is an insured bricklayer who severed his left hand in an automobile accident. Although his primary duty cannot be performed, Chris is also a substitute high school teacher. He collects a full disability income check every month. How does his policy define total disability?
Recurrent
Any occupation
Own occupation
Presumptive
answer
Own occupation
question
Which type of disability would be less than total impairment and equal to permanent impairment?
Partial total disability
Permanent partial disabilty
Residual partial disability
Temporary partial disability
answer
Permanent partial disability
question
A rehabilitation benefit is intended to
prepare the insured to return to employment
minimize the insurer's liability
give the insured time to find a new career
increase the overall benefits given to the insured
answer
prepare the insured to return to employment
question
The waiting period for a disability insurance policy
excludes payments for a short-term illness or injury
is the period of time that must elapse following the effective date of the policy before benefits are payable
helps the insurer determine if the claim is legitimate
allows the insurer to collect medical information on the policyowner
answer
Excludes payment for a short-term illness or injury
question
The factor used most often when underwriting a disability income policy is
annual earnings
sex of the insured
marital status
occupation
answer
annual earnings
question
A disability income policy can prevent an insured from earning a higher income than if he/she were working by utilizing
elimination periods
probationary periods
benefit limits
deductibles
answer
benefit limits
question
A policyowner 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
Nondisabling injury
Presumptive disability
Flat amount disability
answer
Partial disability
question
Tyler purchased a disability policy with a waiver of premium rider on April 1. He is disabled on May 1. On June 1, he receives proof of permanent and total disability, and submits a claim. He begins receiving benefits on June 15. When are his premiums waived?
April 1
May 1
June 1
June 15
answer
May 1
question
Which of the following statements regarding Group Disability Income insurance is TRUE?
It pays 100% or more of an insured's income in the event of disability
It provides benefits for nonoccupational illnesses and injuries
It is generally more expensive than individual policies
It usually pays for occupation-related disabilities
answer
It provides benefits for nonoccupational illnesses and injuries
question
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?
Waiver of premium rider
Guaranteed benefit rider
Payor benefit rider
Guaranteed insurability rider
answer
Guaranteed insurability rider
question
The monthly benefit for an individual disability income policy is usually limited to a percentage of the insured's income in order to avoid
claims
the elimination period
over insurance
adverse selection
answer
Overinsurance
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