Chapter 4 Review (Health): Disability

Question 1

The most common type of individual disability income policy is the _____ _____ policy, which typically adjusts the premium on an annual basis and provide benefits for nonoccupational illnesses and injuries

Answer 1

guaranteed renewable

Question 2

The highest premium under the disability income policy is a _____-day waiting period with a _____-year benefit period

Answer 2

14 day
10 year

Question 3

The first method is called the _____ _____ _____ approach, which determines the benefit using a percentage of the insured’s pre-disability earnings and considers other sources of disability income

Answer 3

percent-of-earnings

Question 4

The second method used to establish disability benefits is the method. Under this approach, the policy specifies a flat income benefit amount that will be paid if the insured becomes totally disabled. Normally, this amount is payable regardless of any other income benefits the insured may receive.

Answer 4

flat amount

Question 5

In the event the insured dies because of the disability, any earned but unpaid benefits will be

Answer 5

paid to the insured’s estate

Question 6

Group long-term disability benefit amounts are typically limited to _____ of a participant’s income

Answer 6

60%

Question 7

_____ _____ or also known as “Combination Definitions”, requires the insured to be unable to perform any occupation for which he is reasonably suited by reason of education, training, or experience to qualify for disability income benefits

Answer 7

Any Combination

Question 8

The _____ _____ definition of total disability requires that the insured be unable to perform the insured’s current occupation because of an accident or sickness. This is more advantageous from the policyowner’s perspective, but it is more expensive and difficult to qualify for.

Answer 8

“own occupation”

Question 9

• ______ disabilities include blindness, deafness, loss of speech, and loss of two or more limbs (in this case it is presumed you are disabled)
• A ______ disability provision typically waives the usual requirements for total disability benefits

Answer 9

Presumptive

Question 10

• The inability of the insured to perform one or more important duties of the job or the inability to work at that job on a full-time basis. Either of which results in a decrease in income.
• Normally, _____ _____ benefits are payable only if the policyowner has first been totally disabled
• Permanent Partial disability_____ _____ would be less than total impairment and equal to permanent impairment
• This benefit is intended to encourage disabled insureds to get back to work, even on a part-time basis, without fear that they will lose all their disability income benefits
• The amount of benefit payable when a policy covers _____ _____ depends on whether the policy stipulates a flat amount or a residual amount

Answer 10

partial disability

Question 11

A flat amount benefit is a set amount stated in the policy, and this amount is usually _____ of the full disability benefit

Answer 11

50%

Question 12

• Normally used after a full disability payment have been paid and the insured is back to work, however with a reduced workload
• A ______ ______ _____ is based on the proportion of income lost due to the partial disability, considering the fact that the insured is able to work and earn some income
• The benefit is usually determined by multiplying the percentage of lost income by the stated monthly benefit for total disability.
• For example, let’s say your job was to wash 10 cars a day. You broke your arm, were still able to work, but could only wash 6 cars a day because of the residual impact of the broken arm.
• If the insured suffered a 40% loss of income because of the partial disability, the _____ _____ payable would be 40% of the benefit that the policy would provide for total disability.
• A _____ _____ _____ is usually a percentage of the total disability benefit for when the insured is working, but unable to perform some of the duties of his/her occupation

Answer 12

residual benefit

Question 13

Under the _____ _____ in a disability income policy, the insurer will pay the approved cost a of a rehabilitation program to help a disabled return to work

Answer 13

rehabilitation benefit

Question 14

• The _____ _____ specified in a disability insurance policy is the period of time that must elapse following the effective date of the policy before benefits are payable.
• It is a one-time-only period that begins on the policy’s effective date and ends _____ or _____ days after the policy has been in force.

Answer 14

The probationary period

15 or 30

Question 15

• Purpose of the probationary period is to exclude _____ _____ from coverage and provide a guidepost in borderline cases when there is a question as to whether an insured became ill before or after the effective date of the policy.
• Helps protect the insurer against ______ ______ because those who know they are ill are more likely to try to obtain insurance coverage.

Answer 15

preexisting sicknesses

adverse selection

Question 16

• _____ _____ ____ is the time immediately following the start of a disability when benefits are not payable
• These periods eliminate claims for short-term disabilities
• The longer the period, the lower the premium for comparable disability benefits
• The period is sometimes called the waiting period

Answer 16

The elimination period

Question 17

Individual short-term disability income policies provide benefits for

Answer 17

six months to two years

Question 18

Individual long-term disability income policies are characterized by benefit periods of more than

Answer 18

two years, such as 5, 10, or 20

Question 19

In some cases, total disability does not occur immediately after an accident but develops some days or weeks later

The amount of time allowed for a _____ _____ may be

Answer 19

delayed disability provision

30, 60, or 90 days etc.

Question 20

Some short-term disability income policies provide for an optional lump- sum payment for certain named injuries. This is an option that can sometimes be selected when applying for a policy.

Answer 20

Elective Indemnity

Question 21

The _____ _____ rider provides for the payment of additional income when the insured is eligible for social insurance benefits, but those benefits have not yet begun, have been denied, or have begun in an amount less than the benefit amount of the rider

Answer 21

The Social Security

Question 22

• This rider provides for indexing the monthly or weekly benefit payable under a disability policy to changes in This index.
• Typically, the benefit amount is adjusted on each disability anniversary date to reflect changes in this index.

Answer 22

The cost-of-living adjustment (COLA), connected with the Consumer Price Index (CPI)

Question 23

A(n) ______ rider on a disability income policy means that a specified disease or body part is not afforded coverage

Answer 23

exclusion

Question 24

Someone gets some payments for a disability income claim, but it turns out that they were injured while committing a crime. What will the insurer do?

Answer 24

The insurer will rescind the policy deny the claim and recover all payments made.

Question 25

A disability elimination period is best described as a:

Answer 25

time deductible.