Chapter 13

Question 1

What is included is earned income for tax purposes?

Answer 1

Commissions, bonus, salary

Question 2

A partial disability policy pays up to ____% of the total DI benefit, for up to _____ months.

Answer 2

50%; 6

Question 3

What are the common elimination period durations?

Answer 3

30, 60, 90, 180, and 365 days (selected by the owner)

Question 4

T/F: An AD&D policy only provides coverage against accidental loss.

Answer 4

T

Question 5

How can WC be obtained or provided by the employer?

Answer 5

Through a commercial insurer, the state compensation fund or self-insured

Question 6

The loss is a limb on an AD&D policy is called the ___________.

Answer 6

Capital sum

Question 7

A BOE policy provides benefits for an insureds ___________ expense.

Answer 7

Normal business

Question 8

A DI policy will provide monthly income that does not exceed ____% to _____% of a persons gross income.

Answer 8

50; 60

Question 9

WC provides coverage against __________ work related injuries.

Answer 9

Compensable

Question 10

The rider that gives benefits until the disabled is eligible for SS benefits is called the ____________ Rider.

Answer 10

SS Supplement Benefit

Question 11

T/F: Benefits from an individual DI policy are received taxable.

Answer 11

F; individual benefits are received tax free

Question 12

What is the advantage when an disability is considered a recurrent disability?

Answer 12

No new elimination period exists, and the insured receives immediate benefits

Question 13

Explain the principal sum

Answer 13

The death benefit provided on an AD&D policy

Question 14

Death or dismemberment must occur on an AD&D policy within ____ days for benefits to be paid.

Answer 14

90

Question 15

What is the period at the beginning of each new disability policy where benefits are not provided?

Answer 15

The elimination or waiting period

Question 16

An _________ DI policy provides coverage for disabilities that occur both on and off the job.

Answer 16

Occupational

Question 17

What DI rider increases the monthly income amount to offset inflation?

Answer 17

The Cost Of Living Rider

Question 18

What policy is designed to pay the insured if she cannot work due to injury or illness?

Answer 18

A disability policy

Question 19

Define partial disability.

Answer 19

The inability to perform some, but not all of you occupation reaponsibilities

Question 20

A BOE policy is not designed to pay the disabled owner an _______ or ________.

Answer 20

Income; salary

Question 21

T/F: A guaranteed insurability rider allows more coverage to be purchased at anytime without underwriting.

Answer 21

F; an insurer will limit the increase option to a specified age, such as 40 or 50.

Question 22

List five benefits that may be provided by WC.

Answer 22

Unlimited medical benefits, survivor income, funeral expense coverage, disability income, and rehabilitation benefits

Question 23

The exclusion from coverage of a particular illness or injury may be done using an _______ rider.

Answer 23

Impairment

Question 24

What is the doctors statement verifying that a disability exists preventing an insured from working?

Answer 24

Proof of loss

Question 25

What is the name of a disability that appears for a second time?

Answer 25

A recurrent disability

Question 26

What is the ceiling for the disability benefit by WC?

Answer 26

66 2/3% of income

Question 27

Premiums paid for individual DI policies are __________.

Answer 27

Not deductible

Question 28

T/F: The shorter the elimination period, the more expensive the DI policy.

Answer 28

T

Question 29

What type of income is protected by a DI policy?

Answer 29

Earned income

Question 30

DI premiums are waived by the insurer once the insured is disabled for _____ months.

Answer 30

3

Question 31

A DI policy with a 90-day elimination period would provide how many days of benefits for a disability lasting one year?

Answer 31

12 months minus 3 months (90days) equals approximately 9 months or 270 days.

Question 32

What policy provides benefits to the employer in the event a significant employee dies or becomes disabled?

Answer 32

A key employee policy

Question 33

Employer paid DI premiums are deductible for the ________.

Answer 33

Employer

Question 34

T/F: AD&D stands for Automatic Dividend and Distribution

Answer 34

F; it stands for Accidental Death and Dismemberment

Question 35

What is the length of short term DI policy benefits?

Answer 35

From 13 to 52 weeks

Question 36

What is the definition of a permanent disability?

Answer 36

A disability expected to last a lifetime

Question 37

What is the standard disability definition?

Answer 37

A persons inability to perform her normal duties or occupation

Question 38

What is a presumptive disability?

Answer 38

A disability cause by loss of sight, speech, or hearing

Question 39

The dismemberment benefit on an AD&D policy is equal to ___% of the death benefit.

Answer 39

50%

Question 40

What are DI policy premiums based on?

Answer 40

The elimination period, length and amount of monthly benefit, occupation, hobbies, age, sex, etc.

Question 41

WC is __________, employee sponsored coverage.

Answer 41

Mandatory

Question 42

What DI rider allows the policyowner to purchase additional amounts of protection without qualifying medically?

Answer 42

The guaranteed insurability rider

Question 43

Explain residual disability.

Answer 43

A type of partial disability benefit that pays based on a percentage of lost income

Question 44

To be considered a recurrent disability, the same disability must again disable the insured within ___ months.

Answer 44

6

Question 45

Benefits received from a group, employer paid DI policy are taxable to the _________.

Answer 45

Employee

Question 46

What type of DI policy is designed to make funds available to purchase the business interest of a disabled partner?

Answer 46

A disability buy sell policy

Question 47

T/F: a DI return of premium rider returns a portion of premiums paid to owners at a predetermined time.

Answer 47

T

Question 48

Define the term accident.

Answer 48

An outside event, beyond the control of the individual, that damages tissue or bone

Question 49

What is the name for DI benefits provided only for off the job disabilities?

Answer 49

No occupational disabilities

Question 50

BOE premiums are _________ to the owner and benefits received are __________.

Answer 50

Tax-deductible; taxable