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Flashcards in Chapter 7 Deck (37):

what 3 types of disability benefits that can typically be provided by an insurance company?

1. waiver of premium for disability benefit
2. waiver of premium for payor benefit
3. disability income benefit


what is the most common supplemental benefit that may be added? define it

waiver of premium for disability benefit.
The insurer promises to give up (waive) its right to collect premiums that become due while the insured is totally disabled. Note there is typically a 3-6 month period between the moment of disability and the time in which you can claim the benefit.


define disabled in terms of a total disability claims

the inability to preform the essential duties of her own occupation or any other occupation for which she is reasonable suited by education, training or experience.


Do total disability waivers come with universal and variable universal life insurance policies

No, since the premiums vary. It typically has a waiver of cost of insurance benefit- (monthly deduction waiver benefit) that waives most periodic charges.


what is a waiver of premium for payor benefits?

Designed for third-party policies. Which provides that the insurance company will waiver its right to collect a policy's renewal premium if the policy owner dies or becomes disabled.


when is a waiver of premium for payor benefit usually added?

usually as a rider to a juvenile insurance policy, where its paid on the child by the parent. In this case the premium is usually only waived until 18 or 21.


a waiver of premium for payor benefit generally includes a two-part definition of total disability. define this.

during first two years, the owner is considered totally disabled if she is unable to perform the essential duties of occupation. After, the owner is considered totally disabled if she is unable to preform the essential duties of nay occupation for which she is reasonably suited for.


what is the disability income benefits?

provide monthly income benefit to the policy-owner if he becomes totally disabled while the policy is in force.


how is the disability income benefit typically calculated?

its a stated percentrage of the policy's face amount. Some state a maximum benefit amount payable or maximum benefit period, or both.
Typically the premiums charged for the income disability benefit and the WP, are both waived during the total disability period.


What is an accidental death benefit ?

A supplemental benefit that provides a death benefit in addidion to the policies basic benefit if the insured dies as a results of an accidnet.
typically expired @ 65-70


What is the term used when the faceamount of the Accidental benefit is the same as the basic death benefit?

Double indemnity benefit.


there are some typical exclusions to the accidental death benefit. What are certain accidents not typically covered?

1. self-inflicted injuries
2. war-related accidents
3. aciation-related accident, if the insured acted in a capacity other than passanger.
4. accidents occurred during the acts of a crime.


what is an accidental death and dismemberment benefit? (ADD)

an accidental benefit that also provides a dismemberment benefit payable if an accident causes the insured to lose any two limbs or sight in both eyes. Sometimes half the payout is available if the insured loses one eye or limb.


Define the term loss of limb in terms of ADD benefits?

the actual physical loss of the limb or as the loss of the use of the limb.


what is an accelerated death benefit? (living benefit)

provides that a policy owner may elect to receive all or part of the polcy's death benefit before the insured death if certain conditions are met.
- the amount is deducted from the death benefit, and is usually only available on large face amount policies


what are the 3 commonly ordered types of accelerated death benefits?

1. terminal illness benefit
2. dread disease benefit
3. long-term care benefit


Define the terminal illness benefit

the insurer pays a portion of the policy's death benefit to a policy-owner who suffers from a terminal illness and has a physician-certified life expectancy of less than a stated time (12-24 months).


what is the payout on a terminal illness benefit

generally the maximum TI benefit is a percentage (25-75) of the faceamount up to a stated maximum. Usually the payment is paid in a lump sum.


does the payment on a TI benefit have to be used for medical expenses?



how is the premium for a TI benefit calculated?

usually paid for by an administrative charge that the insurer assesses when a policy owner elects to exercise the benefit.


what is a dread disease benefit (DD)>

its also known as a CI benefit (critical illness). its an acelerated death benefit under which the insurere agrees to pay a portion of the policies face amount to the policy ownder if the insured suffers from one of a number of specified diseases.


what typical insurable events qualify under the DD benefit?

1. life-threatening cancer
2. coronary artery bypass
3. MI
4. stroke
5. end-stage renal failure
- may include vital organ transplant and alzheimers disease.


Define the long-term care insurance benefit (LTC)

accfelerated death benefit under which the insurer agrees to pay a montly benefit to a policy owner if the insured requires constant care for a medical condition.


what is the payout on a LTC benefit?

the payment is generally equal to the stated percentage of the policies facfe amount. The premiums are typically waived on both thye LTC and the basic life policy during the Long term care period.


is there a waiting period in terms of payout on LTC benefits?

yes, generally 90 days, some benefits also require that the LTC coverage must be in force for a given period of time, usually 1 year or more, before they can qualify for the LTC benefit.


what is a spouse insurance ride?

supplemental benefit that provides term life insurance coverage on the spouse. Usually sold on the basis of coverage units, (5K$).. Some one usually can buy 5-10 units per person (~25-50K)


define a childrens insurance tider

supplemental benefit that provides term insurance on the children. Like the spouse insurance rider, coverage is sold on units (1k-2k).


what term is given to the insurance rider that offer spouse and children coverage on a base plan?

family insurance rider, or spouse and children rider


what is the premium on a child insurance rider?

the premium charged for each coverage unit is a stated amount, regardless of the number of children covered.


what is the time period (ages) in which a typical child insurance rider is offered

15 days- 21 or 25 years old. but some will coffer conversion priviledges that allow children to convert to term when they become policy owners.


what is a second insured rider? (optional insured rider)

a supplemental life insurance policy benefit that provides term insurance coverage on the life of a person other than the policy insured.
-covered under the insured and is usually a spouse or another relative, or business partner. These people are individually assessed by u/w


what options are available to policy owners who would like to increase the amount of his insurance but is no longer insurable at that time.

two additional benefits that are available without having to provide evidence at the time of purse. Guarenteed insurability and paid0ip additional options benefit.


what is the guaranteed insurability benefit (GI/ GIO)?

give policy-owner the right to purchase additional insurance at the same type as the basic life insurance policy for an additional premium amount on specified option dates during the life of the policy without having to provide evidence.


How is the premium calculated for a GI or GIO?

based on the insured attained age when the additional insurance is purchased.
The amount of coverage is usually limited to the policy facfeamount or to an amount specified on the rider. (whichever is less) .


is their an expiry to a GIO benefit?

usually is exercised only until the insured reaches age 40.


what is a paid-up additions option benefit?

allows the owner of a whole life policy to purchase sinfle-premium paid-up additions to the policy on stated dates in the future without providing evidence of the insured insurability.


how are the premiums for a paid-up addition option benefit calculated?

bawsed on the insured attained age at the time the paid-up options are purchased. usually if the option is not exercised for a number of stated years, then the rider will terminate. At the time, the ones purchased stay in place, but the owner can no longer exercise the option to buy new ones.