Flashcards in Chapter 8 Deck (108)
Define Mortality risk
the risk of a particular individual dying, at any given time, when compared to other individuals of the same age and sex.
Define morbidity risk
the risk of a particular individual contracting a disease, or other disabling condition at any given time when compared to other individuals of the same age or sex.
What are some examples of mortality data>
heigh, weight, BP, diabetes and smoking.
would a living benefit underwriting manual be based on more factual data than a life insurance mannual?
would assessment of a morbidity risk be more subjective than an assessment of a mortality risk?
Yes, and it requires different skills.
True or False.
At any given time of an individuals working life, there is a far greater change of experiencing a disability than death?
at the age of 37 the chance of suffering a disability of at least 90 days duration is 8x greater thant the chance of dying.
True or False
the odds of a mortgage foreclosure due to a disability are 16x higher than the risk of foreclosure due to death?
how is disability insurance paid out in the time of a claim?
paid under the terms of the policy if the insurable event occurs. When total disability occurs, a benefit is payable (monthly benefit) after a defined period of time (waiting period), for a defined lenght of time (the benefit period)
What are the 3 types of renewabilikty provisions avialable on individual disability insurance policies?
1. conditionally renewable
2. guaranteed renewable
What do you consider a "non-traditional" vs a "traditional" disability insurance policy?
conditionally renewable policies are "non-traditional" while guarenteed renewable and non-cancelable are "traditional"/
what are conditionally renewable disability plans? 1
1. allows the insurance company the most flexability in making changes to an in force policy. Can cancel or change the plan without notice to specific policy holders.
2. does not provide for any premium or policy provisionguarentees nor for the contribution of the policy
Class is ordinary defined by what?
specific waiting period
Who would want a conditionally renewable policy?
individuals who are looking for a low-cost disability coverage and those who do not qualify for traditional disability insurance.
1.high-risk or low-skilled occupations,
2. seasonal or part-time work,
What is a guaranteed renewable policy?
cant be canceled or changed, provided premium is paid to date.
1. premium can increase by class if the company is experiencing poor claims hx,
2. u/w is less restrictive
3. can include benefit limitations, ie. periods, elimination periods, or reduced beenfit amount for certain claims.
4. some impairements can be excluded from these plans
What is a non-cancelable policy?
the most strictly u/w policy.
as long as premium is paid the company cannot:
1. increase the premiums, or make changes without aggreements
2. change or add provisions/restrictions to the policy
3. cancel the policy, regardless of insured's change in occupation/health.
Does the non-cancelable provision have a time period?
yes, usually age 65.
some insurance companies may allow the policy to conitnue s/t premiums being paid and the insured continues to work FT.
What are some exceptions that are made to the policies when an insured is >65 yo.
1. premiums are usually no longer guarantted and are based on the insurers age on renewable basis.
2. the waiting period remains unchanged as per the original contract but the benefit period is changed to either 12 or 24 months.
3. definition of disability is "total"
4. any benefit riders are terminated.
Disability insurance policies define the conditions that must be met in order for a benefit to be payable. What are the 3 definition categories?
1. own occupation
2. regular occupation
3. any occupation.
Define the term "own occupation" ?
referred to as "own occ" and provides disability coverage for the individual who cannot perform their specific job function. n
What defines a total disibility for own occupation?
as the insurerd's inability, due to injury or sickness, to preform the important duties of his/her current occupation.
- insured must be under the regular care and attendance of a legally qualified medical practitioner.
some policies provide a limited own occupation period. What is this?
its where the insured would be protected in his own occupation for a shorter time period than the full length stated under the benefit period of the policy.
ie first 2, 5, 10 years of benefit period after which the definition should change to that of a regular or any occupation.
What is the definition of total disability for a regular occupation?
same as own occ apart from the exception that the insurers is ineligible for disability beenfits, if able tto work an occpation for which he/she has been educated/trained, or has experience with respect to the duties required under that specific job.
What is a limited regular occupation period mean ?
the regular occupation period would last for the first 2, 5, 10 years of the benefit period, with the definition changing to any occupation thereafter.
what is the definition of any occupation disability?
the lest liberal type of disability.
definition is based on the insured's ability to work in any reasonable occupation.
what happens when a claim is placed for an any occupation disability?
the adjudicator will determine the individuals' ability to work. Claims are adjudicated based on contract definitions in conjunction with all relevant medical, occupation and other information in support of the claim.
what are loss of income policies?
disability policies whom measure total disability in tems of income loss.
The proportion paid is based on loss of income rather than the loss of ability to preform duties.
if the insurers is unable to return to gainful employement due to disability, the Full benefit will be paid out.
How does the disability insurance policy structure differ form the life insurance policy structure?
in the manner in which the benefit payment is made and because the DI policy has a waiting period and a benefit period.
- also contains many various contractual exclusion riders.
- no cash value associated to a disability policy.
How are the benefit payments different with a disability policy?
payable on a monthly basis for the duration of the disability and upon recovery and continued premium payments, the policy remains in force.
What is the waiting period?
AKA the elimination period?
designates the period of time one must be disabled prior to benefits becoming payable.
- usually 30 days, although this can vary.