Disability

Question 1

How do qualify for disability generally?

Answer 1

You have to meet the definition of the contract specifically - diff contracts use diff definitions

Question 2

Any-Occupation

Answer 2

very restrictive - same as SS definition - only if you’re disabled severely enough that you cannot work “any occupation”

Question 3

Any Occupation example

Answer 3

if a surgeon owns an 80% any occupation policy, injures his finger - he can still work as a consultant etc. so he wouldn’t qualify for “any occupation” coverage

Question 4

Own Occupation

Answer 4

allows payment if you’re unable to do your own occupation

Question 5

Own Occupation Example

Answer 5

Surgeon has 80% own occupation policy - injured finger. Say salary is 1 mil a year - can receive 800k as long as he is unable to perform his occupation

Question 6

What happens after Own Occupation stops paying?

Answer 6

Benefits would only continue if you’re also unable to do a job you have the training/education/experience for

Question 7

Presumptive Disability

Answer 7

presumes total disability even if you’re able to return to work a new job - these are major injuries - blindness, deaf, loss of hearing, loss of hands, feet or both

Question 8

How do you qualify for presumptive disability?

Answer 8

You have to have a major injury like go blind, deaf, can’t hear, loss of hand/foot or both

Question 9

Partial Disability

Answer 9

unable to do part of your job or do the job extremely slow - more severe the limitations the higher the $

Question 10

Short Term Disability Insurance Policy

Answer 10

-usually 6 months or less
-most short term plans have no probationary period or if they do its 3 months or less

Question 11

Long Term Disability Policy

Answer 11

-extended benefits, possibly lifetime
-usually disabled for longer than 6 months
-probationary period of 3 months to 1 year

Question 12

Sick Leave Policy

Answer 12

-100% of pay - rarely exceeds 6 months
-say workers comp covers 60% - sick leave policy would cover the other 40%

Question 13

Elimination period for short term plan

Answer 13

-typically 1-7 days
-benefits usually max 2 years

Question 14

Elimination for long term plan

Answer 14

-typically 3-6 months
-benefits 2 years or longer, possibly lifetime

Question 15

Can you get disability if you’re retired or unemployed?

Answer 15

No

Question 16

How do you determine how much short/long term disability you need?

Answer 16

Needs analysis

Question 17

Disability Coordination with Other benefits

Answer 17

To minimize you earning more than what you were being paid - coordination with other benefits like workers comp, SS, other insurance plans

Question 18

Disability COLA

Answer 18

policy w/inflation adjustment - prevents erosion of purchasing power

Question 19

What should you do as your income increases re:disability policies

Answer 19

Purchase new ones

Question 20

If co has more than 15 employees what are they required to include in disability policies

Answer 20

pregnancy

Question 21

Grace period for a disability policy to be reinstated automatically

Answer 21

15 days

Question 22

How does age factor into premium payments on disability

Answer 22

the lower the age the lower the premiums can be locked in

Question 23

Are premiums deductible in an individual disability policy?

Answer 23

No

Question 24

Are individual disability benefits taxed?

Answer 24

Benefits are not taxed and premiums are not deductible

Question 25

With option A universal life, what does the death benefit include?

Answer 25

the cash accumulation fund

Question 26

With option A Universal life, mortality charges are based on what

Answer 26

Net amount at risk

Question 27

What is the net amount at risk in universal life option A

Answer 27

face amount of the policy minus the accumulation fund

Question 28

How long must you own a policy before you can get a viatical settlement?

Answer 28

2 years

Question 29

What must you give the company access to if you apply for a viatical settlement?

Answer 29

Access to your medical records

Question 30

If dividends received exceed the premiums paid for a life insurance policy, how are they taxed?

Answer 30

Ordinary income

Question 31

Partial loans and surrenders of MECS are taxable on what basis?

Answer 31

LIFO

Question 32

Partial loans and surrenders on non-MECs are taxed how?

Answer 32

FIFO

Question 33

Once a life insurance policy becomes a MEC, how can you convert it to a Non-MEC?

Answer 33

You can’t, there is no way to reverse the tax treatment

Question 34

What are 2 types of buy sell agreements?

Answer 34

Cross purchase, entity purchase

Question 35

2 ways to calculate an individuals insurance needs

Answer 35

Human life value method needs analysis method

Question 36

Restrictive underwriting results in higher or lower claims?

Answer 36

Lower, think restrictive, lower

Question 37

Residual disability provision covers what

Answer 37

if you have to work fewer hours due to partial disability