Unit 25: Disability Income Insurance Flashcards
(47 cards)
Page 342
Define total disability
insured’s inability to perform any or all duties of occupation
Define Own Occupation
the insured’s OWN occupation at time disability begins
Define Any Occupation
an alternative/more restrictive def of total disability
means insured’s inability to perform duties of ANY occupation for which he is reasonably qualified (by education, experience, training…)
Which “Occupation” definition is more favorable to the insured?
OWN occupation – less restrictive and more commonly used
What do long-term disability policies use to cover diff periods of time of disability?
Use both “own” and “any” to cover diff periods during the insured’s disability
Page 340
Why is disability often called the living death?
earning power dies while life and expenses (increase) go on
How much of income does disability income insurance typically replace?
A portion of earnings while an insured is disabled.
What is the purpose of disability income insurance?
to replace income when disability prevents a person from working/earning a living
What two ways is disability income insurance available?
- Individual policies
- Group benefits pkg
Are INDIVIDUAL disability policy benefits taxable (from handwritten note)?
No
Are GROUP coverage disability benefits taxable (from handwritten note)?
Yes
Why are group disability income policies more favorable than individual?
- generally more liberal than indiv
- few limitation/exclusions
- easier to acquire coverage
- usually less costly
Page 341
What are some practical considerations in determining disability income needs?
- establish minimum income required if income stops (due to disability)
- consider the need for retirement plan maintenance (in even of long-term disability)
- include enough long-term disab coverage for both occupational and nonoccupational sickness/injury
- include short-term disability coverage to provided income during social security waiting period or to supplement workers’ compensation
What are 4 alternatives to disability income insurance that people might consider and what are the concerns?
- Using savings (one long disability could wipe out savings)
- Borrowing (no one going to lend you money if you’re not working)
- Depending on spouse’s income (will it be enough when used to 2)
- Liquidating assets (can you get a fair market price when forced to liquidate?)
When looking at total disability, what 2 types of work activities do insurers look at?
- The insured’s OWN occupation
- ANY occupation the insured may be qualified to perform
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Page 343
What is presumptive disability?
a condition that automatically qualifies the insured for total disab. classification whether or not he/she can work
What 3 conditions are generally considered presumptive?
- loss of use of any two limbs
- total and permanent blindness
- loss of speech and hearing
How else can presumptive disability also be determined?
Using a loss of earnings test
What other 2 ways is disability defined?
By its cause
The disability can be caused by total accident (or injury) OR
total sickness disability
What 2 types of disability do most long-term plans cover?
Occupational and nonoccupational accidents
and sickness
Occupational benefits often reduced by what is received from worker’s comp or social security
What is a probationary period for some disabil income policies?
A period that begins when policy goes into effect.
often 15 or 30 days or 60 dyas for longterm policies.
This period is usually for sickness not accidents
Page 344
What is the purpose of the probationary period?
Relieves insurance co from having to pay benefits for pre-existing conditions
Define the elimination period in disability income policies?
also called a “waiting” period.
Time between onset of a disabil
and the beginning of benefit payments
Can insureds choose the length of elimination periods?
Yes depending on how long they can manage without addition income after being disabled.
