How long can a person continue to draw state disability insurance benefits quizlet?

The more hazardous an occupation is

The higher the insurance premiums will be.

Presumptive disability

A provision that is found in most disability income policies that specifies conditions that will automatically qualify the insured for full disability benefits, such as the loss of two limbs.

Insurance that would pay for hiring a replacement for an important employee who becomes disabled is called

Key employee disability insurance.

The business is the contract holder and would receive benefits if a specified key employee became disabled.

In disability income insurance, the own occupation definition of disability applies

For the first 2 years of a disability.

How is the amount of Social Security disability benefits calculated?

It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years.

The lowest 5 years of income may be deleted from calculation.

An insured wants to buy a disability income policy that pays a maximum monthly benefit of $1,200. To make sure that the disability benefit keeps up with inflation, the insured would need to add

A cost of living rider.

Harry is recovering from a long period of disability. Which rider could protect his business from loss of income due to his absence, even after he is no longer disabled?

Residual rider

Residual riders provide benefits for loss of income that occurs after an insured recovers from a period of disability.

Although the insured is no longer disabled, the business suffered because of his or her absence.

This rider would help protect against that loss of income.

Benefit periods for individual short-term disability policies will usually continue from

6 months to 2 years.

Short-term disability is defined as a disability lasting not more than 2 years.

Under what condition are group disability income benefits received by an employee NOT taxable as income?

When the benefits received are equal or less than the employee's percentage of the contribution.

The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called

Cost of Living (COLA).

The purchasing power of fixed disability benefits may be eroded due to inflation and increases in the cost of living.

This rider is used to protect against these trends by increasing the monthly benefits automatically once the insured has been receiving benefits for 12 months, if the cost of living increases.

In key person disability insurance

The contract is owned by the business, the premium is paid by the business, and the business is the beneficiary.

The key person is the insured, and the business must have the key person's consent to be insured in writing.

The premium for an insured's group disability income policy is $250 per month. Her employer contributes $125 of the premium. If the insured becomes disabled and receives $350 per week in benefits, she will pay income tax on what amount of the benefit?

$175

Since the insured's employer pays half of the cost of the insurance ($125 in premiums), half of the benefit ($175) is taxable as income to the insured.

On a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform

Their regular job.

If a disability income policy contains the own occupation definition, then the insured will be considered disabled if they cannot perform that particular job, regardless of other jobs that they may be able to do.

In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least

12 months.

Social Security disability benefits are paid to claimants whose disability is expected to last at least 12 months or lead to death.

An insured purchased a disability income policy with a 10-year benefit period. The policy stated a 20 day probationary period for illness. If the insured is hospitalized with an illness 2 weeks after the policy was issued, how much will the policy pay?

Nothing; illness is not covered during the first 20 days of the contract.

Which statement accurately describes group disability income insurance?

The extent of benefits is determined by the insured's income.

Group plans usually specify the benefits based on a percentage of the worker's income.

Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

An insured is covered by a partially contributory group disability income plan that pays benefits of $4,000 a month. If the insured pays 25% of the monthly premium, how much of the monthly benefit would be taxable?

$3,000

On partially contributory group disability income insurance, only that portion of the benefits that are related to the premium paid by the employer is taxable to the employee.

In this case, because the employer pays 75% of the premium, the employee will be taxed on 75% of the benefits.

Carson Refinery offers group Accidental Death and Dismemberment insurance to its workers on a contributory basis. Assuming at least 75% of the eligible employees participate in the plan, an employee would have the privilege of

Naming his/her own beneficiary.

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?

Disability Buy-Sell

In a disability policy, the probationary period refers to the time

During which illness-related disabilities are excluded from coverage.

How can insurers obtain information on an applicant's avocations and the way they will affect a risk?

Through the use of a questionnaire.

David was disabled for a long period of time and has recently returned to work. Unfortunately, his business has suffered a loss of income as a result of his extended absence. What disability rider could protect David against loss of income occurring after his recovery?

Residual rider

Residual rider

Provides benefits for loss of income that occurs after an insured recovers from a period of disability.

Although the insured is no longer disabled, the business suffered because of his or her absence.

This rider would help protect against that loss of income.

When does a person qualify to receive disability-related income?

When the insured is unable to perform his/her job duties

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?

Full benefits

Presumptive Disability plans offer full benefits for specified conditions.

These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies.), total and permanent blindness, or loss of speech or hearing.

Benefits are paid, even if the insured is able to work.

A noncontributory group disability income plan has a 30-day waiting period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to a covered disability, the employee will receive

$12,000, all of which is taxable.

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?

Presumptive disability

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?

No coverage will apply, since the injury could have been foreseen.

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan?

2 years

Under an Own Occupation plan, if the insured cannot perform his/her current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period.

After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.

In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is

Broader in general.

What is the elimination period for Social Security disability benefits?

5 months

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin?

1

The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay.

After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.

What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider?

1 year

Susan has a short-term disability income policy with an "integration of benefits" provision. If she becomes disabled and is also eligible to receive benefits from the state disability insurance program, her policy will

Reduce its benefits by an amount equal to her state disability payments.

The "integration of benefits" provision is designed to prevent a duplication of benefits or "overinsurance."

Premium payments for personally-owned disability income policies are

Not tax deductible.

Max pays for an individual occupational disability income policy. If he becomes disabled while on vacation, the insurer

Must be notified within 20 days of the onset of the disability.

What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered?

Probationary period

Probationary period

The period of time after a policy is in effect before claims arising out of an illness are covered.

This is to prevent adverse selection, persons waiting until they have been exposed to a cause of loss before purchasing coverage.

Henry has a disability income policy. As the result of a traffic accident, he lost his left arm. Henry's gross earned income before the disability was $3,000 a month. How much will his disability income insurance pay per month?

Not to exceed $2,100.

Usually, the benefits for disability income insurance policies are $50-$100 as a minimum, and as high as $10,000 as a maximum.

However, the benefits may not exceed 50-70% of gross earned income ($2,100 in this example).

Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as

Any occupation - more restrictive than other definitions.

If total disability is defined as any occupation, it means the coverage will apply only if the insured cannot find any means of income whatsoever.

This is more strict than own occupation, where a person merely has to prove that they cannot perform the job for which they were previously trained.

A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses?

"Own occupation" - less restrictive than other definitions

The period of time immediately following a disability during which benefits are not payable is

The elimination period.

The elimination period is a waiting period, expressed in days, not dollars, imposed on the insured from the onset of disability until benefit payments commence.

Which of the following disability income policy options allows an insured's disability coverage to increase with inflation?

Automatic increase provision

What is the purpose of the rehabilitation benefit in disability insurance?

To cover the expenses of retraining the insured to return to work

What percentage of individually-owned disability income benefits is taxable?

0%

Premiums are paid with after tax dollars. Benefits are not income taxable.

In a disability policy, the elimination (or waiting) period refers to the period between

The first day of disability and the day the insured starts receiving benefits.

The elimination, or waiting, period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start.

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy?

When the expenses exceed a certain percentage of the insured's adjusted gross income

In either medical expense insurance policies or long-term care insurance policies, unreimbursed medical expenses paid for the insured, the insured's spouse and dependents may be claimed as deductions if the expenses exceed a certain percentage of the insured's adjusted gross income.

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

Residual disability

The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called

Nonoccupational coverage.

When an insurer combines two periods of disability into one, the insured must have suffered a

Recurrent disability.

Recurrent disability is the period of time (usually within 3-6 months) during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability.

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?

None

General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

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