CEBS CEBS Disability & Life Insurance Benefits 1 — Questions and Answers
Question 1: What is the elimination period in a short-term disability (STD) or long-term disability (LTD) policy?
- The maximum duration of benefit payments
- The waiting period before disability benefits begin (Correct answer)
- The percentage of income replaced by the policy
- The period after which pre-existing conditions are covered
Correct answer: The waiting period before disability benefits begin
The elimination period is the waiting period an employee must satisfy after becoming disabled before disability benefit payments commence.
Question 2: Which definition of disability is more restrictive and harder for claimants to satisfy in LTD policies?
- Own-occupation definition
- Any-occupation definition (Correct answer)
- Social Security disability definition
- Gainful employment definition
Correct answer: Any-occupation definition
The any-occupation definition requires the claimant to be unable to perform the duties of ANY occupation for which they are reasonably suited by education, training, or experience — a much higher bar than own-occupation.
Question 3: What is AD&D insurance, and when does it pay a benefit?
- Accidental Death and Dismemberment — pays if the insured dies or loses a limb/function due to a covered accident (Correct answer)
- Additional Death and Disability — supplements Social Security disability income
- Advance Death and Deferment — allows pre-death withdrawals from life insurance
- Accelerated Death and Dismemberment — pays for terminal illness diagnosis
Correct answer: Accidental Death and Dismemberment — pays if the insured dies or loses a limb/function due to a covered accident
AD&D insurance pays a lump-sum benefit if the insured suffers accidental death, or a partial benefit (based on a schedule) for the loss of a limb, sight, hearing, or speech due to a covered accident.
Question 4: In a group term life insurance plan, what does the term 'guarantee issue amount' refer to?
- The maximum death benefit the insurer will ever pay
- The amount of coverage available without requiring evidence of insurability (EOI) (Correct answer)
- The employer's maximum contribution toward premiums
- The minimum benefit payable to any beneficiary
Correct answer: The amount of coverage available without requiring evidence of insurability (EOI)
The guarantee issue amount is the maximum life insurance benefit an eligible employee can elect without submitting evidence of insurability, typically offered during initial enrollment.
Question 5: What is a 'waiver of premium' provision in a group life or disability insurance policy?
- The employer pays all premiums so the employee owes nothing
- Premiums are waived (not owed) while the insured is totally disabled (Correct answer)
- The insurer waives the deductible in case of catastrophic loss
- Premiums are reduced for non-smokers and healthy employees
Correct answer: Premiums are waived (not owed) while the insured is totally disabled
A waiver of premium provision keeps the life or disability policy in force without requiring premium payments while the insured is totally disabled, as defined by the policy.
Question 6: Under the ADA, what obligation does an employer have when an employee's disability may affect their return to work after a leave?
- Terminate the employee after FMLA leave expires
- Engage in the interactive process to identify reasonable accommodations (Correct answer)
- Reassign the employee to a lower-paying role automatically
- Require the employee to use all accrued PTO before returning
Correct answer: Engage in the interactive process to identify reasonable accommodations
The ADA requires employers to engage in a good-faith interactive process with the disabled employee to explore reasonable accommodations that would allow them to perform their essential job functions.
CEBS CEBS Disability & Life Insurance Benefits 1
What is the elimination period in a short-term disability (STD) or long-term disability (LTD) policy?