DC Disability and Long-Term Care Insurance Flashcards

Individual disability income insurance sold in DC is designed primarily to:

Answer: Replace a portion of the insured's earned income if they become unable to work due to disability

Disability income insurance replaces a percentage of lost wages—typically 60–70% of pre-disability income—when the insured cannot work.

In DC, a disability income policy that uses an 'own-occupation' definition of disability means benefits are paid when the insured:

Answer: Cannot perform the material duties of their specific occupation

The own-occupation definition provides the broadest disability protection, paying benefits if the insured cannot perform their specific occupation even if they could work in another field.

The 'elimination period' in a DC disability income policy functions similarly to:

Answer: A waiting period before benefits begin, similar to a deductible

The elimination period is a waiting period at the start of a disability during which no benefits are paid; the insured must be disabled for this period before benefits begin.

Under DC insurance regulations, long-term care (LTC) insurance policies must include which consumer protection feature?

Answer: A nonforfeiture benefit option in case the insured stops paying premiums

DC and NAIC model regulations require LTC insurers to offer a nonforfeiture benefit, such as shortened benefit period coverage, if a policyholder lapses after paying premiums for years.

A DC long-term care insurance policy that covers care in a nursing facility, assisted living facility, and at home is best described as:

Answer: A comprehensive (integrated) LTC policy

A comprehensive LTC policy covers multiple settings of care including nursing facilities, assisted living, and home health care, giving the insured maximum flexibility.

In DC, disability income benefits received under an individually purchased policy funded entirely with after-tax premiums are generally:

Answer: Tax-free to the recipient

When the insured pays disability income premiums with after-tax dollars, benefits received are generally income-tax-free at both the federal and DC level.