Financial Advisor Insurance Planning for Financial Advisors 2 — Questions and Answers
Question 1: Which definition of disability in a disability income insurance policy is most favorable to the insured?
- Any occupation definition
- Own occupation definition (Correct answer)
- Modified own occupation definition
- Social Security definition of disability
Correct answer: Own occupation definition
The own occupation definition pays benefits if the insured cannot perform the duties of their specific occupation, even if they can work in another field.
Question 2: In a disability income insurance policy, the 'elimination period' is best described as:
- The maximum period for which benefits will be paid
- The waiting period after disability onset before benefit payments begin (Correct answer)
- The exclusion period for pre-existing medical conditions
- The period during which premiums are waived due to disability
Correct answer: The waiting period after disability onset before benefit payments begin
The elimination period is essentially a deductible measured in time — benefits do not begin until the insured has been disabled for the specified waiting period (e.g., 60 or 90 days).
Question 3: Long-term care insurance benefits are typically triggered when the insured is unable to perform a specified number of Activities of Daily Living (ADLs). What is the standard minimum number of ADL impairments required?
- 1 of 6 ADLs
- 2 of 6 ADLs (Correct answer)
- 4 of 6 ADLs
- 6 of 6 ADLs
Correct answer: 2 of 6 ADLs
Federal tax law requires that tax-qualified LTC policies pay benefits when the insured is unable to perform at least 2 of 6 ADLs (bathing, continence, dressing, eating, toileting, transferring).
Question 4: Under Medicare, which part covers inpatient hospital stays, skilled nursing facility care, and hospice services?
- Medicare Part A (Correct answer)
- Medicare Part B
- Medicare Part C
- Medicare Part D
Correct answer: Medicare Part A
Medicare Part A is the hospital insurance portion that covers inpatient hospital care, skilled nursing facility stays (following a qualifying hospital stay), hospice, and some home health care.
Question 5: A Health Savings Account (HSA) can only be opened and funded by individuals enrolled in which type of health plan?
- A Health Maintenance Organization (HMO)
- A Preferred Provider Organization (PPO)
- A High-Deductible Health Plan (HDHP) (Correct answer)
- A Medicare Advantage plan
Correct answer: A High-Deductible Health Plan (HDHP)
HSA eligibility requires enrollment in an IRS-qualified HDHP; individuals covered by Medicare, a general-purpose FSA, or other non-HDHP coverage are ineligible.
Question 6: Which employer-sponsored account arrangement uses pre-tax employer dollars to reimburse employees for qualified medical expenses and is owned and controlled by the employer?
- Health Savings Account (HSA)
- Flexible Spending Account (FSA)
- Health Reimbursement Arrangement (HRA) (Correct answer)
- Dependent Care Account (DCA)
Correct answer: Health Reimbursement Arrangement (HRA)
An HRA is funded solely by employer contributions, is owned by the employer, and reimburses employees for qualified medical expenses tax-free; unlike HSAs, employees cannot contribute.
Question 7: Long-term care insurance benefits are LEAST likely to cover costs associated with which of the following settings?
- Assisted living facilities
- Certified nursing facilities (nursing homes)
- Home health aide services
- Acute inpatient hospital stays for surgery (Correct answer)
Correct answer: Acute inpatient hospital stays for surgery
LTC insurance is designed to cover chronic or custodial care needs, not acute medical care; inpatient hospital stays for surgery are covered by health insurance, not LTC policies.
Financial Advisor Insurance Planning for Financial Advisors 2
Which definition of disability in a disability income insurance policy is most favorable to the insured?