Life and Health California Exam Disability Income Insurance

Question 1

The 'elimination period' in a disability income policy is best described as:

Accepted Answer

A waiting period after disability begins before benefits are paid

Answer

The period after which the policy terminates

Answer

The period during which pre-existing conditions are excluded

Answer

The time it takes the insurer to process a claim

Question 2

Under an 'own-occupation' definition of disability, benefits are paid when the insured:

Accepted Answer

Cannot perform the material duties of their own specific occupation

Answer

Cannot perform any job for which they are suited by education or experience

Answer

Has been disabled for more than 12 months

Answer

Receives Social Security Disability Insurance (SSDI)

Question 3

A disability income policy with a benefit period of 'to age 65' means:

Accepted Answer

Benefits are paid until the insured reaches age 65, if disabled that long

Answer

Benefits are paid for a maximum of 65 months

Answer

Benefits stop being paid at age 65 regardless of when disability started

Answer

The policy expires when the insured turns 65

Question 4

Which disability income policy rider pays an additional monthly benefit if the insured is disabled and requires assistance with activities of daily living?

Accepted Answer

Catastrophic disability rider

Answer

Cost of living adjustment (COLA) rider

Answer

Social insurance substitute rider

Answer

Return of premium rider

Question 5

Disability income benefits received by an employee are generally taxable when:

Accepted Answer

The employer paid the premiums with pre-tax dollars

Answer

The employee paid the premiums with after-tax dollars

Answer

Benefits are received as a lump sum

Answer

The disability resulted from an accident rather than illness

Question 6

What is the purpose of a 'residual disability' benefit in a disability income policy?

Accepted Answer

It pays a partial benefit when the insured returns to work but suffers a loss of income due to disability

Answer

It pays benefits to the insured's residual heirs upon death

Answer

It provides a lump-sum payment for permanent partial disabilities

Answer

It waives future premiums if the insured is partially disabled