Disability Income Insurance Flashcards
6 cards from real Life and Health California Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Disability Income Insurance flashcards as text
Which of the following best describes the 'any-occupation' definition of total disability?
Answer: The insured cannot perform any occupation for which they are reasonably suited by education, training, or experience
Any-occupation total disability requires that the insured be unable to engage in any occupation for which they are reasonably suited—a stricter standard than own-occupation.
A disability income policy that cannot be canceled and whose premiums cannot be increased is called:
Answer: Non-cancelable
A non-cancelable policy guarantees the insurer cannot cancel coverage or raise premiums as long as the insured pays the stated premium.
Under a business overhead expense (BOE) disability policy, which of the following is a covered expense?
Answer: Employee salaries, rent, and utilities of the business
BOE policies reimburse a disabled business owner for the fixed overhead expenses of running the business, such as employee salaries, rent, and utilities.
A 'cost of living adjustment' (COLA) rider on a disability income policy:
Answer: Increases the benefit amount annually to keep pace with inflation during a disability
The COLA rider automatically increases the monthly disability benefit each year, often tied to the CPI, to protect the insured's purchasing power during a long-term disability.
If a disability income policy has a 90-day elimination period and the insured becomes disabled on January 1, when will the first benefit payment typically be made?
Answer: April 1
After a 90-day elimination period beginning January 1, the insured satisfies the waiting period on April 1, and the first benefit payment is issued for that date.
Which provision in a disability income policy prevents the insured from collecting more in benefits than they earn in income?
Answer: Relation of earnings to insurance provision
The relation of earnings to insurance provision limits the total disability benefit to a percentage of the insured's pre-disability income to prevent over-insurance.