Life & Health Insurance Disability Income Insurance Flashcards
7 cards from real Life & Health Insurance Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Life & Health Insurance Disability Income Insurance flashcards as text
Under an 'any occupation' definition of disability, benefits are payable only if the insured:
Answer: Cannot perform the duties of any job for which they are reasonably fitted by education and experience
The 'any occupation' definition is more restrictive; the insured must be unable to work in any suitable occupation, not just their own, to qualify for benefits.
What does the waiver of premium provision in a disability income policy do?
Answer: Excuses the insured from paying premiums while totally disabled
The waiver of premium provision keeps the policy in force without requiring premium payments when the insured is totally disabled, typically after a specified waiting period.
A Cost of Living Adjustment (COLA) rider in a disability income policy is designed to:
Answer: Increase benefit payments annually to help offset inflation during a long disability
A COLA rider increases disability benefit payments periodically—often tied to the CPI—so the insured's purchasing power is preserved during an extended disability.
How are disability income benefits generally taxed when the employer pays 100% of the group disability premium?
Answer: Benefits are fully taxable as ordinary income to the employee
When employers pay disability insurance premiums, those premiums are a tax deduction for the employer but the resulting benefits are taxable income to the disabled employee.
A Social Security offset rider in a disability income policy:
Answer: Reduces the insured's disability benefit by the amount of Social Security disability benefits received
A Social Security offset rider lowers the insurer's benefit payment by the amount the insured receives from Social Security Disability Insurance, preventing over-insurance.
Which of the following best describes short-term disability (STD) insurance compared to long-term disability (LTD) insurance?
Answer: STD covers shorter benefit periods (weeks to months) while LTD covers years or to retirement age
Short-term disability insurance provides benefits for a limited period (typically up to 26 weeks), while long-term disability covers extended periods that may last until retirement age.
The guaranteed insurability rider in a disability income policy allows the insured to:
Answer: Purchase additional disability coverage in the future without proving insurability
A guaranteed insurability rider lets the insured buy more disability coverage at specified future dates regardless of any change in their health status.