Life & Health Insurance Exam Life & Health Insurance Disability Income Insurance 2

Question 1

Under an 'any occupation' definition of disability, benefits are payable only if the insured:

Accepted Answer

Cannot perform the duties of any job for which they are reasonably fitted by education and experience

Answer

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.

Question 2

What does the waiver of premium provision in a disability income policy do?

Accepted Answer

Excuses the insured from paying premiums while totally disabled

Answer

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.

Question 3

A Cost of Living Adjustment (COLA) rider in a disability income policy is designed to:

Accepted Answer

Increase benefit payments annually to help offset inflation during a long disability

Answer

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.

Question 4

How are disability income benefits generally taxed when the employer pays 100% of the group disability premium?

Accepted Answer

Benefits are fully taxable as ordinary income to the employee

Answer

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.

Question 5

A Social Security offset rider in a disability income policy:

Accepted Answer

Reduces the insured's disability benefit by the amount of Social Security disability benefits received

Answer

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.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Life & Health Insurance Disability Income Insurance 2