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

Question 1

What is the 'elimination period' in a disability income insurance policy?

Accepted Answer

The waiting period before benefits begin after a disability occurs

Answer

The elimination period is a waiting period that begins when the insured becomes disabled; benefits do not start until this period ends, similar to a deductible expressed in time.

Question 2

Under an 'own occupation' definition of disability, an insured is considered totally disabled if they:

Accepted Answer

Cannot perform the material duties of their specific occupation

Answer

Under own occupation, a person is disabled if they cannot perform the duties of their specific occupation, even if they could work in another field.

Question 3

A non-cancelable disability income policy guarantees which of the following?

Accepted Answer

The insurer cannot raise premiums or reduce benefits as long as premiums are paid

Answer

A non-cancelable policy locks in both the premium and the benefit amount, preventing the insurer from changing terms as long as the policyholder continues paying premiums.

Question 4

What is a residual disability benefit in a disability income policy?

Accepted Answer

A partial benefit paid when the insured can work but suffers a loss of income

Answer

Residual disability benefits provide a partial payment proportional to the insured's loss of income when they can still work but not at full capacity.

Question 5

Disability income benefits are typically limited to what percentage of the insured's pre-disability earned income?

Accepted Answer

50–70%

Answer

Insurers typically cap disability income benefits at 50–70% of pre-disability earnings to maintain a financial incentive for the insured to return to work.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

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