Accident and Sickness Insurance Flashcards

An architect is unable to work at her own occupation due to a car accident, but she is able to earn an income as a university lecturer. Under a standard 'own occupation' disability policy, how would her eligibility for benefits be affected?

Answer: She would receive full disability benefits regardless of her income from lecturing.

An 'own occupation' definition of disability means the insured is eligible for benefits if they are unable to perform the main duties of their specific job at the time of disability. The ability to work in a different field, even without a loss of income, does not disqualify them from receiving their full disability benefit.

A small business owner purchases a Business Overhead Expense (BOE) insurance policy. If the owner becomes disabled, which of the following expenses would typically NOT be covered by the policy?

Answer: The owner's personal salary and lost profits.

Business Overhead Expense (BOE) insurance is designed to cover the fixed, ongoing operating costs of a business if the owner becomes disabled. Covered expenses include items like rent, employee salaries, and utilities. It explicitly excludes the owner's own salary, loss of profits, or the cost of a replacement. Personal disability insurance is needed to cover the owner's lost income.

What is the primary trigger for a benefit payout under a Critical Illness insurance policy?

Answer: The diagnosis of a specific, covered medical condition.

Critical Illness insurance pays a one-time, lump-sum benefit upon the diagnosis of one of the specific, predetermined serious conditions listed in the policy, such as cancer, heart attack, or stroke. The payment is triggered by the diagnosis itself, not the insured's ability to work, their income loss, or their need for care.

In an Accidental Death and Dismemberment (AD&D) policy, the amount paid for the loss of a limb is referred to as the:

Answer: Capital Sum

In an AD&D policy, the 'Principal Sum' is the amount paid for accidental death. The 'Capital Sum' is the amount paid for accidental dismemberment, such as the loss of a limb or sight, and is typically a percentage of the Principal Sum.

A graphic designer is recovering from an illness. She can now work two days a week, earning 40% of her pre-disability income. Her disability policy includes a residual disability benefit. How will this benefit likely be calculated?

Answer: The benefit will be a percentage of her total disability payment, proportional to her 60% loss of income.

Residual disability benefits are designed for individuals who are not totally disabled but have suffered a loss of income due to sickness or injury. The benefit paid is typically proportional to the percentage of income lost. Since she has lost 60% of her income, her residual benefit would be calculated based on this percentage.

Which of the following best describes the 'any occupation' definition of disability in a long-term disability policy?

Answer: The insured is unable to perform the duties of any job for which they are reasonably suited by education, training, or experience.

The 'any occupation' definition is more restrictive than 'own occupation'. It defines total disability as the inability to work in any occupation for which the insured is reasonably qualified based on their skills, education, and experience. This means if they can work in a different, suitable job, they may not be considered disabled under this definition.