LLQP Accident and Sickness Insurance 4 — Questions and Answers
Question 1: A policyholder is injured in a car accident and cannot work for 6 months. Which provision in a disability income policy determines the amount of benefit paid per month?
- The elimination period clause
- The benefit amount provision (Correct answer)
- The coordination of benefits clause
- The waiver of premium rider
Correct answer: The benefit amount provision
The benefit amount provision specifies the monthly dollar amount the insured receives when totally disabled.
Question 2: Under a group accident and sickness plan, which of the following is typically NOT considered an eligible dependent?
- Spouse of the insured employee
- Unmarried child under age 26
- Domestic partner recognized by the employer
- Grandparent living in the insured's household (Correct answer)
Correct answer: Grandparent living in the insured's household
Grandparents are generally not recognized as eligible dependents under standard group health insurance plans.
Question 3: The 'any occupation' definition of total disability is considered more restrictive than the 'own occupation' definition because:
- It pays higher benefits to the insured
- The insured must be unable to perform any job for which they are reasonably suited (Correct answer)
- It has a shorter elimination period
- It covers partial disability automatically
Correct answer: The insured must be unable to perform any job for which they are reasonably suited
Under 'any occupation,' benefits are only paid if the insured cannot work in any job suited to their education and experience, making it harder to qualify.
Question 4: An insured purchases a critical illness policy. She is later diagnosed with a covered condition. How are benefits typically paid under this type of policy?
- As a monthly income replacement benefit
- As reimbursement only for hospital expenses
- As a lump-sum payment upon diagnosis (Correct answer)
- As reimbursement after treatment is completed
Correct answer: As a lump-sum payment upon diagnosis
Critical illness policies pay a lump-sum benefit upon diagnosis of a covered condition, regardless of actual medical expenses.
Question 5: Which of the following statements about the 'pre-existing condition' exclusion period is CORRECT under individual accident and sickness policies?
- It permanently excludes all conditions the insured had before applying
- It is a temporary period during which benefits for conditions existing before the policy are limited or excluded (Correct answer)
- It only applies to group insurance plans
- It cannot exceed 6 months under any state law
Correct answer: It is a temporary period during which benefits for conditions existing before the policy are limited or excluded
A pre-existing condition exclusion is typically a time-limited period, not a permanent exclusion, after which coverage for those conditions may begin.
Question 6: Under the LLQP framework, which type of accident and sickness benefit specifically replaces income lost due to a short-term disability lasting weeks to a few months?
- Long-term disability insurance
- Short-term disability insurance (Correct answer)
- Critical illness insurance
- Accidental death and dismemberment insurance
Correct answer: Short-term disability insurance
Short-term disability insurance is designed to replace income during brief disability periods, typically ranging from a few weeks up to two years.
Question 7: An insured's disability income policy includes a cost-of-living adjustment (COLA) rider. What is the primary purpose of this rider?
- To waive premiums if the insured becomes disabled
- To increase benefit payments over time to keep pace with inflation (Correct answer)
- To extend the benefit period beyond the policy's original term
- To provide a lump-sum payment at the end of disability
Correct answer: To increase benefit payments over time to keep pace with inflation
The COLA rider increases disability benefit payments periodically, usually tied to an inflation index, to preserve purchasing power.
LLQP Accident and Sickness Insurance 4
A policyholder is injured in a car accident and cannot work for 6 months.
Which provision in a disability income policy determines the amount of benefit paid per month?