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Disability income insurance
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Chapter 2 part B

Disability income

QuestionAnswer
Disability income insurance is the lost income if a person becomes disabled. you can get it indvidually or thru an employer.
elimination period is a waiting time before the insurance starts paying benefits after a disability. the longer the waiting period meaning number of days after injury the lower the premium.
what is the purpose of an elimination period? to elimanate claims of short term injury or illness that keeps you out of work. The elimination period is a "time" deductible, designed to eliminate coverage for short-term disabilities, and reduce the filing of excessive claims.
you will NOT recive diability benefits if.. your elimnation period last longer than you disability. for example if you were rendered disabiled for 75 days but your elimation period if 45 days you will only be cominsated for those 30 day
probationary period separate from elimination period it is the waiting time of 10-30 days from policy issue date and benefits wont be paid for only illness related disability.
a probationary period only apply to what? rather than what? it only applies to sickness not accidents or injury
what is the purpose of a probationary period? to prevent people from buying disability insurancy policy right after they find out about a health issue that needs coverage very soon.
Benefit period is the length of time for the disability benefits payments to last for each disability after the elimination period. policies offer benefit periods of 1, 2, 5 year, ot the age of 65 or for a life time. the longer the benefit period the higher the premium.
when it comes to Disability income insurance policy what can result in a high premium? short elimination periods, long or forever lasting benefits periods
what are the two types of injury definition in insurance? 1. accidental bodily injury: that the DAMAGE to body is unexpected and unintended 2. accidental means: that the CAUSE of accident must be unexpected and unintended
which one of the definition of injury will provide a broader coverage? A policy that uses accidental bodily injury definition will provide broarder coverage
sickness in insurance aka illness is either sickness or disease contracted after the policy has been in force at least for 30 days or after the policy is in place
presumptive disability is a provision in the policy that qualifies the insured for full disability benefits under specific conditions regardless of if they can work or not.
what are the conditions for presumptive disability benefits? dismemberment of one or mroe limbs, total permanent blindness, or loss of speech or hearing. some may require severance of limbs rather than loss of use.
Benefits limitations is the amount of monthly benefits that is payable under the policy based on the percentage of the insured past earnings. basically they limit benefits based on average income before the disability
why do companies utilize benefit limitations? they do not reimburse indivdual for 100% or more of lose income because the insured will no longer have an incentive to return to work after diability.
How do companies make sure people are not making profit or taking advantage of disability income insurance? they do so by adjusting the payable amount based on any money recived from social security or workers compensation. As to encourage them to return to work as soon as they are cabable of doing so
what is social insurance supplement (SIS) used for? AK Social Security rideres is a supplement, add on or benefits payable to replace socail security disability or workers compensation programs or fill in any gaps or enhance financial assistance, security and overall coverage
What are the situations as to provide eligibility for social security riders or SIS? this feature comes into place when: 1. the insured is eligible for Social Security but benefits haven't started yet, 2. if the insured is denied Social Security coverage, 3. or when the Social Security amount is less than what the rider offers.
What are instances where disability income policy generally does not cover losses? loss arising from war, military service, self inflicted injury, oversease residence, or injuries suffered while commiting or attempting a felony
What are the three types of disability income policies used for business? 1. business overhead expense policy 2. key person disability 3. disability buy- sell insurance
Business overhead expense policy (BOE) if a small business owner becomes disable this helps cover costs of rent utilities and salaries but not owner income waiting period of 15-30days pays benefits for 1-2yrs premium is tax free benefits are taxable
Busienss disability buyout policy the buy sell agreement legally binding agreement as to how the business will pass between parites in the event that the owner dies or is disabled. has cash to fund the buyout, long elimination periods 1-2yr premium are taable and benefits are tax free.
Key employee policy employer purchase on the life of a key employee. a persons economic value of the worker in term of loss, hiring and trianing replacement. the busienss is the contract owner, premium payor and beneficiary
group VS. individual disability income policy based on benefits group benefits is based on a % of workers income, individual benefits is based on a flat amount,
group VS. individual disability income policy based on short term group plans provide max benefits period of 13-52 weeks (26 most common) and weekly benefits of 50-100% of individuals income individual plan has max benefit of 6 month- 2 year and is not renwable
groupl disability income policy based on long term provides max benefirt period of more than 2 years with monthly benefits limited to 60% of individuals income
the three other conditions only applicable to group plans are. 1. minmum participation requirment of mployment for 30-90 days for coverages 2. makes benefits supplements to any benefits received under workers comp 3. may limit coverage to only nonoccupational
recurrent disability specifies period oftime during with the recurrence of an injury orillness will be considered a continuation of a prior disability
Created by: Hthabet
 

 



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