Questions
Questions
14: Which of the following is NOT true regarding partial disability?
A An insured would qualify if he couldn’t perform some of his normal job duties.
B This is a form of insurance that covers part-time workers.
C The insured can still report to work and receive benefits.
D Benefit payments are typically 50% of the total disability benefit.
Partial disability covers full-time-working insureds who are unable to perform some, but not all, of their regular job duties or can no longer work full-time, which ultimately results in a loss of income. Payment from partial disability is typically 50% of the total disability benefit.
What is the main purpose of the total disability plan?
A To provide benefits when the insured is unable to perform any of the duties of the occupation for which they are suited by education or training
B To pay additional monthly benefits to totally disabled individuals
C To protect individuals or families against the economic loss after a total disability of the wage earner
D To provide comprehensive coverage for disabled individuals
A total disability plan protects a family or individual against the economic loss that would occur if the wage earner were totally disabled.
1: According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase an insured’s benefit level?
A Birth of a child
B Death of a spouse
C Age 40
D Marriage
The FIO rider allows insureds to increase their benefit levels to certain amounts at specific times without proof of insurability. The following are the typical occasions when an insurer allows for a benefit increase: ages 25, 28, 31, 34, 37 and 40; marriage; and the birth of a child.
7: What type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities?
A Accidental Death & Dismemberment
B Medical Reimbursement Benefit
C Partial Disability
D Basic Accidental Injury
Medical Reimbursement Benefits help to pay medical costs for accidental injuries that are not considered to be disabling.
8: Which of the following refers to "own occupation" disability?
A Insured business owner is unable to perform the duties of his/her own business.
B Insured business owner is unable to perform the duties of any related business.
C Insured is unable to perform duties of the occupation for which he/she was educated and trained.
D Insured is unable to perform duties of any occupation.
Under an Own Occupation plan, if the insured cannot perform duties of his/her current job or the job that he/she was educated and trained for, disability benefits will be paid, even if the insured would be capable of earning income at a different occupation.
10: The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called
A Workers compensation.
B Nonoccupational coverage.
C Unemployment coverage.
D Occupational coverage.
Most group disability income is nonoccupational coverage, covering insureds only off the job. The employer carries workers compensation for on the job injuries or sickness.
14: In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is
A Broader in duration.
B Broader in general.
C More limited in general.
D More limited in duration.
A policy that uses the accidental bodily injury definition will provide broader coverage than a policy that uses the accidental means definition.
2: An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?
A Partial benefits
B Full benefits until the blindness lifts
C No benefits
D Full benefits
Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.
2: A man works for Company A and his wife works for Company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim,
A Both plans will pay the full amount of the claim.
B The insurance through his company is primary.
C The insurance through his wife's company is primary.
D The insurance plans will split the coverage evenly.
The policy that covers the person filing the claim will be considered the primary policy.
5: An insurer is preparing to pay disability income benefits to an insured. In order to prevent overinsurance, the insurer monitors the income of the insured before submitting payment. Which rule corresponds to this behavior?
A Relation of earnings to insurance
B Overinsurance prevention
C Income tracking
D Income monitoring phase
The relation of earnings to insurance rule is designed to protect an insurer from overinsuring disability cases. Before submitting payment, the insurer monitors the income of the insured for a period of time. The goal of this monitoring is to make sure that the income the insured receives while on disability is not greater than the income that the insured receives while working.
10: A policyholder is entitled to which of the following under an individual accident and health policy?
A Return of earned premiums
B Extension of renewal period
C Return of unearned premiums
D Refusal of cancellation
Most policies are cancelable, which means the insurer may cancel at any time with proper notice while retaining any earned premium. Only unearned premiums must be refunded.
11: The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called
A Nonoccupational coverage.
B Unemployment coverage.
C Occupational coverage.
D Workers compensation.
Most group disability income is nonoccupational coverage, covering insureds only off the job. The employer carries workers compensation for on the job injuries or sickness.
12: An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?
A Coverage will apply, but will be reduced by 50%.
B No coverage will apply, since the injury could have been foreseen.
C No coverage will apply, since disability income policies cover sickness only.
D Coverage will apply since the break was accidental.
An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.
15: Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?
A Full
B 50%
C 25%
D None
General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.
9: In disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability?
A Typical
B Statutory
C Own occupation
D Any occupation
For disability income benefits to be paid, the insured must whatever definition of total disability is stated in the policy, which varies. The "any occupation" definition states that an insured is disabled if they cannot perform any job that they are suited for by prior education, training or experience. The "own occupation" definition states that an insured is disabled if they cannot perform their own job, whatever that may be.
10: Which of the following describes taxation of individual disability income insurance premiums and benefits?
A Premiums are tax deductible, but benefits are not taxable.
B Premiums are tax deductible, and benefits are taxable.
C Premiums are not tax deductible, and benefits are not taxable.
D Premiums are not tax deductible, but benefits are taxable.
In individual disability income, benefits are not taxable, and premiums are not tax deductible
11: The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called
A Double Indemnity.
B Residual Benefits.
C Cost of Living (COLA).
D Waiver of Premium.
The purchasing power of fixed disability benefits may be eroded due to inflation and increases in the cost of living. This rider is used to protect against these trends by increasing the monthly benefits automatically once the insured has been receiving benefits for 12 months, if the cost of living increases.
5: Which of the following refers to "own occupation" disability?
A Insured is unable to perform duties of any occupation.
B Insured business owner is unable to perform the duties of his/her own business.
C Insured business owner is unable to perform the duties of any related business.
D Insured is unable to perform duties of the occupation for which he/she was educated and trained.
Under an Own Occupation plan, if the insured cannot perform duties of his/her current job or the job that he/she was educated and trained for, disability benefits will be paid, even if the insured would be capable of earning income at a different occupation.
10: A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?
A The insured will have to select a plan from which to collect benefits.
B The benefits will be coordinated.
C Neither plan would pay.
D Each plan will pay in equal shares.
Benefits will be coordinated when individuals are covered under two or more health plans.
11: An insured owns a medical expense policy that he purchased for his family. The insured's employer purchased a Group Disability Income policy for the insured and all eligible employees. The insured subsequently suffered an accident on the job that left him unable to work for four months. If the insured receives benefits from his disability income policy, which of the following would be true?
A Benefits received that are attributable to employer contributions are fully taxable to the employee as income.
B Premiums the insured paid for his medical expense policy are normally deductible from his income.
C Benefits from employer contributions are not taxable.
D The insured can deduct his medical expense benefits from his income tax.
Group disability income premium payments are considered tax-deductible by the business as an ordinary business expense. In a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income.
13: Which of the following describes taxation of individual disability income insurance premiums and benefits?
A Premiums are not tax deductible, but benefits are taxable.
B Premiums are tax deductible, but benefits are not taxable.
C Premiums are tax deductible, and benefits are taxable.
D Premiums are not tax deductible, and benefits are not taxable.
In individual disability income, benefits are not taxable, and premiums are not tax deductible
14: An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?
A No coverage will apply, since the injury could have been foreseen.
B No coverage will apply, since disability income policies cover sickness only.
C Coverage will apply since the break was accidental.
D Coverage will apply, but will be reduced by 50%.
An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.
1: According to the proof of loss provision, which of the following must be specified in a contract that provides disability benefits?
A A disclaimer that no benefits will be paid if proof of loss is not furnished
B Specific losses that are covered and not covered
C When and how an insured may prove a loss
D How a claim can be invalidated
A contract that provides disability benefits must specify reasonable requirements as to the time, method and form of proof of disability (in other words, when and how an insured may prove a loss).
2: On a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform
A Their regular job.
B Any job that they are suited for by prior education.
C Any job that they are suited for by prior training.
D Any job that they are suited for by prior experience.
If a disability income policy contains the own occupation definition, then the insured will be considered disabled if they cannot perform that particular job, regardless of other jobs that they may be able to do.
3: Which of the following describes taxation of individual disability income insurance premiums and benefits?
A Premiums are not tax deductible, but benefits are taxable.
B Premiums are tax deductible, but benefits are not taxable.
C Premiums are tax deductible, and benefits are taxable.
D Premiums are not tax deductible, and benefits are not taxable.
In individual disability income, benefits are not taxable, and premiums are not tax deductible
5: All of the following are true in regards to 24 Hour Coverage EXCEPT
A It reduces litigation concerning cause of injury or disease.
B Gaps in coverage are reduced as employees have both occupational and nonoccupational policies.
C It can be distributed through a life insurance policy.
D Employees are covered around the clock.
The terminology "24 Hour Coverage" comes from the fact that employees are covered “around the clock”, i.e. 24 hours a day, 7 days a week, 365/366 days a year. While they are working, employees are covered under the Workers Compensation part of the policy. Off-the-job they are covered under the nonoccupational part. 24 Hour Coverage does not include distribution through a life insurance policy.
6: The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called
A Nonoccupational coverage.
B Unemployment coverage.
C Occupational coverage.
D Workers compensation.
Most group disability income is nonoccupational coverage, covering insureds only off the job. The employer carries workers compensation for on the job injuries or sickness.
10: An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin?
A 5
B 3
C 2
D 1
The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.
13: Which of the following statements regarding Business Overhead Expense policies is NOT true?
A Benefits are usually limited to six months.
B Premiums paid for BOE are tax-deductible.
C Any benefits received are taxable to the business.
D Leased equipment expenses are covered by the plan.
Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.
15: What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider?
A For the duration of the disability or the contract, depending on which ends first
B 1 month
C 1 year
D 2 years
The Additional Monthly Benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year’s time, the insurer ends the benefit and assumes that Social Security will then begin benefit payment.
14: Which of the following statements regarding Business Overhead Expense policies is NOT true?
A Benefits are usually limited to six months.
B Premiums paid for BOE are tax-deductible.
C Any benefits received are taxable to the business.
D Leased equipment expenses are covered by the plan.
Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.
2: An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?
A Partial benefits
B Full benefits until the blindness lifts
C No benefits
D Full benefits
Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.
2: A man works for Company A and his wife works for Company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim,
A Both plans will pay the full amount of the claim.
B The insurance through his company is primary.
C The insurance through his wife's company is primary.
D The insurance plans will split the coverage evenly.
The policy that covers the person filing the claim will be considered the primary policy.
5: An insurer is preparing to pay disability income benefits to an insured. In order to prevent overinsurance, the insurer monitors the income of the insured before submitting payment. Which rule corresponds to this behavior?
A Relation of earnings to insurance
B Overinsurance prevention
C Income tracking
D Income monitoring phase
The relation of earnings to insurance rule is designed to protect an insurer from overinsuring disability cases. Before submitting payment, the insurer monitors the income of the insured for a period of time. The goal of this monitoring is to make sure that the income the insured receives while on disability is not greater than the income that the insured receives while working.
10: A policyholder is entitled to which of the following under an individual accident and health policy?
A Return of earned premiums
B Extension of renewal period
C Return of unearned premiums
D Refusal of cancellation
Most policies are cancelable, which means the insurer may cancel at any time with proper notice while retaining any earned premium. Only unearned premiums must be refunded.
11: The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called
A Nonoccupational coverage.
B Unemployment coverage.
C Occupational coverage.
D Workers compensation.
Most group disability income is nonoccupational coverage, covering insureds only off the job. The employer carries workers compensation for on the job injuries or sickness.
12: An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?
A Coverage will apply, but will be reduced by 50%.
B No coverage will apply, since the injury could have been foreseen.
C No coverage will apply, since disability income policies cover sickness only.
D Coverage will apply since the break was accidental.
An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.
15: Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?
A Full
B 50%
C 25%
D None
General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.
9: In disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability?
A Typical
B Statutory
C Own occupation
D Any occupation
For disability income benefits to be paid, the insured must whatever definition of total disability is stated in the policy, which varies. The "any occupation" definition states that an insured is disabled if they cannot perform any job that they are suited for by prior education, training or experience. The "own occupation" definition states that an insured is disabled if they cannot perform their own job, whatever that may be.
10: Which of the following describes taxation of individual disability income insurance premiums and benefits?
A Premiums are tax deductible, but benefits are not taxable.
B Premiums are tax deductible, and benefits are taxable.
C Premiums are not tax deductible, and benefits are not taxable.
D Premiums are not tax deductible, but benefits are taxable.
In individual disability income, benefits are not taxable, and premiums are not tax deductible
11: The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called
A Double Indemnity.
B Residual Benefits.
C Cost of Living (COLA).
D Waiver of Premium.
The purchasing power of fixed disability benefits may be eroded due to inflation and increases in the cost of living. This rider is used to protect against these trends by increasing the monthly benefits automatically once the insured has been receiving benefits for 12 months, if the cost of living increases.
A Insured is unable to perform duties of any occupation.
B Insured business owner is unable to perform the duties of his/her own business.
C Insured business owner is unable to perform the duties of any related business.
D Insured is unable to perform duties of the occupation for which he/she was educated and trained.
Under an Own Occupation plan, if the insured cannot perform duties of his/her current job or the job that he/she was educated and trained for, disability benefits will be paid, even if the insured would be capable of earning income at a different occupation.
10: A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?
A The insured will have to select a plan from which to collect benefits.
B The benefits will be coordinated.
C Neither plan would pay.
D Each plan will pay in equal shares.
Benefits will be coordinated when individuals are covered under two or more health plans.
11: An insured owns a medical expense policy that he purchased for his family. The insured's employer purchased a Group Disability Income policy for the insured and all eligible employees. The insured subsequently suffered an accident on the job that left him unable to work for four months. If the insured receives benefits from his disability income policy, which of the following would be true?
A Benefits received that are attributable to employer contributions are fully taxable to the employee as income.
B Premiums the insured paid for his medical expense policy are normally deductible from his income.
C Benefits from employer contributions are not taxable.
D The insured can deduct his medical expense benefits from his income tax.
Group disability income premium payments are considered tax-deductible by the business as an ordinary business expense. In a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income.
13: Which of the following describes taxation of individual disability income insurance premiums and benefits?
A Premiums are not tax deductible, but benefits are taxable.
B Premiums are tax deductible, but benefits are not taxable.
C Premiums are tax deductible, and benefits are taxable.
D Premiums are not tax deductible, and benefits are not taxable.
In individual disability income, benefits are not taxable, and premiums are not tax deductible
14: An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?
A No coverage will apply, since the injury could have been foreseen.
B No coverage will apply, since disability income policies cover sickness only.
C Coverage will apply since the break was accidental.
D Coverage will apply, but will be reduced by 50%.
1: According to the proof of loss provision, which of the following must be specified in a contract that provides disability benefits?
A A disclaimer that no benefits will be paid if proof of loss is not furnished
B Specific losses that are covered and not covered
C When and how an insured may prove a loss
D How a claim can be invalidated
A contract that provides disability benefits must specify reasonable requirements as to the time, method and form of proof of disability (in other words, when and how an insured may prove a loss).
2: On a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform
A Their regular job.
B Any job that they are suited for by prior education.
C Any job that they are suited for by prior training.
D Any job that they are suited for by prior experience.
If a disability income policy contains the own occupation definition, then the insured will be considered disabled if they cannot perform that particular job, regardless of other jobs that they may be able to do.
3: Which of the following describes taxation of individual disability income insurance premiums and benefits?
A Premiums are not tax deductible, but benefits are taxable.
B Premiums are tax deductible, but benefits are not taxable.
C Premiums are tax deductible, and benefits are taxable.
D Premiums are not tax deductible, and benefits are not taxable.
In individual disability income, benefits are not taxable, and premiums are not tax deductible
5: All of the following are true in regards to 24 Hour Coverage EXCEPT
A It reduces litigation concerning cause of injury or disease.
B Gaps in coverage are reduced as employees have both occupational and nonoccupational policies.
C It can be distributed through a life insurance policy.
D Employees are covered around the clock.
The terminology "24 Hour Coverage" comes from the fact that employees are covered “around the clock”, i.e. 24 hours a day, 7 days a week, 365/366 days a year. While they are working, employees are covered under the Workers Compensation part of the policy. Off-the-job they are covered under the nonoccupational part. 24 Hour Coverage does not include distribution through a life insurance policy.
6: The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called
A Nonoccupational coverage.
B Unemployment coverage.
C Occupational coverage.
D Workers compensation.
Most group disability income is nonoccupational coverage, covering insureds only off the job. The employer carries workers compensation for on the job injuries or sickness.
10: An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin?
A 5
B 3
C 2
D 1
The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.
13: Which of the following statements regarding Business Overhead Expense policies is NOT true?
A Benefits are usually limited to six months.
B Premiums paid for BOE are tax-deductible.
C Any benefits received are taxable to the business.
D Leased equipment expenses are covered by the plan.
Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.
15: What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider?
A For the duration of the disability or the contract, depending on which ends first
B 1 month
C 1 year
D 2 years
The Additional Monthly Benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year’s time, the insurer ends the benefit and assumes that Social Security will then begin benefit payment.
2: Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?
A Presumptive disability
B Dismemberment disability
C Partial disability
D Residual disability
Presumptive disability is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.
4: What will happen if it is impossible for an injured insured to produce proof of disability in the time specified in a contract that provides disability benefits?
A After the deadline, benefits will be reduced by a percentage every week proof is not furnished.
B Claims will be paid as contracted provided the proof is furnished as soon as possible.
C The insured must submit to a doctor’s examination before benefits will be paid.
D The insurance company has the right to cancel the policy.
As long as the insured produces proof of loss as soon as possible, a claim for disability benefits will not be invalidated or reduced.
5: An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?
A The group plan will pay a portion of the employee's expenses.
B The group plan will pay depending on the employee's recovery.
C The group plan will not pay because the employee was injured at work.
D The group plan will pay.
Because the employee's injuries were work related, the group health policy would not respond. The insured would have to rely on worker's compensation for coverage.
8: An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan?
A 1 month
B She would not receive any benefits.
C 3 years
D 2 years
Under an Own Occupation plan, if the insured cannot perform his/her current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period. After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.
9: Regarding the taxation of Business Overhead policies,
A Premiums are not deductible, but expenses paid are deductible.
B Premiums are deductible, and benefits are taxed.
C Premiums are not deductible, and benefits are taxed.
D Premiums are not deductible, but benefits are deductible.
The premiums paid for BOE insurance are tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received.
12: Janie is on bed rest for a brain injury. She is finally released to return to some of her normal activities but is only allowed to work on a part-time basis. Which of the following could help Janie recover the portion of income lost by working only part-time?
A Income Compensation
B Disability Income Differential
C Recovering Worker’s Compensation
D Residual Disability Benefit
A Residual Policy Benefit is written for those individuals who are returning to work after a period of disability but are only able to work on a part-time basis. The benefit compensates the insured for the amount of monthly income lost by the reduced number of working hours. For instance, if Janie earns $2500 per month but, because of her reduced hours, only earns $1500 per month, she will receive a $1000 benefit payment.
13: Under which of the following disability income plans would the benefits be subject to income tax?
A Individual
B Key person
C Partnership buy-out
D Group
In group disability income policies, benefit payments that are attributed to employee contributions are not taxable, but benefits payments that are attributed to employer contributions are taxable to the employee.
15: An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?
A No benefits
B Full benefits
C Partial benefits
D Full benefits for 2 years
Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies.), total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work.
Incorrect Answers:
Q: What is the own occupation disability?
A: Insured's inability to perform duties of his or her current job or an occupation for which the insured is educated and trained
A: Insured's inability to perform duties of his or her current job or an occupation for which the insured is educated and trained
Q: What type of disabilities will be covered by occupational coverage?
A: Disabilities that result from accidents or sicknesses that occur on or off the job
A: Disabilities that result from accidents or sicknesses that occur on or off the job
Q: What type of insurance covers an employee who is hurt on the job?
A: Workers compensation
A: Workers compensation
Q: What type of health insurance is sold to small business owners to reimburse them for the overhead expenses?
A: BOE - Business Overhead Expense insurance
A: BOE - Business Overhead Expense insurance
Q: What are the four types of workers compensation benefits?
A: Medical, income, rehabilitation and death benefits
A: Medical, income, rehabilitation and death benefits
Q: What is the primary purpose of disability income insurance?
A: To replace income lost due to a disability
A: To replace income lost due to a disability
Q: What entity regulates workers compensation benefits?
A: State government
A: State government
Q: A waiver of premium provision may be included with what type of health insurance policies?
A: Disability Income
A: Disability Income
Q: What type of health insurance covers partners or corporate officers of a closely held business?
A: Disability buy-sell
A: Disability buy-sell
Q: What portion, if any, of the individual disability income policy benefits are taxed to the insured?
A: Disability benefits are not income taxable.
A: Disability benefits are not income taxable.
Q: What is a presumptive disability provision?
A: Provision found in most disability income policies that specifies the conditions that will automatically qualify for full disability benefits
A: Provision found in most disability income policies that specifies the conditions that will automatically qualify for full disability benefits
Q: How can an AD&D policy be written?
A: As a rider to a health insurance policy, or as a separate policy
A: As a rider to a health insurance policy, or as a separate policy
Q: What is the term for a period of time immediately following a disability during which benefits are not payable?
A: Elimination period
A: Elimination period
Q: What is another name for Old Age, Survivors, and Disability Insurance benefits?
A: Social Security
A: Social Security
Q: How does someone qualify for Social Security disability income benefits?
A: The insured must have the proper insured status (such as fully insured), meet the definition of disability, and satisfy the waiting period
A: The insured must have the proper insured status (such as fully insured), meet the definition of disability, and satisfy the waiting period
Q: What benefit is based on a primary insurance amount (PIA)?
A: Social Security disability benefit
A: Social Security disability benefit
Q: What does the amount of disability benefit that an insured can receive depend on?
A: The insured's income at the time of policy application
A: The insured's income at the time of policy application
Q: What type of health insurance would pay for hiring a replacement for an important employee who becomes disabled?
A: Key-person disability insurance
A: Key-person disability insurance
Q: What is the purpose of a buy-sell agreement for health insurance policies?
A: To specify how the business will pass between owners when one of them dies or becomes disabled
A: To specify how the business will pass between owners when one of them dies or becomes disabled
Q: After the elimination period, a totally disabled insured qualified for benefits from a disability income policy that has a waiver of premium rider. What will happen to the premium that was paid into the policy during the elimination period?
A: Premium will be refunded
A: Premium will be refunded
1: An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?
A Partial benefits
B Full benefits until the blindness lifts
C No benefits
D Full benefits
Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.
4: An insured owns a medical expense policy that he purchased for his family. The insured's employer purchased a Group Disability Income policy for the insured and all eligible employees. The insured subsequently suffered an accident on the job that left him unable to work for four months. If the insured receives benefits from his disability income policy, which of the following would be true?
A Benefits received that are attributable to employer contributions are fully taxable to the employee as income.
B Premiums the insured paid for his medical expense policy are normally deductible from his income.
C Benefits from employer contributions are not taxable.
D The insured can deduct his medical expense benefits from his income tax.
Group disability income premium payments are considered tax-deductible by the business as an ordinary business expense. In a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income.
8: In disability income insurance, the time between the onset of an injury or sickness and when benefits begin is known as the
A Elimination period.
B Qualification period.
C Enrollment period.
D Probationary period.
On disability income insurance, the time between the onset of an injury or sickness and the time benefits begin is known as the waiting or elimination period.
9: An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?
A The group plan will pay.
B The group plan will pay a portion of the employee's expenses.
C The group plan will pay depending on the employee's recovery.
D The group plan will not pay because the employee was injured at work.
Because the employee's injuries were work related, the group health policy would not respond. The insured would have to rely on worker's compensation for coverage.
10: Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
A Disability Buy-Sell
B Proprietary Transfer
C Absolute assignment
D Transfer of Ownership
The Disability Buy-Sell agreement specifies how a business will pass between business owners if one of the owners dies or becomes disabled.
13: Which of the following is NOT a characteristic of a group long-term disability plan?
A The benefit period may be to age 65.
B The benefit can be up to 66 and 2/3% of one's monthly income.
C The benefit can be up to 50% of one's yearly income.
D The elimination period is the same as in the short-term plan's benefit period.
The maximum benefit is based upon monthly income.
14: If an employer provides long-term group disability insurance for its employees, what percentage of monthly wages are lower-paid employees eligible to collect?
A 33 and 1/3%
B 50%
C 66 and 2/3%
D 90%
If an employer provides long-term group disability insurance for its employees, the benefit period may be limited to age 65, and benefits will be limited to 50% of the monthly wages for higher-paid employees and 66 and 2/3% of the monthly wages for lower-paid employees.