7: If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT
A Rent.
B Utilities.
C Employee payroll.
D Loss of the owner's income.
If business owners want coverage for the loss of their own income due to total disability, they need to purchase a separate individual disability income policy.
9: A Waiver of Premium provision may be included with which kind of health insurance policy?
A Basic medical
B Hospital indemnity
C Dread Disease
D Disability Income
A Waiver of Premium rider generally is included with guaranteed renewable and noncancellable individual disability income policies. It is a valuable provision because it exempts the insured from paying the policy's premium during periods of total disability.
10: A policyholder is entitled to which of the following under an individual accident and health policy?
A Return of unearned premiums
B Refusal of cancellation
C Return of earned premiums
D Extension of renewal period
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.
6: Which of the following applies to partial disability benefits?
A Benefits are reduced once an insured is no longer under a doctor's care.
B Payment is limited to a certain period of time.
C An insured is entitled to a principal sum benefit for the partial loss of a limb.
D Payment is based on termination of employment.
The partial disability benefit is typically 50% of the total disability benefit, and is limited to a certain period of time.
11: All of the following are true in regards to 24 Hour Coverage EXCEPT
A It can be distributed through a life insurance policy.
B Employees are covered around the clock.
C It reduces litigation concerning cause of injury or disease.
D Gaps in coverage are reduced as employees have both occupational and nonoccupational policies.
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.
3: Under which of the following disability income plans would the benefits be subject to income tax?
A Key person
B Partnership buy-out
C Group
D Individual
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.
4: Which of the following applies to partial disability benefits?
A Benefits are reduced once an insured is no longer under a doctor's care.
B Payment is limited to a certain period of time.
C An insured is entitled to a principal sum benefit for the partial loss of a limb.
D Payment is based on termination of employment.
The partial disability benefit is typically 50% of the total disability benefit, and is limited to a certain period of time.
8: 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 Recovering Worker’s Compensation
B Residual Disability Benefit
C Income Compensation
D Disability Income Differential
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.
10: Which of the following statements regarding Business Overhead Expense policies is NOT true?
A Any benefits received are taxable to the business.
B Leased equipment expenses are covered by the plan.
C Benefits are usually limited to six months.
D Premiums paid for BOE are tax-deductible.
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.
11: An insured severely burns her hand, but is not classified as disabled. Which of the following types of coverage would cover at least a portion of the insured’s medical expenses?
A Medical reimbursement benefit
B Medical expense compensation
C Accidental death & dismemberment
D Partial disability
Medical reimbursement benefits help to pay medical costs for accidental injuries that are not considered to be disabling.
12: A single mother wants to make sure that if she is unable to work for health reasons, she and her child would be protected financially. Which of the following insurance plans would best suit her needs?
A Total disability plan
B Workers compensation
C Comprehensive health insurance plan
D Accidental death & dismemberment
A total disability plan protects a family or individual against the economic loss that would occur if the wage earner were totally disabled.