CLU Disability Income Insurance

Question 1

What distinguishes the 'own occupation' definition of disability from the 'any occupation' definition?

Accepted Answer

Under 'own occupation,' benefits are paid if the insured cannot perform the material duties of their specific occupation, even if able to work in another field

Answer

Under 'own occupation,' benefits are paid only if the insured cannot perform any job whatsoever

Answer

Under 'any occupation,' benefits are paid if the insured cannot perform their specific occupation's duties

Answer

Under 'own occupation,' the insured must be completely bedridden to qualify for benefits

Question 2

The elimination period in a disability income policy serves a function most similar to which feature found in other insurance lines?

Accepted Answer

A deductible

Answer

The benefit period maximum

Answer

The COLA rider

Answer

The definition of disability

Question 3

A 'noncancelable and guaranteed renewable' disability income policy guarantees that:

Accepted Answer

The insurer cannot increase premiums or reduce benefits as long as premiums are paid on time

Answer

The insurer will pay benefits for life if the disability is permanent

Answer

The insured can cancel the policy at any time for a full premium refund

Answer

Benefits will automatically increase by 3% per year to offset inflation

Question 4

Under the Social Security Disability Insurance (SSDI) program, an individual qualifies as disabled when they:

Accepted Answer

Are unable to engage in any substantial gainful activity due to a medically determinable impairment expected to last at least 12 months or result in death

Answer

Are unable to perform their own specific occupation for at least 6 months

Answer

Have suffered an income loss of at least 20% due to a medical condition

Answer

Are unable to perform sedentary work and are over age 50

Question 5

A 'residual disability' benefit provision in a disability income policy pays:

Accepted Answer

A proportional benefit based on the percentage of income lost when the insured can work but suffers a loss of income due to disability

Answer

A full disability benefit whenever the insured works reduced hours

Answer

A lump-sum payment when the insured fully recovers from total disability

Answer

Benefits equal to 100% of pre-disability income minus any current earnings

Question 6

Which disability income policy provision allows the insured to increase coverage at specified future intervals without providing new evidence of medical insurability?

Accepted Answer

Future insurability (future purchase option) rider

Answer

Waiver of premium rider

Answer

Cost of living adjustment (COLA) rider

Answer

Residual disability rider

Question 7

When an individual pays disability income insurance premiums entirely with after-tax dollars, which tax treatment typically applies?

Accepted Answer

Premiums are not deductible; benefits received are generally income tax-free

Answer

Premiums are deductible; benefits received are taxable income

Answer

Both premiums paid and benefits received have no tax consequences

Answer

Premiums are deductible; benefits received are income tax-free