Workers Compensation and Disability Insurance Flashcards

Which type of disability income policy provision prevents an insurer from canceling coverage as long as premiums are paid?

Answer: Noncancelable provision

A noncancelable policy guarantees the insurer cannot cancel the policy or raise premiums as long as the policyholder continues to pay the premium on time.

In a disability income policy, what is the 'elimination period'?

Answer: The time the insured must be disabled before benefits begin

The elimination period is a waiting period at the start of disability during which no benefits are paid; it functions like a deductible measured in time rather than dollars.

Which definition of disability is more favorable to the insured under a disability income policy?

Answer: Own occupation definition

The own-occupation definition pays benefits if the insured cannot perform the duties of their specific occupation, even if they could work in a different job.

Which provision in a disability income policy allows the insured to receive partial benefits when they return to work part-time after a total disability?

Answer: Residual disability benefit

The residual disability benefit pays proportional benefits when an insured returns to work part-time or at reduced earnings after a period of total disability.

Under a group short-term disability (STD) plan, what is the typical maximum benefit duration?

Answer: Up to 26 weeks

Group short-term disability plans typically provide benefits for up to 13 to 26 weeks, bridging the gap until long-term disability benefits begin.

A disability income policy that the insurer can renew but may adjust premiums on is called:

Answer: Guaranteed renewable

A guaranteed renewable policy ensures the insurer must renew coverage but allows the insurer to raise premiums on a class basis, unlike noncancelable policies.