Life & Health Insurance Disability Income Insurance Flashcards
7 cards from real Life & Health Insurance Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Life & Health Insurance Disability Income Insurance flashcards as text
What is 'presumptive disability' in a disability income policy?
Answer: An automatic total disability classification for specific severe losses such as loss of sight, hearing, speech, or limbs
Presumptive disability provisions automatically consider the insured totally disabled—and waive the elimination period—upon certain severe losses like blindness or loss of both hands, regardless of work ability.
Under a recurrent disability provision, if an insured returns to work and becomes disabled again from the same cause, the policy will typically:
Answer: Treat the second disability as a continuation of the first if it recurs within a specified period
The recurrent disability provision allows a second disability from the same cause within a specified period (often 6 months) to be treated as a continuation, so the insured does not have to satisfy a new elimination period.
What is a Business Overhead Expense (BOE) disability policy designed to cover?
Answer: Business operating expenses such as rent, utilities, and employee salaries during the owner's disability
A BOE policy reimburses a business owner for fixed operating expenses—like lease payments, utilities, and staff salaries—that continue while the owner is disabled and unable to generate revenue.
A return of premium rider in a disability income policy provides that:
Answer: A portion of premiums paid is returned if the insured has few or no claims over a specified period
A return of premium rider refunds a percentage of paid premiums—minus any claims paid—at the end of a specified period, rewarding policyholders who remain healthy.
How are individually owned disability income benefits taxed when the insured pays the premiums with after-tax dollars?
Answer: Benefits are received income-tax-free
When an individual pays disability premiums with after-tax money, the disability income benefits received are generally income-tax-free because the premiums were already taxed.
What is the primary purpose of the rehabilitation benefit found in some disability income policies?
Answer: To cover the costs of vocational or physical rehabilitation programs that help the insured return to work
Rehabilitation benefits fund vocational training, physical therapy, or other programs aimed at helping the disabled insured regain the ability to work and become self-sufficient again.
Which of the following policies covers only disabilities caused by accidents and excludes illness-related disabilities?
Answer: Accident-only disability policy
An accident-only disability policy pays benefits exclusively for disabilities resulting from accidental injury and does not cover disabilities arising from sickness or disease.