Life & Health Insurance Exam Life & Health Insurance Disability Income Insurance 2

Question 1

Under an 'any occupation' definition of disability, benefits are payable only if the insured:

Accepted Answer

Cannot perform the duties of any job for which they are reasonably fitted by education and experience

Answer

Cannot perform the duties of their own job

Answer

Is confined to a hospital or nursing facility

Answer

Has been disabled for at least 12 consecutive months

Question 2

What does the waiver of premium provision in a disability income policy do?

Accepted Answer

Excuses the insured from paying premiums while totally disabled

Answer

Waives the elimination period after the first claim

Answer

Reduces the benefit amount in exchange for lower premiums

Answer

Allows premium payments to be deducted from benefit checks

Question 3

A Cost of Living Adjustment (COLA) rider in a disability income policy is designed to:

Accepted Answer

Increase benefit payments annually to help offset inflation during a long disability

Answer

Reduce premiums as the insured ages

Answer

Adjust the elimination period based on economic conditions

Answer

Automatically increase the face amount of the policy each year

Question 4

How are disability income benefits generally taxed when the employer pays 100% of the group disability premium?

Accepted Answer

Benefits are fully taxable as ordinary income to the employee

Answer

Benefits are received tax-free

Answer

Only 50% of benefits are taxable

Answer

Benefits are subject to capital gains tax

Question 5

A Social Security offset rider in a disability income policy:

Accepted Answer

Reduces the insured's disability benefit by the amount of Social Security disability benefits received

Answer

Pays additional benefits equal to estimated Social Security income

Answer

Eliminates the waiting period if Social Security denies the claim

Answer

Doubles the benefit if Social Security disability is approved

Question 6

Which of the following best describes short-term disability (STD) insurance compared to long-term disability (LTD) insurance?

Accepted Answer

STD covers shorter benefit periods (weeks to months) while LTD covers years or to retirement age

Answer

STD has longer elimination periods and higher benefit amounts

Answer

STD is always provided by the government; LTD is private only

Answer

STD pays higher benefits than LTD for the same condition

Question 7

The guaranteed insurability rider in a disability income policy allows the insured to:

Accepted Answer

Purchase additional disability coverage in the future without proving insurability

Answer

Guarantee that premiums will never increase

Answer

Convert the disability policy to a life insurance policy

Answer

Extend the benefit period without a new application