Which one of the following statements regarding disability insurance is false?

Question 1 options:

The longer the elimination period, the less expensive the policy.

An own-occupation policy will provide disability benefits if the insured is unable to perform the duties of his or her own occupation.

An any-occupation policy is less expensive than an own-occupation policy.

A residual benefit clause provides the insured with benefits that extend beyond the disability period.

Question 2 (1 point)

Jack has a disability income policy that pays a monthly benefit of $2,400. Jack has been disabled for 60 days, but he only received $1,200 from his disability insurance. Which of the following is the probable reason that he only received $1,200?

Question 2 options:

The policy has a deductible of $1,200.

The elimination period is 45 days.

The policy has a 50% coinsurance clause.

Jack is considered to be only 50% disabled.

Question 3 (1 point)

Jared is a university professor who teaches three classes. He developed throat cancer and can no longer lecture. His disability policy is not covering him due to his sickness. What type of policy does he likely have?

Question 3 options:

Own occupation policy.

Split definition policy.

Modified own occupation policy.

Any occupation policy.

Question 4 (1 point)

Diane, an ER surgeon, buys a disability policy with a base benefit of $6,000 and an SIS offset benefit of $1,200. Diane becomes disabled and eventually receives $1,000 in Social Security disability benefits. How much will she receive from the insurance company initially?

Question 4 options:

$4,800.

$6,000.

$6,200.

$7,200.

Question 5 (1 point)

Lucy, an ER surgeon, buys a disability policy with a base benefit of $6,000 and an SIS offset benefit of $1,200. Lucy becomes disabled and eventually receives $1,000 in Social Security disability benefits. How much will she receive from the insurance company after Social Security benefits begin?

Question 5 options:

$4,800.

$6,000.

$6,200.

$7,200.

Question 6 (1 point)

Andrea owns and runs a printing company that is organized as an S corporation. Unfortunately, she has an accident with a printing press and is rendered disabled. She receives $4,000 per month in disability payments. The S corporation had paid the premiums on the policy, but reported the payments on her W-2. How much of the benefit is subject to income tax?

Question 6 options:

$0.

$2,000.

$3,000.

$4,000.

Question 7 (1 point)

Beth is an associate at GWC Attorneys at Law. The firm has a contributory long-term group disability policy. She is required to pay 60 percent of the premiums. If she becomes disabled, her benefits would equal $4,000 per month. Based on this type of plan, which of the following is correct if she were to become disabled?

Question 7 options:

She will only receive a benefit of $2,400.

The entire benefit will be taxable.

The entire benefit will not be taxable.

She will receive a benefit of $4,000, but $1,600 will be taxable.

Question 8 (1 point)

Allison is a news reporter with a local station. The news station does not provide disability insurance. She purchases a policy through a local insurance agent that provides a benefit of $3,000 per month. If she is in the 30 percent tax bracket, what will her benefits equal after-tax?

Question 8 options:

$0.

$900.

$2,100.

$3,000.

Question 9 (1 point)

Which of the following provisions may not increase the cost of the policy?

Question 9 options:

COLA.

Waiver of premium rider.

Automatic increase rider.

SIS benefit.

Question 10 (1 point)

Which of the following is the most favorable definition of total disability in a disability insurance policy?

Question 10 options:

Any occupation.

Own occupation.

Modified own occupation.

Split definition.

Question 11 (1 point)

Ralph is an engineer at RTQ Enterprises. The firm does not offer disability policies to employees. Therefore, Ralph is considering purchasing a policy on his own. What percent of his salary will an insurance company typically offer as a benefit?

Question 11 options:

No more than 1.5 times his salary.

No more than 100 percent of his salary.

Approximately 60 percent of his salary.

No more than 33 1/3 percent since he is covered under Social Security.

Question 12 (1 point)

How long would someone have to wait to receive Social Security disability benefits if they qualify?

Question 12 options:

5 months.

6 months.

12 months.

Benefits are paid immediately if eligible.

Question 13 (1 point)

Roger has a disability policy with a 12-month elimination period. He was in a bizarre accident involving a crane falling on a building causing part of the buildings exterior wall to fall on his van. He lost the use of both of his legs in the accident. If his policy has a presumptive total disability coverage provision, when will he begin receiving benefits?

Question 13 options:

Immediately.

After six months as the provision accelerates the waiting period.

After a one month statutory administrative time period.

He will have to wait the 12 months.

Question 14 (1 point)

Disability policies have many characteristics and provisions. Which of the following is correct regarding policies that are guaranteed renewable versus non-cancelable?

Question 14 options:

Non-cancelable prevent the insurance company from cancelling the policy as long as the premiums are paid.

Guaranteed renewable and non-cancelable disability policies often have policy increases.

Guaranteed renewable and non-cancelable disability policies always provide protection for the insured until age 65.

Guaranteed renewable policies can experience premium increases based on the health conditions of the insured.

Question 15 (1 point)

Many disability policies that are provided on a group basis have a spit definition. Which of the following describes such a definition?

Question 15 options:

Disability will be defined based on the duties of the insured.

Disability will be defined based on any occupation that the insured is qualified for based on experience or training.

Disability will be defined based on the specific duties of the insured.

Disability will be defined based on the duties of the insured for a period of time and then based on any occupation that the insured is qualified for based on experience or training.