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QuestionAnswer
What does DI stand for? Disability Income
What is a Disability Income policy for? If is related to becoming sick or injured and not being able to earn a living.
What is another term for Disability? Living Death - financial needs but no way to satisfy them through earning income.
Why do we need insurance? It is the best way to transfer the risk of disability.
What is the likelihood of suffering from a disability? 7 times more likely then death.
What are the benefits for DI? 1/2 to 2/3 of the individuals gross income (never more then 80%)
Why are DI benefits never more then 80%? Because income received as a benefit is Free from federal income tax.
When are benefits paid out? Monthly - after elimination period.
What is an Elimination Period? can be a few days to a year - up to 2 years is the MAXIMUM. it is a deductible of time that keeps cost of coverage lower if you can wait for the benefits to kick in. The longer u wait, the less premium u pay.
What is an Indemnity Period (IP)? Total time a contract will cover any single accident or illness - usually, 1,2 or 5+yrs.
What is the typical white collar indemnity period. Typical coverage is up to age 65 for professionals but can be up to 100 if ind. is still working in that profession.
Underwriting Disability Income: what are the main factors for this? age, health and occupation are a BIG impact but the CRITICAL factoris OCCUPATION.
When deciding on disability why is Occupation a critical factor? White collar professionals have best contracts and r covered at lowest rates. Wheras, blue collar workers r limited to indemnity period selection and premium cost is higher.
Is disability insurance paid out per month or in a lump sum? Always per month.
What is BOE? Business overhead expense.
What is BOE (busness overhead expense) policy for? helps business owners meet expenses when owner is totally disabled - ie, rent, utilities, salaries.
What is the normal max for BOE (business overhead expense) policy? 2 years.
What is Business Disability Buyout similar to? Buy-sell agreement
Business Disability buyout is also thought of as? Business continuation Approach
Business Disability Buyout is for what? Owners of business agree to buy a disability contract on each other - or a "cross purchase"
Why would owners purchase a Disability buyout on each other? Should 1 owner become disabled, receipt of benefits from DI (disability income) entitles non-disabled owner to the disabled owners share of business.
What is Entity purchase? when the business itself purchases and owns the policies on the insured.
What is Group Disability Income Policy? When employees of a company receive coverage for Disability Income (DI) as a result of their employment (an added benefit for them)
What if the Group Disability Income is paid entirely by the employer? If it's employer paid and deducted as a business expense, then benefit paid to employee is TAXABLE.
What is the Group Disability Income policy also called? Salary Continuation.
What is a KEY EMPLOYEE/PARTNER policy? if key employees are disabled and that directly affects the Co. revenue you want this.
How is the Key employee/partner policy pay out figured out? It is based on a person's salary or documented amt. of revenue that person generates.
What is a general benefit of the key employee policy? 1 times the annual salary or amt. of documented revenue.
How is key employee benefit paid out? Benefit is paid over 12 months after a short elimination period of (30,60,90 days) Alt. benefit is up to 3x salary pd. in a lump sum after a 1 yr. elimination period.
What is AD&D? Accidental Death and Dismemberment.
what are some key components of AD&D? Only payable when death or dismemberment is the result of an ACCIDENT.
What are some exclustion to AD&D policy? Illegal activities, illness or disease, suicide, WAR, doubtful accident, voluntarily inhaling fumes.
In the result of accidental death, how is it paid out? Pays a "principal sum"
If there is dismemberment, how is it paid? Paid in a "lump" or "capital" sum
What is accidental bodily injury? Any injury resulting from an accident but not self-inflicted.
Death must occur within how many days of injury to be covered? 90 days.
If you have double dismemberment, what does that mean for payment? any 2 limbs lost it is considered a presumptive disability and premium payments are waived by the company.
What are the 4 basic approaches to insuring medical expenses? *Indemnity based products *Reimbursement(expense incurred products) *Prepaid plans *Consumer Driven Health Care.
What are Indemnity based products? Payment of a specific benefit based on the contract regardless of actual charges (ie, basic hospital, medical and surgical policies)
What are Reimbursement based products? Payment for all expenses or a fixed percentage of incurred expenses according to costs which are actually incurred. (ie, major medical, long term care)
What are prepaid plans? An insureds benefit is paid whether they access the health care or not (ie, HMO's, PPO's) also call "managed care" approach
What is consumer driven health care? Combines tax favored accts. used in conjuction with high deductible plans that give health care consumers more control over choice and cost (ie, FSAs, MSAs, HRAs and CDHPs)
Under the indeminty products the plans are basic or major? Plans are BASIC!
What are some drawbacks of a basic plan? Coverage is for a limited amount and specified time. Provide great 1st dollar coverage but very low maximum benefit amounts.
Under a basic plan (indemnity product) what is an example of a hospital stay and expense? If a contract agrees to pay$100/day for a hospital room but the charge is $500/day the benefit paid is $100 per day!
What does indemnify mean? Contractually obligated to pay to the insured.
Created by: kduro12345