CE 115, PART 6

T	F	1. Unemployment compensation does not provide protection for prolonged disabilities. (6–7)
T	F	2. The federal government provides disability income protection for its civil servants. (7)
T	F	3. Disability income insurance is available from insurance companies to cover nearly every occupation. (8)
T	F	4. A single individual rarely has any need for disability income insurance. (9)
T	F	5. Both residual-disability and partial-disability benefits are intended to encourage the insured to return to work prior to total recovery. (10)
T	F	6. The longer the qualification period associated with residual benefits, the more generous the benefits are to the insured. (12)
T	F	7. The insured has full control over the ability to renew his or her coverage under conditionally renewable contracts and optionally renewable contracts. (12–13)
T	F	8. The first benefit payment under a disability income policy will normally be 30 days after the end of the elimination period. (13)
T	F	9. Short-term disability income policies protect the insured from catastrophic financial losses due to disability. (16)
T	F	10. The insured has a contractual right to reinstate a lapsed disability income policy within 60 days after the end of the grace period without evidence of insurability. (18)
T	F	11. Cost-of-living-adjustment (COLA) provisions generally have both a per-year limit and an aggregate limit applicable to automatic benefit increases. (20)
T	F	12. Disability income policies always require consecutive days of disability to satisfy the elimination period. (22)
T	F	13. Presumptive-disability provisions generally exclude benefit payments for a list of minor disabling conditions that rarely prevent the insured from returning to work. (24)
T	F	14. The incontestability clause in disability income policies limits the period of time during which the insurer can contest the validity of the contract on the basis of fraud, material misrepresentation, or concealment in the application. (25)
T	F	15. The social security option available with some disability policies pays additional benefits for periods of total disability when the insured fails to collect social security disability benefits. (25–26)
T	F	16. Hospitalization benefits provided as a supplement to disability policies almost always use the same elimination period that applies to total-disability benefits. (27)
T	F	17. Financial condition is often an important factor in underwriting disability income policies. (28)
T	F	18. Disability income policies often require more information and supporting documents for underwriting than life insurance policies. (29–30)
T	F	19. Disability policies are available that provide benefits in a lump sum to fund business disability buy-sell agreements. (33)

Answers to Review Questions
1-T, 2-T, 3-F, 4-F, 5-T, 6-F, 7-F, 8-T, 9-F, 10-F, 11-T, 12-F, 13-F, 14-T, 15-T, 16-F, 17-T, 18-T, 19-T

3. Many occupations are classified as high risk and are not insurable for disability income purposes.

4. Since a single individual is the only income earner in the household, he or she needs income protection as much as any married breadwinner.

6. The qualification period is the required duration of total disability that must precede any period of residual-benefit eligibility. The shorter the qualification period, the more generous the benefits are to the insured. Zero-day qualification periods are the most generous available.

7. The insurance company retains significant control over the renewability of optionally renewable and conditionally renewable contracts. The insured may be prevented from renewing coverage even if ready, willing, and able to pay the renewal premium.

9. Any disability that exceeds the maximum benefit period of a short-term disability policy can produce a financial disaster for the insured.

10. The insurance company has the right to require evidence of insurability for any reinstatement beyond the end of the grace period. However, in most cases the insurer will waive such requirement if reinstatement occurs within 30 or 60 days of the grace period.

12. Some insurers will aggregate nonconsecutive days of disability to satisfy the policy’s elimination period.

13. Presumptive-disability provisions specify that total-disability benefits will be payable automatically if the insured suffers one or more of the losses listed in the provision, such as the loss of sight in both eyes.

16. Very often the elimination period applicable to hospitalization benefits in supplemental riders (some as short as zero days) is different from the elimination period applicable to total-disability benefits.