Disability Benefits Are:
Limited to a percentage of earned income
A disability income policy requires that the insured...
Cannot perform the duties of their occupation
Own Occupation Policy
Benefits when the insured is unable to perform any duties of HIS/HER OWN occupation because of sickness/accident
First 24 Months after the commencement of a loss...Own Occupation
After 24 Months...ANY Occupation, so it reduces insurers liability
Any Occupation
Unable to perform any duties of the occupation for which they are suited by reason of education, training, or experience (worse benefit than Own Occup)
Presumptive Disability
Provision that is found in most disability income policies..
Provides Benefit for: Dismemberment (loss of two limbs), total and permanent blindness, or loss of speech or hearing.
Proof of Loss provision
Proof of disability be furnished as soon as reasonably possible
Provided no later than 1 YEAR of the time proof would otherwise be required
Individual Disability Income Policy
Individual rather than employer as group...Premiums paid with after tax dollars, and benefits are not income taxable
Total Disability Plan
Protects family/individual against economic loss that comes with the total disability of the wage earner
Benefits for Disability are paid...
Normally Monthly, sometimes weekly
Elimination Period
Generally it ranges from 30 to 180 Days
Waiting period that is imposed on the insured from the onset of disability until benefit payments commence.
A Deductible measured in DAYS instead of Dollars
It tries to eliminate short-term disabilities when the insured will be able to return to work in a
Benefit Period
Most offer 1, 2, 5 and to age 65...Some offer livelong periods
Longer benefit period= Higher premium
Accidental bodily injury
Broader Coverage
Accidental bodily injury means the damage to the body is unexpected and unintended.
Accidental means injury
Narrower Coverage
indicates that the cause of the accident must be unexpected and unintended.
Sickness
After policy has been in force for at least 30 days, or one that manifests itself after the policy is in force
Recurrent Disability
Not subject to another Disability
Waiver of Premium
stop paying premiums once they qualify for benefits.
Premiums paid during the elimination period are refunded once insured qualifies to receive Benefits
Coordination of Benefits COB Provision
Group Health Plans ONLY- Avoid duplication of benefits and overinsurance...Limits claims paid from insurers to be no more than the total allowable medical expenses
COB contd
Primary Plan= Responsible for providing full benefit amounts
Secondary (AKA Excess) Plan= Additional benefits payable (including deductibles & coinsurance), once Primary has paid full benefits and payments still exist
COB Provision Distinction of Primary
1) Married Couple both have group coverage, each persons OWN group coverage is primary (Spouses secondary)
2) Birthday Rule- Parents both name children as dependents in group policies...parent with the earlier birthday in the year, will be considered prim
Premium Payments on personally owned disability income policies
NON-deductible by individual
Disability income benefits are received income tax free by individual
Additional Monthly Benefit (AMB)
Rider that pays approx. what Social Security would pay, benefit is only for 1 year- SS benefits commence at the end of 1 year
Social Insurance Supplement (SIS)
Rider pays benefit approx to social secuirty would pay, but if social security does pay, the SIS benefit is reduced dollar or dollar by the Social Security Benefit payment...
Provide Payment of Income Benefits in 3 different situations:
1 When insured is
Occupational Coverage
Illness, injury or disability resulting from accidents or sicknesses that occur on or off the job
Nonoccupational Coverage
only covers claims that result from accidents or sicknesses occurring off the job
Group plans are...
Nonoccupational only...Individual policies written occup, or nonocc.
Workers Compensation
Covered on the job
Cancellation
Insurer has right to cancel an individual accidnet and health policy within the first 90 Days after its issue...As long as the insurer provides a 10-day notice to the insured. Insurer must return any unearned premium on a pro-rata basis
COLA Rider
protect against inflation. Insureds monthly benefit will increased automatically. Starting at the end of year 1 and annually increases
Future Increase Option Rider
Guaranteed insurability rider = FIO. Allows insured to increase benefit level to a specific predetermined amount at certain times or certain occasions without proof of insurability.
Must qualify from income standpoint to prevent overinsurance
Relation of Earnings
Check income of insured before an income claim.
This tries to stop insureds from not seeking rehabilitation bc the insured is receiving greater income while disabled than while working
Insurers are only liable for a proportionate amount of the disability
Accidental Death & Dismemberment Rider
Accidental losses only, pure form of accident insurance.
Principal sum is paid for accidental death. Amount is usually equal to the amount of coverage under the insurance contract, or the face amount.
Loss of sight in one eye or accidental dismemberment,
Accidental Death Benefit...
Paid as long as death is caused by accident and occurs within a specific time, such as 60-90 Days.
Rehab. Benefit
Cover cost for insured to enroll in a formal Re-Training program that will help the insured back to work. Specified sum, to cover costs not paid by other insurance
Medical Reimbursement Benefit (Nondisabling Injury)
This benefit provides forthe payment of medical expenses incurred due to an accidental bodily injury when the insured is not disabled
Partial Disability
50% of the total disability benefit, limited to certain period of time...Benefits are paid in a flat amount, or residual amount
Residual disability benefit
Guaranteed dollar amount if worker cant come back on a full time basis and just a part time basis.
Total Disability
inability to engage in any work, more specifically to the insureds inability to perform the duties of their own occupation for the first 2 years, then any gainful employment for which the insured is reasonably suited by education, training, and experience
24 Hour Coverage
Employee provided with both workers compensation policy and some type of medical insurance coverage such as disability insurance policy or health care service plan for injuries or illnesses outside of work
Therefore employee is covered 24 hours a day.. Wo
Exclusions
War, Military Service, Intentionally self inflicted injuries, overseas residence, injuries suffered while committing or attempting to commit felony
Tax on Disability Payments
Benefit payments attributed to employee contributions are not taxable
but the benefits payments that are attributed to employer contributions are taxable to the employee.....Premium is deductible to the employer
Group VS Individual Plans
1 Group plans specify benefits based on %age of workers income...Individual policies specify flat amount
2 Short term group plans usually provide max benefit period of 13 to 26 weeks, with weekly benefits of 50% to 100% of the individuals income. Individu
Short Term Disability
Elimination period 0 Days and the benefit period NOT longer than 2 years, benefit period could be 6 months to 1 year
Long Term Disability
Elimination period usually coincides with benefit period of the short-term disability plan, benefit period may be to age 65. Lower wage employees are usually limited to 66% of monthly wage...Higher wage employees are limited to 50% of monthly wage.
Business disability insurance
Key Person Disability Income...Ecomonic loss of the person to the business and the process or training a replacement.
Contract is owned by the business, premium paid by business, and business is benef.
Must have key persons consent b4 insuring
Disability Buy-Sell Policy
Legal agreement prepared by an attorney. Specifies how the business will pass between owners when one dies/disabled...
Extremely long elimination period, one or 2 years...Generally these policies funding buy-sell agreements also provide a large lump sum b
Business Overhead Expense Policy BOE
Small business owners who must meet overhead expenses..such as rent, utilities, salaries, etc...
Following a disability, businessowner is reimbursed the actual expenses incurred while he is disabled.
Elimination period of 15 to 30 days
Tax Deductible are