Unit 15 - Disability Stipulations Life and Health

Own Occupation Definition

Inability to perform duties of the insured's normal occupation; a more liberal definition

Any Occupation Definition

Inability to perform any occupation the insured is qualified for by training, education, and experience; harder to qualify for

Income Replacement Definition

A reduction in income triggers disability payment

Presumptive Disability

Automatic qualification for loss of two limbs, total blindness, loss of speech, or total hearing loss

Medically Defined Disability

Requires house confinement and doctor's care

Indemnity Benefit (Disability)

A fixed benefit with no offsets

Elimination Period (Disability)

Length of time insured must be disabled before payments begin

Benefit Period (Disability)

How long disability benefits will be paid

Waiver of Premium (Disability)

Waives future premiums after a waiting period; refunds premiums paid during the wait

Additional Monthly Benefit Rider

Pays extra benefit for the first 6-12 months, even if insured receives government benefits

Social Insurance Supplement

Makes up the difference between government benefits and the rider amount when social benefits aren't paid

Partial Disability

Insured returns to work at reduced capacity; usually pays 50% of benefit for 3-6 months

Residual Disability

Paid based on reduction of income, whether working full or part time, for as long as income reduction continues

Recurrent Disability

A condition that recurs after returning to work within a certain timeframe, without a new waiting period

Cost of Living Rider (COLA)

Increases disability benefit based on the Consumer Price Index, usually every 12 months

Future Increase Option (FIO)

Allows increasing policy benefits without evidence of insurability if income has increased

Relation of Earnings to Insurance (Disability)

Allows insurer to adjust benefits if income decreased, with a partial premium refund

AD&D Rider (Disability)

Pays the principal sum for accidental death or loss of both limbs/eyes; capital sum for loss of one

Rehabilitation Benefit

Helps a totally disabled insured train for a new occupation while in the program

Medical Reimbursement (Disability)

Helps pay medical bills for a non-disabling injury

Return of Premium (Disability)

Refunds a stated percentage of premium after a stated time, minus benefits paid

Cash Surrender Value (Disability)

Accumulates value equal to all premiums paid; benefits paid are subtracted upon surrender

Disability Income Exclusions

War/military service, suicide/self-inflicted injury, non-commercial aviation, felony commission, living overseas

Disability Underwriting Factors

Occupation, benefit limits, and policy issuance alternatives (increased premium or exclusion rider)

Business Uses of Disability Insurance

Key person, business overhead expense, and disability buy-sell

Social Security Disability Credits

Requires at least 6 credits in the last 13 quarters; 40 credits for fully insured status

Social Security Disability Waiting Period

5 months, not retroactive; disability must last 12 months

Workers' Compensation

Covers medical treatment, rehabilitation, and income lost due to disability or death