Chapter 5 – Exploring Business Needs Review Questions

An individual disability insurance policy pays a $20,000 monthly benefit. This contract provides:

Which of the following is NOT typically reimbursable under a business overhead expense policy?

When an insured employee terminates employment, which of the following plans would not automatically terminate because the policy is owned by the executive employee?

When are benefits paid under a salary continuation plan taxable to the disabled insured as income?

An insured’s business overhead expense policy has a maximum monthly benefit of $6,000. During the first month after the elimination period, covered expenses total $6,200. Because this is a reimbursement policy, you know the policy will pay ____ for this month’s expenses.

A certain business overhead expense policy pays a partial benefit tied to the relationship of the insured’s post­-disability earnings to pre-disability earnings. Under this particular arrangement, the benefit is not a true residual benefit, but a certain amount is paid if the insured’s earnings are 50% or less than before the disability occurred. Assuming this is the case and the insured’s policy pays a maximum monthly benefit of $4,000, what is the amount of the benefit she will receive for partial disability?

Disability buyout payments may be made in all the following ways EXCEPT:

Assuming the person insured under a disability buyout policy is disabled as defined in the policy, what triggers the buyout?

An insured is disabled for five months, returns to work for one month, and then suffers a recurrent disability. Under a disability buyout policy with a 12-month elimination period, which statement is true?

The benefit from a key person disability policy is paid to:

A common method for determining the monthly benefit for a key person disability policy is which of the following?

Which of the following may be established on a selective basis rather than covering every employee in a business?