Chapter Recap

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This chapter covered the key concepts and major types of disability income insurance, including individual, group, and business disability policies, along with the disability benefits available through Social Security. Let's recap the key features of each category.

Disability Income

Topic	Key Points
Disability Income Insurance	Replaces lost income in the event of disability. Insured must be unable to perform occupational duties. Presumptive disability — specifies conditions that automatically qualify the insured for full disability benefits. Recurrent disability — specifies the period during which the recurrence of an injury or illness is treated as a continuation of a prior disability. Elimination period — waiting period from the onset of disability until benefit payments start. Probationary period — period after the policy starts during which benefits will not be paid for illness-related disabilities. Benefit period — length of time monthly disability benefit payments last. Benefit limitations — maximum benefit an insurer will accept for an individual risk, based on percentage of the insured's past earnings. Social Insurance Supplement (SIS) or Social Security Riders — supplement or replace benefits payable under Social Security Disability.

Topic

Key Points

Disability Income Insurance

Replaces lost income in the event of disability. Insured must be unable to perform occupational duties. Presumptive disability — specifies conditions that automatically qualify the insured for full disability benefits. Recurrent disability — specifies the period during which the recurrence of an injury or illness is treated as a continuation of a prior disability. Elimination period — waiting period from the onset of disability until benefit payments start. Probationary period — period after the policy starts during which benefits will not be paid for illness-related disabilities. Benefit period — length of time monthly disability benefit payments last. Benefit limitations — maximum benefit an insurer will accept for an individual risk, based on percentage of the insured's past earnings. Social Insurance Supplement (SIS) or Social Security Riders — supplement or replace benefits payable under Social Security Disability.

Type	Key Points
Business Overhead Expense Policy	Reimburses small business owners for overhead expenses incurred while the business owner is totally disabled.
Business Disability Buyout Policy	Specifies who will purchase a business partner's interest in case of disability.
Key Person Disability	Covers the potential loss of business income and the expense of hiring and training a replacement for a key person. Business owns the contract, pays the premium, and is the beneficiary.
Group Disability	Short-term disability (STD) — benefit period no longer than 2 years. Long-term disability (LTD) — elimination period may last as long as the benefit period for STD; benefit period may last until age 65; usually reserved for management employees.

Social Security Benefits

Topic	Key Points
Basics	OASDI — Old Age, Survivors, and Disability Insurance. Provides disability income benefits. Individual must meet proper insured status, definition of disability, and waiting period requirements.
Qualifying for Disability Benefits	Fully insured — 40 quarters of coverage (equivalent of 10 years of work). Currently insured — 6 credits during the 13-quarter period. 5-month waiting period. Benefits based on PIA.

Workers Compensation

Topic	Key Points
Eligibility and Benefits	Must work in an occupation covered by Workers Compensation. Benefits paid in response to work-related injuries. Fault or negligence is not a factor in payable benefits. Provides medical, income, death, and rehabilitation benefits.