Disability & Life Insurance Chapter 6 Complete Test Bank

Chapter 06

Employer-Sponsored Disability Insurance, Life Insurance, and Workers' Compensation

  / QuestionsTrueFalse

1. In short-term disability insurance plans, the exclusion period spans from the initial date of hire to the date of eligibility for coverage. (Short-Term Disability Insurance Programs)

2. A miner who develops black lung disease is eligible for workers' compensation benefits. (Workers’ Compensation Claims)

3. Long-term disability insurance plans used to cover partial disabilities, but ceased due to high costs. (Long-Term Disability Insurance Programs)

4. Employer-sponsored disability insurance is more encompassing than workers’ compensation, because its benefits generally apply to both work-related and nonwork-related illnesses and injuries. (Disability Insurance

5. In 2015, employers generally paid $700 annually per private sector employee for workers' compensation protection. (Cost of Workers’ Compensation Insurance)

6. In the 1800s and early 1900s, the seriously injured workers left with virtually no recourse because social insurance programs were nonexistent.  (Origins of Disability Insurance and Workers’ Compensation Insurance)
7. Long-term disability insurance plans become effective following the end of short-term coverage and a 30-day elimination period. (Long-Term Disability Insurance Programs)
TRUEFALSE

8. An employee's pregnancy is covered under a company's short-term disability insurance program. (Short-Term Disability Insurance Programs)

9. Employers pay disability benefits from disability insurance policies or regular payroll. (Disability Insurance)

10. Although workers' compensation benefits have unlimited medical care benefits, it does specify a maximum amount paid for certain procedures. (Unlimited Medical Care)

11. Most group life insurance is offered on a contributory basis mainly because the employer enjoys substantially higher tax benefits than they do with noncontributory plans. (Group Term Life Insurance)

12. Short-term disability insurance plans usually consider disability as an inability to perform any and every duty on one's occupation. (Short-Term Disability Insurance Programs)

13. Recipients of long-term disability benefits are also eligible to file ADA claims. (Relationships between Company-Sponsored Disability Plans and Benefits Laws)

14. Under a universal life insurance plan, policy holders can shift money between the insurance and savings components of the policy.  (Universal Life Insurance)

15. The values in the current Uniform Table were adjusted to reflect higher rates of mortality between 1988 and 2000. (Costs of Group Term Life Insurance)

16. The short-term elimination period ranges from one to twelve months and the most common elimination period is three months. (Short-Term Disability Insurance Programs)

17. An Administrative Services Only plan is a disability insurance funding plan that is handled through a third-party claims management company. (Funding Disability Insurance Programs)

18. A term life insurance policy is considerably more expensive than whole life policy. (Types of Life Insurance Programs)

19. Long-term disability insurance carriers define long-term disability as an inability to engage in any occupation for which the individual is qualified by reason of training, education or experience. (Long-Term Disability Insurance Programs)

20. Under partial self-funding of disability insurance, employers pay claims from their assets invested in a trust fund, for a limited period or up to a maximum dollar amount. (Funding Disability Insurance Programs)

21. Universal life insurance has less flexibility than whole life insurance. (Types of Life Insurance Programs)

22. AD&D does not pay survivor benefits in the case of death by illness. (Accidental Death and Dismemberment Insurance)

23. Both discretionary short-term and long-term disability plans sometimes duplicate public disability benefits mandated by state workers’ compensation laws and the Social Security Act. (Disability Insurance)

24. Pregnancy and childbirth are not considered as disabilities. (Short-Term Disability Insurance Programs)

25. Sick leave policies are separate from disability leave. (Disability Insurance)

26. Prior to the 1960s, establishment funds provided minimal cash payments to workers who became occupationally ill or injured. (Origins of Disability Insurance and Workers’ Compensation Insurance)

27. When an employee files a lawsuit claiming retaliatory action, the employer possesses the burden of proof. (Employers’ Rights under Workers’ Compensation Programs)

28. One of every twenty employees will have a disability that lasts at least 90 days. (Disability Insurance)

29. The wage-loss approach bases benefit amounts on approximate loss of earning from scheduled injuries. (Types and Amounts of Workers’ Compensation Benefits)

30.  Dual capacity means that a firm may fulfill a role for an employee that is completely different from its role as employer. (Employers’ Rights under Workers’ Compensation Programs)

31. Workers' compensation laws do not apply to small businesses with fewer than a stipulated number of employees (Coverage of Workers’ Compensation Programs)

32. Long-term disability plans often contain exclusion provisions. (Short-Term Disability Insurance Programs.

33. Compared to life insurance, AD&D generally does not pay survivor benefits in the case of death by illness. (Accidental Death and Dismemberment Insurance)

34. State compulsory disability laws created workers’ compensation programs. (State Compulsory Disability Laws (Workers’ Compensation))

35. States rely on rating manuals to specify workers’ compensation insurance rates based on businesses’ payroll size. (Financing Workers’ Compensation Programs)

36. Second-injury funds are a funding element of workers’ compensation programs where claims are associated with two employees with similar injuries. (Financing Workers’ Compensation Programs)

37. Scheduled injuries involve the loss of a member of the body, including an arm, leg, finger, hand, or eye. (Types and Amounts of Workers’ Compensation Benefits)

38. If a company is participating in workers’ compensation programs and complying with applicable regulations, injured employees cannot bring a legal suit against them under any conditions. (Employers’ Rights under Workers’ Compensation Programs)

39. Becoming injured while using an employer’s product to perform work is an instance of dual capacity and the injured employee would be eligible to file a workers’ compensation claim. (Employers’ Rights under Workers’ Compensation Programs)

40. By adding a partial disabilities inclusion, long-term disability carriers cover a portion of income loss associated with paid part-time employment while a disabled person works on a part-time basis in any job. (Long-Term Disability Insurance Programs)

Multiple Choice Questions
 

41(Relationships between Company-Sponsored Disability Plans and Benefits Laws)
A. Employers can require a longer pre-eligibility period for employees with disabilities
B. Employers cannot exclude qualified employees with disabilities from participating in its' disability retirement plans
C. Employers must offer the same benefits to all under its disability retirement plans
D. Employers must include cost-of-living adjustments on its disability benefits. According to ADA guidelines, which of the following is ? true

42. Employer-sponsored disability insurance plans generally supplement legally required benefits established by which law? (Relationships between Company-Sponsored Disability Plans and Benefits Laws)
A. Family Medical Leave Act
B. Employee Retirement Income Security Act
C. Fair Labor Standards Act
D. Social Security Act

43. Most short-term disability insurance plans pay employees around how much of their regular pay? (Short-Term Disability Insurance Programs)
A. 85 - 100%
B. 35 - 50%
C. 50 - 67%
D. 40 - 59%

44. Which of the following laws was NOT mentioned as having a major influence on company-sponsored disability insurance plans? (Relationships between Company-Sponsored Disability Plans and Benefits Laws)
A. Fair Labor Standards Act
B. Age Discrimination in Employment Act
C. Employee Retirement Income Security Act
D. Americans with Disabilities Act

45. To qualify as a group term life insurance policy, it must insure at least how many full-time employees? (Group Term Life Insurance)
A. 20
B. 15
C. 10
D. 25

46. This is a mental or physical disability for which medical advice, diagnosis, care or treatment was received, during a designated period preceding the beginning of disability insurance coverage. (Short-Term Disability Insurance Programs)
A. Pre-eligibility condition
B. Exclusive condition
C. Eliminating condition
D. Preexisting condition

47. In 2015, what percentage of full-time and part-time employees received employer-sponsored life insurance? (Coverage and Costs of Life Insurance)
A. 38% full-time, 23% part-time
B. 70% full-time, 30% part-time
C. 69% full-time, 41% part-time
D. 72% full-time, 13% part-time

48. Self-inflicted wounds and drug dependency are generally considered as what in most short-term disability insurance plans? (Short-Term Disability Insurance Programs)
A. Partial disability provisions
B. Exclusion provisions
C. Elimination provisions
D. Preexisting condition provisions

49. These reduce company-sponsored benefits by subtracting a particular percentage of these disability benefits from workers' compensation and Social Security disability plans. (Relationships between Company-Sponsored Disability Plans and Benefits Laws)
A. Elimination provisions
B. Exclusion provisions
C. Limited integration provisions
D. Offset provisions

50. Most long-term disability insurance plans pay how much after a waiting period of how long? (Long-Term Disability Insurance Programs)
A. 70 - 90%, after 6 - 12 months
B. 70 - 90%, after 3 - 6 months
C. 50 - 70% after 6 - 12 months
D. 50 - 70% after 3 - 6 months

51. If an employee suffers a disability that limits the kind of work an individual can perform on an enduring basis, she would qualify for what type of disability income under workers' compensation? (Types and Amounts of Workers’ Compensation Benefits)
A. Permanent total disability
B. Temporary partial disability
C. Permanent partial disability
D. Temporary total disability 

52. In short-term disability insurance plans, this term refers to the minimum amount of time an employee must wait after becoming disabled before disability insurance payments begin. (Short-Term Disability Insurance Programs)
A. Elimination period
B. Exclusion period
C. Pre-eligibility period
D. Full integration period

53. This amendment contains the equal benefit or equal cost principle and bans termination of an employee's long-term disability benefits for active employees based on age. (Relationships between Company-Sponsored Disability Plans and Benefits Laws)
A. Older Workers Benefit Protection Act
B. Retired Workers Protection Act
C. Age Discrimination in Employment Act
D. Older Workers Retirement Act

54. US companies offered life insurance to what percentage full time employees in
2015? (Coverage and Costs of Life Insurance)
A. 52%
B. 72%
C. 60%
D. 78%

55. What's it called when an employer intentionally fails to reveal the exposure of a worker to harmful substances? (Employers’ Rights under Workers’ Compensation Programs)
A. Deliberate and knowing tort
B. Violation of an affirmative duty
C. Deliberate and knowing affirmative duty
D. Violation tort

56. Scheduled and unscheduled injuries are categories used to determine benefits for which type of disability income? (Types and Amounts of Workers’ Compensation Benefits)
A. Permanent total disability
B. Temporary partial disability
C. Permanent partial disability
D. Temporary total disability

57. After an injury, claims to workers' compensation for rehabilitative services usually have to be submitted in what time frame? (Types and Amounts of Workers’ Compensation Benefits)
A. 6 - 24 months
B. 1 - 3 months
C. 6 - 12 months
D. 3 - 12 months

58. When paying permanent partial disability benefits, for unscheduled injuries, this approach bases the amount on the physical or mental loss associated with the injury to a bodily function. (Types and Amounts of Workers’ Compensation Benefits)
A. Dismemberment
B. Loss of wage-earning capacity
C. Wage-loss
D. Impairment

59. In 2015, on average, employers spent how much annually per employee to provide short-term disability insurance? (Coverage and Costs of Disability Programs)
A. $80
B. $125
C. $100
D. $140

60. In 2015, on average, employers spent how much annually per employee to provide life insurance coverage? (Coverage and Costs of Life Insurance)
A. $83
B. $100
C. $120
D. $140

Essay Questions
 

61. Prior to the enactment of workers’ compensation laws, injured employees could choose not to pursue compensation, or they could file a lawsuit. List and briefly define the three common-law defenses that employers could mount to earn liability.

Main Points:

• Assumption of risk – showing the injury resulted from an ordinary hazard of employment of which the worker should have been aware.
• The fellow worker rule – showing the injury was caused by a fellow worker’s negligence.
• Contributory negligence – showing the worker’s own negligence contributed to the injury, regardless of any fault of the employer.
• America's shift from an agrarian to an industrialized economy
• Companies were NOT overly concerned with health and safety measures
• Employees had little or no recourse if disabled on the job
• Establishment funds, created by employers to provide minimal cash payments to disabled employees
• Individual disability insurance, which was offered by insurance carriers
• Group disability insurance
• Paid lump sum benefits
• The amount was generally the same regardless of age or the severity of illness or injury
• Employer is absolutely liable for providing benefits to employees for occupational disabilities or injuries that result, regardless of fault
• Employers should assume that the costs of occupational injuries and accidents
• The most common type offered by employers
• Provides protection to employees' beneficiaries only during a limited period based on a specified number of years or maximum age when the policy expires
• No benefits are received by anyone when the policy expires
• In order to continue coverage employee must renew the policy and make premium payments while below the maximum allowed age of coverage
• Pays beneficiaries' a specified amount upon the death of the employee
• Policies do NOT expire until payment to beneficiaries
• Is more expensive than term life
• Combines insurance protection with savings because portion of the money paid to meet the premium is available in the future plus interest earned on this amount
• Provides protection to employees’ beneficiaries based on the insurance feature of term life insurance
• A more flexible savings or cash accumulation plan

65. Briefly discuss the types of disabilities recognized under workers' compensation laws. (Types and Amounts of Workers’ Compensation Benefits)

Main Points
● Temporary total disabilities preclude individuals from performing meaningful work for a limited period
● Permanent total disabilities prevent individuals from ever performing any work
● Temporary partial disabilities allows individuals to perform limited amounts of work until making a full recovery
● Permanent partial disabilities limit the kind of work that individuals perform on an enduring basis