unit 1

1.Louise is contemplating disability insurance but finds the industry a bit confusing. Which among the following statements concerning disability insurance is TRUE? It is more probable that someone in their mid-twenties will suffer a disability lasting three months or more before they are 65, than someone who is 60 years old.

2.Monika works for Geological Capital Corporation as a full-time surveyor? Class 3 3.In general, risk management strategies are intended to protect individuals from the risks associated with their daily lives? If partial or total disability occurs, the primary amount at risk is the client’s before-tax income.  4. Ben earns $54,000 per year on which he pays $16,000 in taxes. After assessing his lifestyle expenditures, net worth and other factors, he realizes that he could face great difficulty maintaining his standard of living if his after-tax income was reduced at all.? Ben’s potential financial loss is his pre-tax income plus the pre-tax cost of additional medical care. 5.Other than the occupational classification, there are other ways to evaluate an individual’s disability risk category. Which of the following does not correctly describe one of the risk severity categories?Risks of major severity can lead to a reduction in one’s standard of living 6.Roberto and Julia like to race snowmobiles on the weekends?Julia purchases a helmet and wears it when snowmobiling.  7.Tony and Sharon follow their financial planner’s advice and implement some risk financing strategies. Which of the following is an example of a risk financing strategy?   purchasing a disability insurance contract  8. Aaron is 17 years old. He attends high school full-time and starts university full-time next year. His father works and his mother is on a CPP disability pension? when Aaron turns 25 years of age. 9.Conrad works as a floor supervisor at a major Canadian newspaper. During the summer, he received a severe concussion and dislocated his shoulder after falling into a printing press?Workers’ compensation benefits are not taxable 10.Martha, Albert, Ken, and Karen purchased disability insurance contracts through the Indian Feather College alumni association two years ago?  Albert’s claim, resulting from injuries sustained when a plate glass window fell on him as he was walking down the sidewalk. 11. Albert’s claim, resulting from injuries sustained when a plate glass window fell on him as he was walking down the sidewalk? Uri, who worked as a mailman before losing one leg and is now unable to find any work.  12.Tom would like some advice on the type of disability coverage he should purchase. He is in his late thirties and currently works as a highly skilled medical researcher, but can teach at the local university if required? The policy may include a future income option to increase disability coverage, provided he continues to be insurable. 13.Benito earns $165,000 per year of employment income as a securities lawyer with a large Vancouver law firm.? Benito does not need to report the insurance premium paid by his employer as a taxable benefit on his income tax return. 14.Jason works as an investment advisor. He has a disability insurance policy that specifies a monthly benefit for total disability of $4,500. Late last year, he suffered an illness that caused a total disability. He has recuperated to a point where he can return to work part-time? $1,500. 15.After purchasing a typical disability insurance contract, Susan developed a medical condition that prevented her from working for four months? Susan must wait another three months before collecting total disability payments.  16.Alley, an archaeologist, purchased a substantial amount of disability insurance four years ago prior to an expedition in Africa. At 38 years of age, her premiums on the ten-year policy are relatively inexpensive? Alley’s policy includes a level premium term.  17.Pat is self-employed as a carpenter. He is trying to decide whether he should purchase an individual disability contract or a group contract through the trade association to which he belongs? Group plans usually provide a higher quality of coverage than individual plans. 18.Paula is completing her income tax return. She receives a disability benefit from the disability policy that she personally owns and for which she personally pays the premiums? All of the above.  19. Jack is self-employed and works on a contract basis. He recently purchased a disability insurance policy. He personally owns the policy and makes all of the premium payments? Jack’s premiums are deductible by the company with which he contracts. 20 One of your clients would like some information on various aspects of disability insurance. He has realized that, with his occupation and age, this type of insurance will provide a degree of financial protection for him and his family? Individual plans offer the most extensive coverage at the lowest overall cost.