AD Banker Comprehensive Practice Exam

What provides the basis for the benefit amount paid to an insured under a disability income rider?

1. The length of time income payments are to be paid out

2. The elimination period

3. The face amount of the policy

4. The amount of monthly benefit selected

The correct answer is: The elimination period

The disability income rider is designed to provide financial support to the insured in the event they become disabled and are unable to work. The benefit amount paid to an insured under this rider is based on the monthly benefit selected, which reflects their regular income needs during the time they are unable to earn an income due to their disability. While the elimination period is an important factor in determining when benefits begin, it is not the basis for the actual benefit amount itself. The elimination period refers to the duration an insured must wait after becoming disabled before benefits start being paid. It does influence how soon the insured receives payments, but does not set the amount of those payments. The correct answer—based on the monthly benefit selected—reflects the insured's choice regarding how much they wish to receive each month in the event of a disability. This chosen amount is intended to replace lost income and is clearly specified in the policy. Understanding this will help in grasping how disability income riders work and the crucial aspects the insured needs to consider when selecting coverage.