GLOSSARY

Any occupation definition of total disability
The total disability definition providing the least protection for the insured is the any occupation definition.  Under the any occupation definition of total disability, the insured must be unable to engage in any occupation in order to be considered totally disabled.
Benefit period
The benefit period is usually defined as that maximum period of time, beginning at the conclusion of the elimination period for which disability income benefits are payable during the continuation of the insured's disability.
Conditionally renewable
Under a disability policy with a conditionally renewable provision, the insurer guarantees to renew the policy provided the insured meets the conditions of renewability but retains the right to increase premiums.  Generally offered on disability policies covering insureds in high-risk occupations.
Cost of Living Adjustment Rider (COLA)
A COLA rider adjusts the amount of monthly disability benefit received by the insured each year during his or her disability.  The first adjustment is on the 13th month of disability.
Disability (likelihood)
At most ages, the probability of disability occurring is from 2½ to 4 times more likely than that death will occur at that age.   
Disability buyout insurance
Disability insurance that provides funds, in a lump sum or in installments, with which to purchase a disabled partner's or co-stockholder's business interest.
Disability purchase option rider
A disability purchase option rider allows the insured, usually on specific policy anniversary dates, to increase the monthly benefit payable in the event of his or her future disability without regard to his or her current health.
Elimination period
The elimination period is that period of time beginning with the onset of disability and ending when benefits for that disability begin to accrue.
Exclusions and limitations
Those disability insurance policy provisions that exclude or limit coverage for certain conditions.
Financial underwriting
The principal underwriting concern in the area of financial underwriting is whether the insured will be financially motivated to return to gainful employment after a period of disability.
Guaranteed renewable
In policies containing a guaranteed renewable provision, the insurer guarantees not to refuse to renew the policy but retains the right to increase premiums on a class basis.

Income replacement policy
The typical income replacement policy pays a monthly income benefit that is equal to the percentage of income lost by the insured as a result of sickness or accident multiplied by the maximum monthly income benefit.   
Income sources during disability
For most people the sources generally available to provide an income during their disability are savings, spousal employment, borrowing or disability income insurance.
Keyperson Disability Insurance
Keyperson disability insurance is designed to function in an identical manner to keyperson life insurance.  It replaces the value that is lost to the employer as a result of the loss of the employee through disability.
Limited own occupation definition of total disability
Under a limited own occupation definition of total disability, the definition of what constitutes total disability changes with the duration of the disability from a pure own occupation definition of disability to an any occupation definition.  As the disability continues, its definition becomes more restrictive.
Long-term group disability plan
A typical long-term group disability plan may have benefit periods of 5 years, to age 65 or for lifetime and elimination periods that are as short as 30 days to as long as 6 months, or longer.
Modified own occupation definition of disability
The modified own occupation definition of total disability states that the insured will be considered totally disabled if he or she is unable to perform his or her own occupation and not engaged in any other occupation.
Noncancellable & guaranteed renewable
In coverage that is noncancellable and guaranteed renewable, the insurer makes two important guarantees: that it will not increase the premium and that it will not refuse to renew the policy or unilaterally modify any provision. Noncancellable and guaranteed renewable coverage offers the greatest amount of protection to the insured and has the highest premium when compared to identical coverage offered under the other three provisions.
Non-disabling injuries benefit
Under the provisions of a non-disabling injuries benefit, an insurer will typically pay for the medical treatment prescribed by a physician required within 90 days of and as a result of an accident.  Generally the benefit is limited to not more than 50% of the monthly benefit for total disability and is payable in lieu of disability benefits.
Non-occupational disability programs
Six jurisdictions have compulsory non-occupational disability insurance programs.  These non-occupational disability programs provide short-term financial assistance for disabilities occurring off the job.  Their maximum benefit periods are limited to 6 months.

Occupation classification
The assigning of each occupation into a class generally indicative of the disability hazard posed by the occupation and the probability of the insured's returning to it following a period of disability.
 Optionally renewable
 Under an optionally renewable provision, premiums may be increased and benefits modified on a class basis.  In addition, the insurance company may cancel an individual policy-but, only on a policy anniversary or on a premium due date.
Overhead Expense coverage
Overhead Expense insurance provides funds to pay overhead expenses incurred by the insured during a relatively limited period of disability.
 Own occupation definition of disability
 Under a pure own occupation definition of total disability, the insured is considered totally disabled if, as a result of accident or sickness, he or she can't perform the substantial and material duties of his or her regular occupation-even if employed doing something else
 Partial disability benefit
 Partial disability benefits require that the insured be unable to perform one or more of the duties of his or her regular occupation as a result of accident or sickness, but there is no requirement that the insured suffer any income loss.  Partial disability benefits are usually a fixed percentage of the total disability benefit, payable for a limited period.
Pre-existing condition
A pre-existing condition is defined as a sickness or physical condition for which medical advice or treatment was recommended by or received from a physician, or symptoms existed which would cause a prudent person to seek diagnosis or treatment in the two-year period preceding the policy's effective date.
Recurrent disability
The typical recurrent disability provision provides that a subsequent disability occurring within a specified period-usually 6 months-following a prior disability from the same or a related cause is considered a recurrence and a continuation of the earlier disability.
Renewability
There are four different renewability provisions that may be contained in disability income insurance policies: noncancellable & guaranteed renewable, guaranteed renewable, conditionally renewable and optionally renewable.
Residual disability benefits
Residual disability benefits pay a monthly disability income that is generally equal to the insured's lost income percentage multiplied by the policy's benefit for total disability.  It is paid in lieu of total disability benefits.  A 20% income loss is generally required before any residual disability benefit is paid.

Return of Premium rider
In the typical Return of Premium rider, the policyowner pays a premium in addition to that required for the disability benefit.  That additional premium creates a cash value that is payable to the policyowner less the total of any claims previously paid on dates specified in the policy.
Short-term group disability plan
Short-term group disability coverage is characterized by short elimination periods, that generally range from 0 days to 30 days and limited benefit periods that normally are 13, 26 or 52 weeks in duration.
Social insurance benefit rider
Social Insurance Benefit riders pay a monthly disability income benefit only if Social Security does not pay.  If and when Social Security disability benefits are payable, some or all of the benefits under these riders cease.
Social Security disability benefit
An income benefit payable to workers that are fully insured for Social Security benefits.  In order to receive benefits, a fully insured worker must be unable to engage in any substantial or gainful work for at least 5 months before filing a claim and have a disability which has lasted or is expected to last at least 12 months or be expected to result in death
Total disability (defined)
There are three different definitions of total disability.  These three definitions are known as the "own occupation," "limited own occupation" and "any occupation" definitions of disability.
Waiver of Premium
Waiver of Premium is a benefit generally available on disability insurance policies.  In a waiver of premium provision the insured's disability for a 90-day period will cause the insurance company to waive all future premiums during the continuation of disability and refund those premiums paid during the 90-day period.
Workers Compensation
Workers Compensation provides an array of benefits in the form of cash payments and medical and hospital services.  These benefits are provided to workers that sustain job-connected injuries or illnesses and are available to every worker.