Chapter 1 Review

For many people, disability is the forgotten hazard -- despite its being far more likely at most ages before retirement than death.  Although the chances of becoming disabled are greater for someone with a history of health problems, age, occupation and lifestyle also impact the likelihood of disability.  If the disability statistics for any individual are sobering, the same statistics when applied to a group of individuals are even more so.  As the size of any group increases, the likelihood of a long-term disability among members of the group also increases.  As the group size becomes larger, the chance of a disability becomes almost 100%.  

After considering the alternative income sources during disability -- savings, borrowing or spousal employment -- the only obvious answer is disability income insurance.

Chapter 1 Review Questions

True or False

1.  At most ages, the likelihood of disability is about the same as the likelihood of death.


2.  How many disabilities are likely to occur by age 65 in a group of 10 men, all of whom are age 40?


3.  Which of the following affect the likelihood of any individual's becoming disabled?

I.   Age
II.  Occupation
III.  Lifestyle

I & II only
I & III only
II & III only
*I, II & III

4.  Which of the following is/are affected by a prospective disability insurance applicant's occupation?

The cost of disability coverage
The quality of disability coverage
*Both a and b
Neither a nor b

5.  Which of the following would NOT normally be considered a part of a disability insurance applicant's lifestyle?

Smoking habits
Drinking habits