Sep 23, 2019

Understanding Disability Income Insurance Terminology

Underwritten by New York Life Insurance Company New York, NY 10010 on policy form GMR

Activities of Daily Living:  Actions you are normally able to accomplish on your own, such as: bathing, dressing, toileting, transferring, continence and eating.

Average Monthly Income:  The amount of income you earn monthly, 60% of which, is eligible for disability income benefits.  The formula for determining average monthly income is:  1/24th of your wages, salaries, commissions, fees and other amounts received for personal services including the cost of fringe benefits and share of total surplus—before deduction of income or social insurance taxes and after deduction of the normal business expenses which are deductible for income tax purposes—for the immediately preceding 24 month period. It does not include income from interest, dividends, rent, royalties, annuities, other insurance or other unearned income.

Benefit Period:  A benefit period is the maximum amount of time the insured may receive monthly benefits for a covered disability.  Under the AIChE Disability Income plan, the member may select a benefit period of five years or up to age 65.

Catastrophic Disability Option: This optional Disability Income benefit is designed to provide an additional layer of protection for severe disabilities. By electing this option, members may be able to replace up to 100% of their pre-disability income if the covered Total Disability causes: a loss of the ability to perform (a) two or more “activities of daily living,” (b) “cognitive impairment,” or (c) a life expectancy of less than 12 months, as will be described in the certificate of insurance issued when coverage is approved.

Cognitive impairment:  A deficiency (measurable according to generally accepted medical standards) in: short or long-term memory; orientation as to a person, place and time; deductive or abstract reasoning; or judgment as it relates to safety awareness.

Continuous Disability: See “Successive Periods of Covered Total Disability.”

Disability Insurance: Disability insurance is a type of health insurance which pays the insured a monthly benefit, replacing a portion of pre-disability (usually 60%) earnings lost from an inability to work due to a covered accident or sickness. 

Evidence of Insurability: Proof that you are insurable. Such evidence is generally obtained through statements on your application regarding your health, avocations and financial condition. In most cases, a medical examination is required.

Exclusions: Specific conditions in which a disability will not be covered as will be described in the group policy or individual certificate issued to each insured person. For example, many plans will not provide benefits for disabilities that are due to, occurs during or related to a war, participating in a riot, committing a felony, or self-inflicting an injury.

Full-time work:  The active performance for pay or profit of the regular duties of your normal occupation for pay or profit on the basis of at least 30 hours per week at the place such duties are normally performed or other location to which travel is required.

Medical Underwriting: A method of evaluating an applicant’s health and medical history to determine if coverage will be issued and if so, the appropriate rates and exclusions.

Monthly Benefit: Pre-Existing Condition:  An injury or sickness for which you consulted a doctor, received any medical services or supplies, or took any medication during the three months immediately before becoming insured under the AIChE Disability Income Plan.

Pre-Existing Condition Limitation: Benefits are not payable for an injury or sickness or any condition related to an injury or sickness for which a person consults a doctor, receives medical services or supplies or takes medication during the three month period before coverage goes into effect for the covered person if such person did not fully disclose the condition during the request for insurance.  A disability which is classified as a Pre-Existing Condition will not be covered until you have not consulted a doctor, received any medical services or supplies, or taken any medication for the condition for a period of 3 months immediately after first becoming insured; or 12 consecutive months during which you have been continuously insured under the plan.

Recurring Disability Benefits:  See “Successive Periods of Covered Total Disability.”

Rehabilitation Benefit: "Vocational Rehabilitation." If, while you are disabled, you wish to enter into a rehabilitation program, New York Life will review, at their expense, the feasibility of that program. If you and New York Life agree on a rehabilitation program, New York Life will state in writing which expenses of the program it will pay. Any payment by New York Life toward a rehabilitation program will be in addition to the disability income benefit to which you are entitled. Complete details will be described in the Certificate of Insurance issued when coverage is approved.

Residual/Partial Disability: While recovering from a disability, if you return to work but are earning less than you were before you were disabled, you may be eligible to receive a percentage of your monthly benefit.  This is to encourage a return to the work force.

Spouse/Eldercare Benefit:  If a member is receiving disability benefits, is participating in an approved rehabilitation program and has an eligible, chronically ill or disabled spouse or other specified family member, an additional benefit of up to $500 per month, may be payable for up to 12 months.

Successive Periods of Covered Total Disability: will be considered one period of Covered Total Disability, if such disabilities are due to (a) the same or related causes, and which are separated by a return to continuous “full-time work” of three months during which the insured is not totally disabled (six months during which the insured is not catastrophically disabled if applicable to the optional Catastrophic Disability Option), or (b) different or unrelated causes, and are not separated by return to “full-time work.”

Survivor Benefit:  If you pass away on a day that a covered Total Disability benefit is payable, and the benefit has been paid for a period of 12 consecutive months immediately before the insureds death from any cause, the monthly benefits will be payable for six months (or until the maximum benefit period is reached, if sooner).  The Survivor Benefit will be paid to your surviving relatives in the following order: your spouse, equally among your children, equally among your brothers and sisters, or if there are no surviving relatives, to the executor or administrator of your estate.

Total Disability/Totally Disabled:  An incapacity that completely and continuously prevents you from performing the material and substantial duties of your usual occupation as a result of a covered illness or injury, provided you are not otherwise working for pay or profit.

Underwriter: An insurance company employee who reviews an application for insurance and decides if the applicant is approved for coverage.

Waiting Period: The waiting period is the number of consecutive days you must be totally disabled before monthly benefit payments begin. The longer the waiting period, the lower your rate.

Waiver of Premium: When an individual becomes disabled and eligible for benefits, no further disability premium payments are required as long as benefits are being paid out.