A disability income policy that pays benefits only when disability results from a sickness or injury arising off the job is described as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Disability policies are classified by the source of the disability. Occupational coverage pays only for disabilities arising from the insured's job, non-occupational coverage pays only for disabilities that arise away from work, and a 24-hour policy combines both. The policy described pays only for off-the-job causes, so it is non-occupational coverage. Non-occupational policies deliberately exclude work-related injuries because those are typically covered by workers' compensation. Understanding the classification matters at claim time, because it determines whether a work injury or a leisure injury triggers benefits under a given policy.
Why the other options are wrong
- B) Occupational coverage is the opposite classification: it pays only for disabilities caused by work-related sickness or injury. The policy described here pays for off-the-job causes, so it is non-occupational.
- C) Residual coverage is a rider that pays benefits based on lost income after the insured returns to work at reduced earnings. It describes how benefits are calculated, not the source of the disability.
- D) Guaranteed renewable describes the insurer's obligation to renew the policy despite changes in the insured's health. It says nothing about the source of disability, which is what the occupational and non-occupational classification defines.
Memory hook
Occupational = at work. Non-occupational = away from work. 24-hour = both.