A disability income policy that covers only nonoccupational disabilities will pay benefits when the insured:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Disability coverage is divided between occupational and nonoccupational categories. A nonoccupational policy covers disabilities that arise off the job, because disabilities caused by work are the province of workers' compensation, which provides its own benefits. Conversely, an occupational policy covers only job-related disabilities. The two categories are mutually exclusive, and the distinction is a standard coverage-definition point in disability income insurance (AH-IV.5). Candidates must understand that a nonoccupational policy's exclusion of work-related injuries is not a gap in coverage but a deliberate boundary drawn to avoid duplication with workers' compensation.
Why the other options are wrong
- B) Disabilities that occur while performing work duties are occupational and are excluded by a nonoccupational policy. The exclusion exists because work-related disabilities are generally covered by workers' compensation, and the nonoccupational policy is designed to complement that coverage.
- C) Covering disability from any cause, on or off the job, describes an all-inclusive or any-cause disability policy. A nonoccupational policy deliberately excludes work-related disabilities, so it does not cover every cause of disability.
- D) Unemployment without disability does not trigger disability benefits. The insured must be disabled as defined by the policy, not merely out of work, and a nonoccupational policy still requires the disability to satisfy its coverage definition.
Memory hook
Nonoccupational policy covers off-the-job; workers' comp owns the on-the-job injuries.