A disability income policy that integrates with Social Security disability benefits is one in which:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Integration coordinates private disability income benefits with benefits from Social Security or other sources so that the combined payments do not exceed a stated percentage of the insured's pre-disability earnings. A common design is a social insurance supplement that pays a specified monthly amount and then reduces or terminates when Social Security disability benefits begin. This prevents over-insurance and keeps total replacement income within policy limits, while giving the insured income protection during the period before federal benefits are approved.
Why the other options are wrong
- B) The insurer does not pay Social Security taxes on the insured's behalf; integration only coordinates benefit amounts.
- C) Private policies supplement, not replace, Social Security; integration coordinates the two rather than substituting one for the other.
- D) There is no forfeiture; integration merely reduces the private benefit by the Social Security amount within contract limits.
Memory hook
Integration adds up the checks and caps the total. Social Security comes first; the private policy fills the gap.