Accident and sickness Insurance Exam Questions and Correct Answers Latest update 2024 (Rated A+)
Linda, aged 55 and a resident of Ontario, is a specialized surgeon at a local hospital. While on her way to
work one morning, she is in a car accident and breaks both her arms. Due to the damage done to the
fine motor skills in her hand, she must go to physical therapy. It is estimated by her doctor that she will
fully recover in 8-10 months. She submits a claim for short-term disability to her employer-paid group
health insurance and receives only 50% of her usual salary. She usually makes $16,000 per month. In
conversation with a colleague, they suggest that she look at applying for Canadian Pension Plan's (CPP)
disability insurance benefit. The current CPP disability benefit is $1,390 per month. How much CPP
disability benefit will Linda receive over the course of the first five months?
a) $0
b) $1,390
c) $6,610
d) $6,950 - Answers Linda will not receive any CPP disability benefit as it is only paid when the disability
is severe and prolonged.
Evelyn purchased a creditor disability insurance policy which was offered as a package deal while
obtaining a mortgage from a bank. If Evelyn becomes totally disabled, which of the following outcomes
can be expected with regard to the creditor disability insurance?
a) Tax-free benefits will be paid to the bank on behalf of Evelyn.
b) Evelyn will start receiving the benefits immediately without a waiting period.
c) Benefits received by Evelyn will be considered as taxable income.
d) The benefits paid to Evelyn will not be subject to a maximum allowable limit. - Answers Tax-free
benefits will be paid to the bank on behalf of Evelyn
The tax-free benefits will be paid to the bank on behalf of Evelyn. There will invariably be a waiting
period, often 60 days but benefits as mentioned earlier will be paid to the bank. The benefit is subject to
a maximum allowable monthly and overall limit.
Yara is a member of her employer's group insurance plan, which provides her with disability benefits of
$2,000 a month. Yara and her employer contribute equally to the plan and so far, they have each paid
$4,800 in premiums. Yara became ill and was unable to work for seven months. She received $10,000 in
disability benefits. How much of these benefits would have been received by Yara tax-free?
,a) Yara would have received $4,800 of the benefits tax-free.
b) Yara would have received $5,200 of the benefits tax-free.
c) Yara would have received the entire $10,000 as a tax-free benefit.
d) Yara would have received the entire $10,000 as a taxable benefit. - Answers Yara would have received
$4,800 of the benefits tax-free.
Rationale: Yara would have received the first $4,800 of the benefits tax-free and the other $5,200 of
benefits would have been taxed. If the employer and employee share the group disability premiums, in
the event of a claim, the plan member receives a portion of the benefits equal to his aggregate
premiums paid, tax-free, and the balance of the benefits is treated as taxable income.
Matt is a small business owner. Because his business would be in deep trouble if he were to become
disabled, he purchased a disability insurance policy. Matt wanted fixed benefits and fixed premiums,
which are options that came at a significant cost. Much to Matt's delight, now that the disability policy
has been signed and delivered, the insurer can make no changes to it and must honour all of the
commitments made as long as Matt pays the premiums.
What type of policy does Matt own?
a) Non-cancellable policy
b) Cancellable policy
c) Guaranteed renewable policy
d) Guaranteed issue policy - Answers Once a non-cancellable policy is issued, the insurer can make no
changes to the terms and conditions of the contract
While applying for a critical illness (CI) insurance policy, 58-years old Robin asked his insurance agent
about the benefits of adding a waiver of premium rider to his policy, as he wishes to add one. Which of
the following responses is the agent likely to provide Robin?
a) Robin is less likely to be able to add the waiver of premium rider to his policy due to his age.
b) At the onset of a qualifying disability, Robin can stop paying premiums without a waiting period.
c) Robin will be able to add the rider by paying additional premiums and without medical underwriting.
, d) Robin will have to medically qualify for the rider, but the premiums will not be affected. - Answers A
waiver of premium rider may be added to a critical illness policy provided the insured qualifies medically
and pays an additional premium. The rider is added at the time of policy issue and is usually only
available if the insured is age 55 or younger at the time of application. The waiver is usually subject to a
waiting period of between four and six months from the onset of the qualifying disability and premiums
paid by the policyholder may be refunded once the waiting period has expired. The conditions
(disability) that would result in a waiving of premiums under the policy are different from those that
would result in a successful claim for critical illness benefits.
Harold is Thomas' insurance agent. Harold recently submitted a disability insurance application with a
cheque for Thomas' monthly premium of $100. The policy was approved in early June and sent to Harold
for delivery. Both Harold and Thomas were busy and they could not set up an appointment for Harold to
deliver the policy to Thomas. Thomas, however, continued to pay the premiums for his policy as the
insurance company charged premiums based on his authorization. Ultimately, in October, Harold met
with Thomas and delivered the policy on October 15. However, Thomas decides to cancel the policy two
days after receiving it. What is the status on Thomas being eligible to receive a refund of all the
premiums he has paid to date?
a) Thomas can exercise his rescission rights and is therefore entitled to a refund of premiums.
b) Thomas is entitled to a refund of premiums because it was Harold's fault that the policy was not -
Answers homas is not eligible for a refund of premiums as he was covered from June to October and any
claim would have been honoured by the insurer.
The policy needs to be delivered to the client for the policy to legally come into force. Thomas is entitled
to receive all of the paid premiums as a refund because he was not covered until the date of delivery of
the policy.
Maria works in a factory that produces dishwashers. In addition to her group coverage, she carries an
individual disability insurance policy. She has added a rider to her policy that will pay her a benefit of
50% of the total disability benefit if she cannot work full time or is prevented from performing one or
more key tasks of her job.
Which rider does Maria have on her disability policy?
a) Partial disability rider
b) Residual disability rider
c) Presumptive disability rider
Linda, aged 55 and a resident of Ontario, is a specialized surgeon at a local hospital. While on her way to
work one morning, she is in a car accident and breaks both her arms. Due to the damage done to the
fine motor skills in her hand, she must go to physical therapy. It is estimated by her doctor that she will
fully recover in 8-10 months. She submits a claim for short-term disability to her employer-paid group
health insurance and receives only 50% of her usual salary. She usually makes $16,000 per month. In
conversation with a colleague, they suggest that she look at applying for Canadian Pension Plan's (CPP)
disability insurance benefit. The current CPP disability benefit is $1,390 per month. How much CPP
disability benefit will Linda receive over the course of the first five months?
a) $0
b) $1,390
c) $6,610
d) $6,950 - Answers Linda will not receive any CPP disability benefit as it is only paid when the disability
is severe and prolonged.
Evelyn purchased a creditor disability insurance policy which was offered as a package deal while
obtaining a mortgage from a bank. If Evelyn becomes totally disabled, which of the following outcomes
can be expected with regard to the creditor disability insurance?
a) Tax-free benefits will be paid to the bank on behalf of Evelyn.
b) Evelyn will start receiving the benefits immediately without a waiting period.
c) Benefits received by Evelyn will be considered as taxable income.
d) The benefits paid to Evelyn will not be subject to a maximum allowable limit. - Answers Tax-free
benefits will be paid to the bank on behalf of Evelyn
The tax-free benefits will be paid to the bank on behalf of Evelyn. There will invariably be a waiting
period, often 60 days but benefits as mentioned earlier will be paid to the bank. The benefit is subject to
a maximum allowable monthly and overall limit.
Yara is a member of her employer's group insurance plan, which provides her with disability benefits of
$2,000 a month. Yara and her employer contribute equally to the plan and so far, they have each paid
$4,800 in premiums. Yara became ill and was unable to work for seven months. She received $10,000 in
disability benefits. How much of these benefits would have been received by Yara tax-free?
,a) Yara would have received $4,800 of the benefits tax-free.
b) Yara would have received $5,200 of the benefits tax-free.
c) Yara would have received the entire $10,000 as a tax-free benefit.
d) Yara would have received the entire $10,000 as a taxable benefit. - Answers Yara would have received
$4,800 of the benefits tax-free.
Rationale: Yara would have received the first $4,800 of the benefits tax-free and the other $5,200 of
benefits would have been taxed. If the employer and employee share the group disability premiums, in
the event of a claim, the plan member receives a portion of the benefits equal to his aggregate
premiums paid, tax-free, and the balance of the benefits is treated as taxable income.
Matt is a small business owner. Because his business would be in deep trouble if he were to become
disabled, he purchased a disability insurance policy. Matt wanted fixed benefits and fixed premiums,
which are options that came at a significant cost. Much to Matt's delight, now that the disability policy
has been signed and delivered, the insurer can make no changes to it and must honour all of the
commitments made as long as Matt pays the premiums.
What type of policy does Matt own?
a) Non-cancellable policy
b) Cancellable policy
c) Guaranteed renewable policy
d) Guaranteed issue policy - Answers Once a non-cancellable policy is issued, the insurer can make no
changes to the terms and conditions of the contract
While applying for a critical illness (CI) insurance policy, 58-years old Robin asked his insurance agent
about the benefits of adding a waiver of premium rider to his policy, as he wishes to add one. Which of
the following responses is the agent likely to provide Robin?
a) Robin is less likely to be able to add the waiver of premium rider to his policy due to his age.
b) At the onset of a qualifying disability, Robin can stop paying premiums without a waiting period.
c) Robin will be able to add the rider by paying additional premiums and without medical underwriting.
, d) Robin will have to medically qualify for the rider, but the premiums will not be affected. - Answers A
waiver of premium rider may be added to a critical illness policy provided the insured qualifies medically
and pays an additional premium. The rider is added at the time of policy issue and is usually only
available if the insured is age 55 or younger at the time of application. The waiver is usually subject to a
waiting period of between four and six months from the onset of the qualifying disability and premiums
paid by the policyholder may be refunded once the waiting period has expired. The conditions
(disability) that would result in a waiving of premiums under the policy are different from those that
would result in a successful claim for critical illness benefits.
Harold is Thomas' insurance agent. Harold recently submitted a disability insurance application with a
cheque for Thomas' monthly premium of $100. The policy was approved in early June and sent to Harold
for delivery. Both Harold and Thomas were busy and they could not set up an appointment for Harold to
deliver the policy to Thomas. Thomas, however, continued to pay the premiums for his policy as the
insurance company charged premiums based on his authorization. Ultimately, in October, Harold met
with Thomas and delivered the policy on October 15. However, Thomas decides to cancel the policy two
days after receiving it. What is the status on Thomas being eligible to receive a refund of all the
premiums he has paid to date?
a) Thomas can exercise his rescission rights and is therefore entitled to a refund of premiums.
b) Thomas is entitled to a refund of premiums because it was Harold's fault that the policy was not -
Answers homas is not eligible for a refund of premiums as he was covered from June to October and any
claim would have been honoured by the insurer.
The policy needs to be delivered to the client for the policy to legally come into force. Thomas is entitled
to receive all of the paid premiums as a refund because he was not covered until the date of delivery of
the policy.
Maria works in a factory that produces dishwashers. In addition to her group coverage, she carries an
individual disability insurance policy. She has added a rider to her policy that will pay her a benefit of
50% of the total disability benefit if she cannot work full time or is prevented from performing one or
more key tasks of her job.
Which rider does Maria have on her disability policy?
a) Partial disability rider
b) Residual disability rider
c) Presumptive disability rider
