ALU 202 - CHAPTER 8 (MORBIDITY RISKS) 55+
ACTUAL QUESTIONS AND ANSWERS|2025 UPDATE
1. Mortality risk The risk of a particular individual dying at any given time - compared with other
individuals of the same sex and age.
2. Morbidity Risk The risk of a particular individual contracting a disease or disabling condition at
any given time - when compared with other individuals of the same sex and age.
3. Living Benefit Disability, Long-term care, critical illness, accelerated death benefits. Less mortality
Products data due to being relative newcomers to the marketplace.
4. Mortgage Fore- 16 times more likely due to disability than death.
closure
5. Disability Insur- Benefits are paid under the terms of the policy if the insurable event occurs. Benefit
ance occurs after a defined period of time (waiting period) for a defined length of time
(benefit period).
6. Premiums previ- Any benefits paid would usually be taxable.
ously deducted
for tax purposes
7. Permanent Dis- No longer able to perform two or more activities of daily living.
ability
8. Disability Insur- Conditionally renewable (non-traditional); guaranteed renewable and non-cance-
ance (Types of re- lable (both are traditional)
new provisions)
9. Canadian Tax Not considered a disposition and does not generate taxable income.
Law (disability
payment)
10. Conditionally re- Known as cancelable and non-traditional. Allow the most flexibility (for the insur-
newable policies ance company) in making changes to in force policies. Must change all premium
or cancel policies for all policyholders within a class. Some contracts include
, ALU 202 - CHAPTER 8 (MORBIDITY RISKS) 55+
ACTUAL QUESTIONS AND ANSWERS|2025 UPDATE
provisions for cancellation or adjustment to an individual's policy (new occupation
declinable).
11. Conditionally re- Defined by age, gender, a specific waiting period, benefit period, occupation, or
newable (Class) policy type.
12. Guaranteed Re- Referred to as "traditional". Cannot be canceled or have provisions changed (if
newable Policy premiums on time). Lower premium initially - possible increased premium if
company is experiencing poor claims history. Less restrictive underwriting.
13. Conditionally Re- Looking for low-cost disability, high risk and/or lower skilled occupations, or do
newable (Types not qualify for traditional disability insurance.
of customers)
14. Non-Cancelable Most strictly underwritten (greatest risk to the company). If premium paid on time,
Policy company cannot increase premium or add additional charges, change or add
provisions, cancel the policy (usually to age 65).
15. Non-Cancelable Premiums are usually no longer guaranteed and are based on the attained age
Policy (After the on an annual basis, waiting period remains unchanged but the benefit period is
time limit) reduced to 12 or 24 months, definition of disability is 'total', and any benefit riders
are terminated.
16. Disability defini- Own occupation, regular occupation, any occupation
tions
17. Own Occupation Cannot perform his/her specific job function. Must be under regular care and
(Own Occ) attendance of a legally qualified medical practitioner. Can work other jobs while
still receiving benefits.
18. Limited Own Oc- Covered for a shorter time period than full length (2, 5, or 10 years) and then
cupation change to Regular Occupation or Any Occupation.
19.
ACTUAL QUESTIONS AND ANSWERS|2025 UPDATE
1. Mortality risk The risk of a particular individual dying at any given time - compared with other
individuals of the same sex and age.
2. Morbidity Risk The risk of a particular individual contracting a disease or disabling condition at
any given time - when compared with other individuals of the same sex and age.
3. Living Benefit Disability, Long-term care, critical illness, accelerated death benefits. Less mortality
Products data due to being relative newcomers to the marketplace.
4. Mortgage Fore- 16 times more likely due to disability than death.
closure
5. Disability Insur- Benefits are paid under the terms of the policy if the insurable event occurs. Benefit
ance occurs after a defined period of time (waiting period) for a defined length of time
(benefit period).
6. Premiums previ- Any benefits paid would usually be taxable.
ously deducted
for tax purposes
7. Permanent Dis- No longer able to perform two or more activities of daily living.
ability
8. Disability Insur- Conditionally renewable (non-traditional); guaranteed renewable and non-cance-
ance (Types of re- lable (both are traditional)
new provisions)
9. Canadian Tax Not considered a disposition and does not generate taxable income.
Law (disability
payment)
10. Conditionally re- Known as cancelable and non-traditional. Allow the most flexibility (for the insur-
newable policies ance company) in making changes to in force policies. Must change all premium
or cancel policies for all policyholders within a class. Some contracts include
, ALU 202 - CHAPTER 8 (MORBIDITY RISKS) 55+
ACTUAL QUESTIONS AND ANSWERS|2025 UPDATE
provisions for cancellation or adjustment to an individual's policy (new occupation
declinable).
11. Conditionally re- Defined by age, gender, a specific waiting period, benefit period, occupation, or
newable (Class) policy type.
12. Guaranteed Re- Referred to as "traditional". Cannot be canceled or have provisions changed (if
newable Policy premiums on time). Lower premium initially - possible increased premium if
company is experiencing poor claims history. Less restrictive underwriting.
13. Conditionally Re- Looking for low-cost disability, high risk and/or lower skilled occupations, or do
newable (Types not qualify for traditional disability insurance.
of customers)
14. Non-Cancelable Most strictly underwritten (greatest risk to the company). If premium paid on time,
Policy company cannot increase premium or add additional charges, change or add
provisions, cancel the policy (usually to age 65).
15. Non-Cancelable Premiums are usually no longer guaranteed and are based on the attained age
Policy (After the on an annual basis, waiting period remains unchanged but the benefit period is
time limit) reduced to 12 or 24 months, definition of disability is 'total', and any benefit riders
are terminated.
16. Disability defini- Own occupation, regular occupation, any occupation
tions
17. Own Occupation Cannot perform his/her specific job function. Must be under regular care and
(Own Occ) attendance of a legally qualified medical practitioner. Can work other jobs while
still receiving benefits.
18. Limited Own Oc- Covered for a shorter time period than full length (2, 5, or 10 years) and then
cupation change to Regular Occupation or Any Occupation.
19.
