Prepare for the Life and Health Insurance Exam. Utilize mock tests, flashcards, and multiple choice questions with hints and explanations. Ace your exam with ease!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.


How does a DI Flat Dollar Amount policy pay benefits?

  1. It pays a percentage of the insured’s income

  2. It pays a flat fee based on the type of disability

  3. It pays a minimum amount set by the insurance agency

  4. It pays a flat amount regardless of other income benefits

The correct answer is: It pays a flat amount regardless of other income benefits

A Disability Income (DI) Flat Dollar Amount policy pays a predetermined flat amount to the insured regardless of other income benefits they may receive. This structure provides a specific benefit amount that is set in the policy, which the insured will receive during the period of disability. The flat amount is often determined at the time the policy is purchased and remains consistent throughout the duration of the claim, which means the insured can rely on this fixed income to help maintain their financial stability. This distinguishes it from policies that calculate benefits as a percentage of the insured’s income or those that vary based on the type of disability. By paying a fixed amount, this type of policy simplifies the benefit process, as the insured does not need to provide information on other income sources to determine the benefit amount they are entitled to. This can be especially beneficial for individuals looking for predictable financial support in the event of a disabling condition.