Health · Chapter 18 · Optional Provisions
Relation of Earnings to Insurance (Average Earnings)
Definition
Optional provision in disability income policies: if combined monthly benefits from all policies exceed the insured's earnings — in Florida, the greater of earnings when disability began or the 2-year average (F.S. 627.624) — benefits are cut back pro rata across insurers, but never below a $500/month floor. Typically included in noncancelable or guaranteed renewable policies; guards against the moral hazard of profitable disability.
In plain English
Being disabled can't pay better than working — otherwise nobody heals.
Exam tip
In the current NAIC Model this clause is combined with the "loss of time" version of Insurance With Other Insurers.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms