5 - Health and Accident Insurance

Why do group health insurance plans require minimum participation? A) To eliminate pre-existing condition exclusions. B) To utilize individual underwriting criteria. C) To guarantee conversion to an individual plan. D) To prevent adverse selection.

D) To prevent adverse selection. Group health plans require a minimum number of participants to prevent adverse selection.

All of the following are normally considered to be qualifications for partial disability payments EXCEPT? A) being unemployed. B) being unable to perform one or more of the important duties of his job. C) submitting proof of disability. D) being under care of a physician.

A) being unemployed. Being unemployed does not qualify you for disability payments.

Total disability does not always occur immediately after an accident, but develops days or weeks later. A specified time frame is allowed for this and the insured will still be eligible for benefits. This is referred to as? A) the probationary period. B) delayed disability. C) the elimination period. D) recurrent disability.

B) delayed disability. The delayed disability provision allows a certain amount of time during which total disability may result from an accident and the insured will still be eligible for benefits.

The pre-existing condition waiting period after open enrollment for employer plans of 2-50 employees CANNOT exceed how many months? A) 3. B) 6. C) 9. D) 12.

D) 12. The pre-existing condition waiting period for plans of 2-50 employees cannot exceed 12 months.

Disability income coverage is designed to provide income for all of the following causes EXCEPT? A) accident. B) death. C) sickness. D) economic death.

B) death. All of these are causes to provide income for disability income coverage except for death.

A Disability Income policy with the lowest possible rate contains a? A) long elimination period and long benefit period. B) long elimination period and short benefit period. C) short elimination period and long benefit period. D) short elimination period and short benefit period.

B) long elimination period and short benefit period. A Disability Income policy with a long elimination period and short benefit period would have the lowest rates.

In a noncontributory group health plan, what percentage of eligible employees must participate before the plan can be put in force? A) 100%. B) 33 1/3%. C) 75%. D) 66 2/3%.

A) 100%. Normally,100% of eligible employees must participate in a noncontributory group plan before the plan can be put in force.

If an insured who has been a florist takes a job as a coal miner, is the insured's Disability coverage void? A) No, but the insured's benefits may be reduced. B) No, the coverage will remain unchanged. C) Yes, regardless of other circumstances. D) Yes, if the insured is over the age of 30.

A) No, but the insured's benefits may be reduced. The insured's benefits may be reduced because of the new occupation's job risk.

Which definition of disability requires the insured be unable to perform the insured's current occupation as a result of sickness or accident? A) Own occupation. B) Any occupation. C) Residual disability. D) Presumptive disability.

A) Own occupation. "Own Occupation" definition requires that the insured be unable to work at their own occupation as a result of an accident or sickness.

Who bears the financial risk for the payment of covered claims in a fully insured group health plan? A) The insurer. B) The health provider. C) The employee. D) The employer.

A) The insurer. The insurer bears the financial risk for payment of covered claims.

An insured has a disability income policy with an accidental means provision. While diving into a lake from a high, rocky ledge, the insured suffers an injury causing paralysis. The insurer will? A) deny the claim because the insured intentionally made the dive. B) pay the insured's claim because the resulting injuries were unexpected and accidental. C) deny the claim if the insured was still in the probationary period. D) pay 1/2 of the claim because the dive was intentional, but the result was accidental.

A) deny the claim because the insured intentionally made the dive. The accidental means provision requires that the cause must have been accidental. In this case, the actual dive itself was not accidental, it was intentional. No claim would be paid.

An insured has a Residual Disability Income policy for a benefit of $1,000 per month and the insured's income suffers a loss of 40%. How much will the monthly benefit be? A) $0. B) $600 per month. C) $400 per month. D) 40% of the total lost income.

C) $400 per month. A residual amount benefit is based on the proportion of income actually lost due to partial disability. The benefit is usually determined by multiplying the percentage of lost income by the stated monthly benefit for total disability.

What is Business Overhead Expense Insurance designed to pay? A) Business expenses when the business is closed due to fortuitous loss. B) Business expenses caused by natural disasters. C) Business expenses incurred when a business owner is disabled. D) Business expenses upon the death of a key person.

C) Business expenses incurred when a business owner is disabled. Business Overhead Expense insurance is designed to pay business expenses incurred when a business owner is disabled.

An insured's Disability Income policy has a feature that not only will pay a full benefit for total loss of income but also will pay 40% of the total benefit if the insured loses 40% earned income. Which form of Disability policy does the insured have? A) Buy-out. B) Recurrent. C) Residual. D) Probationary.

C) Residual. A residual amount benefit is based on the proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income.

An underwriter finds that 10 out of 100 people who would be covered by a Master Group Health policy have serious health problems. The insurer may accept? A) the group, but charge the 10 high-risk people a higher premium. B) the 90 healthy people and reject the other 10. C) or reject the whole group. D) the group, but limit the benefits of the 10 unhealthy people.

C) or reject the whole group. The approach in underwriting group health plans evaluates the group as a whole, rather than individuals within the group. Based on the group's risk profile, the group is either accepted or rejected.