All Health
Disability insurance policies must include a provision entitling policyholders to a grace period for premium payment. At least how long must the grace period be for monthly premium policies? A) 10 days B) 90 days C) 31 days D) 1 year
10 days Explanation A grace period for payment of the premium must allow at least 7 days for policies in which premiums are paid weekly, 10 days for those paid monthly, and 31 days for all other policies.
An accident and health insurance policy that provides for monthly payments has a grace period of: A) 10 days B) 31 days C) 14 days D) 7 days
10 days Explanation Each accident and health insurance policy must contain a grace period of at least 31 days if the premium is paid yearly, 10 days if the premium is paid monthly, and 7 days if the premium is paid weekly.
KAC Health Insurance Company insures a risk without being notified that the insured already has existing coverage for the same risk. The policy that KAC issued contains the insurance with other insurers provision. When a loss occurs, the total coverage that the insured had purchased (including the coverage that KAC was unaware of at the time of application) would pay $5,000. Had KAC been the only insurer, it would have paid $2,500. What amount is KAC liable to pay? A) 1250 B) 2500 C) 1750 D) 0
1250 Explanation According to the insurance with other insurers provision, benefits payable for expenses incurred are prorated if the insurer accepted the risk without being notified of other existing coverage for the same risk. The insurer is only liable to pay pro rata benefits in proportion to the amount of insurance with the insurer as it relates to the total amount of insurance under all policies. As a result, if KAC's policy would have paid a total of $2,500 for the claim and the benefit payable under all coverages totals $5,000, KAC must pay only half of the amount it would have otherwise paid (or $1,250).
An accident and health insurance policy may not be rescinded, except for fraud, after it has been in effect for A) 2 years B) 4 years C) 1 year D) 6 months
2 years Explanation After an accident and health insurance policy has been in force for 2 years, the insurer may not rescind it unless the insured obtained the coverage through fraud or fails to pay the premium.
Which of the following is NOT an essential health benefit found in qualified health plans? A) Dental services B) Pediatric services C) Rehabilitative services D) Emergency services
Dental services Explanation Qualified health plans (QHPs) must offer essential health benefits such as emergency, rehabilitative and pediatric services. Dental services are not included in the list of essential health benefits.
Which of the following statements applies to both grandfathered and non-grandfathered health plans? A) Preventive services must be provided free of charge. B) Any mistake, even an honest one, on an application is grounds for cancellation of a policy. C) Pre-existing conditions may be excluded for all patients. D) Dependent coverage must be extended to adult children until age 26.
Dependent coverage must be extended to adult children until age 26. Explanation Laws that protect consumers under both grandfathered and non-grandfathered health plans include the following: dependent coverage was extended to age 26; no lifetime dollar limits may be applied to essential health benefits; and policies may not be canceled if a mistake on an application is an honest mistake.
Which kind of health insurance policy ensures renewability up to a specific age of the insured, although the insurer reserves the right to change the premium rate on a class basis? A) Noncancelable B) Optionally renewable C) Cancelable D) Guaranteed renewable
Guaranteed renewable Explanation Guaranteed renewable health insurance policies ensure renewability up to a specific age of the insured, although the insurer reserves the right to change the premium rate on a class basis.
Marco's medical expense policy states that it will pay a flat $75 per day for room and board for each day of hospitalization. The policy pays benefits on which basis? A) Invoice B) Reimbursement C) Service D) Indemnity
Indemnity Explanation Medical expense policies written on an indemnity basis pay a daily benefit for each day of hospitalization, regardless of the actual expenses.
Which of the following statements concerning credit accident and health insurance is CORRECT? A) It covers health care costs of unemployed individuals. B) It can only be purchased from surplus lines agents. C) It can be purchased by a debtor to cover payments due on a specific loan while the debtor is disabled. D) It is purchased by a creditor to protect against loss resulting from the creditor's disability.
It can be purchased by a debtor to cover payments due on a specific loan while the debtor is disabled. Explanation Credit accident and health insurance coverage covers a debtor, with the creditor receiving the benefits to pay off the debt if the debtor becomes disabled. It can be sold as an individual policy covering a single debtor or on a group basis to cover more than 1 debtor. Credit accident and health insurance coverage ensures that the borrower (debtor) will cover payments due on a specific loan or other credit transaction while the borrower is disabled.
Which of the following is NOT a basic form of health insurance coverage? A) Disability income B) Accident-only C) Limited-pay health D) Medical expense
Limited-pay health Explanation Three distinct categories of basic health coverage exist: medical expense, disability income, and accident-only.
Excepted benefits are not included as minimum essential coverage. Which of the following is NOT an excepted benefit? A) Accident-only insurance B) Disability income insurance C) Workers' compensation insurance D) Medicare
Medicare Explanation Medicare is considered a minimum essential coverage. The other 3 types of insurance are excepted benefits.
Which renewability provision allows an insurer to not renew a health insurance policy on a given date as specified in the policy? A) Conditionally renewable B) Cancelable C) Optionally renewable D) Guaranteed renewable
Optionally renewable Explanation The renewability provision in an optionally renewable policy gives the insurer the option to terminate the policy on the date specified in the contract. The date specified is typically the policy anniversary date or the premium due date.
All of the following titles refer to the Affordable Care Act (ACA) EXCEPT A) Health Care Reform B) Obamacare C) Patient Protection and Affordable Care Act D) Patient Assistance Act
Patient Assistance Act Explanation The other titles for the Affordable Care Act include Obamacare, Health Care Reform, and the Patient Protection and Affordable Care Act (PPACA).
Which of the following is NOT a common health insurance exclusion? A) Cosmetic surgery to reduce wrinkles B) Plastic surgery to repair scar tissue C) Treatment for burns sustained while the insured was committing arson D) Medical care after the insured breaks her arm while at work
Plastic surgery to repair scar tissue Explanation Elective cosmetic surgery, injuries covered by workers' compensation, and injuries sustained in the process of committing a felony are all excluded in health insurance.
Which of the following terms relates directly to the consideration clause? A) Endorsement B) Premium C) Exclusion D) Beneficiary
Premium Explanation The consideration clause describes the amount and frequency of the premium payments.
With what provision of a standard health insurance policy would the following clause be associated: "the insured and the insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium"? A) Time limit on certain defenses provision B) Grace period provision C) Reinstatement provision D) Cancellation provision
Reinstatement provision Explanation The reinstatement provision provides that when a policy lapses due to nonpayment of premiums, but the insured subsequently pays the renewal premium (which the insurer accepts without requiring an application for a new policy), the policy will be reinstated with the same provisions and rights as before (with the exception of coverage for sickness-related losses within the first 10 days after reinstatement).
Which of the following entities would NOT be offered a blanket health insurance policy? A) A soccer team B) An airline C) The employees of a factory D) A college
The employees of a factory Explanation Blanket health policies can be used by common carriers (such as airlines, bus lines, and railroads), colleges, schools, sports teams, and camps, among others.
Jane submits written notice of a health insurance claim to her insurance company. After a month has passed, the insurer still has not provided her with a claim form. Which of the following statements is CORRECT? A) Jane should assume her claim has been denied. B) The insurer may not deny the claim, since it did not timely supply a claim form. C) The insurer should have furnished Jane with a claim form no later than 15 days after receiving the notice of claim. D) Jane must resubmit her notice of claim because more than 30 days have passed.
The insurer should have furnished Jane with a claim form no later than 15 days after receiving the notice of claim. Explanation All individual accident and health insurance policies must contain a claim forms provision. According to this section, the insurer must provide a claim form to Jane within 15 days of receiving her written notice of claim.
Which of the following is the best reason to purchase a vision care policy? A) To help pay the cost of medically necessary eye surgery B) To obtain coverage that will pay for corrective surgery C) To supplement existing major medical coverage D) To obtain coverage that will pay 100% of routine vision care
To supplement existing major medical coverage Explanation Vision care coverage is generally not included in major medical policies. While it pays for routine vision care, it does not pay for surgery. It pays either a scheduled benefit amount or a percentage of reasonable and customary charges; it generally does not cover 100% of costs.
Which of the following provisions is optional in an individual health insurance policy? A) Grace period B) Unpaid premium C) Entire contract D) Change of beneficiary
Unpaid premium Explanation All individual health insurance policies must contain an entire contract provision stating that the policy, including the endorsements and attached papers, constitutes the entire insurance contract. Individual policies must also contain a grace period of at least 7 days for weekly premium policies, 10 days for monthly premium policies, or 31 days for all other policies for payment of each premium after the first. A change of beneficiary provision, which states that the insured has the right to change the beneficiary unless an irrevocable beneficiary designation has been made, is also mandatory. However, an unpaid premiums provision is optional and states that when a claim is paid, any premium due may be deducted from the payment.
All of the following are mandatory health insurance policy provisions EXCEPT A) grace period B) entire contract C) reinstatement D) change of occupation
change of occupation Explanation Change of occupation is an optional provision.
Blanket health insurance is a type of A) individual health and life insurance B) group health and life insurance C) individual accident insurance D) group accident insurance
group accident insurance Explanation Blanket health insurance is a form of group accident insurance that covers accidents only under very specific conditions. Generally, these insurance policies are limited to cover passengers on a common carrier such as an airplane or train, employees at a social function such as a company picnic, members of a school's athletic team, summer camp attendees, and volunteer firefighters while on duty.
All of the following are required provisions of accident and health insurance policies EXCEPT A) grace period B) reinstatement C) notice of claim D) inflation protection
inflation protection Explanation Inflation protection is a feature offered with long-term care insurance policies.
A grandfathered health policy is A) your grandfather's health insurance B) one that existed prior to the Affordable Care Act C) one that is specifically for grandfathers D) a policy that has expired
one that existed prior to the Affordable Care Act Explanation A grandfathered health policy is one that existed before the passing of the Affordable Care Act. This type of policy is not required to comply with many of the rules that apply to more recent health plans.
A health insurance plan may pay benefits for all the following EXCEPT A) over-the-counter drugs B) a disabling injury or sickness C) nursing home care D) dental work
over-the-counter drugs Explanation Generally, nonprescription medicines are not covered by health insurance.
With an optionally renewable policy, the insurance company reserves the right to A) cancel the policy at any time with 5 days' notice B) terminate coverage at any policy anniversary date or premium due date C) modify the coverage if claims filed by the insured exceed an amount specified in the policy D) increase the premium on a policy if benefits paid to an insured exceed a stated amount
terminate coverage at any policy anniversary date or premium due date Explanation With an optionally renewable policy, the company reserves the right to terminate coverage at any policy anniversary date or premium due date, but it may not exercise this right between these dates.
All of the following statements regarding individual health coverage plans are true EXCEPT A) accidents are covered regardless of when or where they occur B) health coverage benefits may be tailored to meet the individual's specific needs C) an individual's health might prompt the need for a medical exam D) the insurance company provides every insured with a certificate of insurance as evidence of coverage
the insurance company provides every insured with a certificate of insurance as evidence of coverage Explanation When an individual enrolls in a health care plan, the insurance carrier will provide that person with a policy providing detailed information regarding the various coverages. Certificates of insurance are used with group health policies, not individual policies.
Who is responsible for examination costs when required by the insurer? A) the insurer B) the agent of record C) the beneficiary D) the insured
the insurer Explanation Insurers have the right to request physical examinations or autopsies to be performed. They are also responsible for paying all costs if either are necessary.
A hospital indemnity insurance policy may be recommended to a client for all the following reasons EXCEPT A) the premiums are affordable B) the policy will pay the full amount of a hospital stay C) the policy can be an ideal supplement to other health insurance D) benefits are paid directly to the insured and may be used for any purpose
the policy will pay the full amount of a hospital stay Explanation Benefits with a hospital indemnity policy are a fixed dollar-amount benefit, payable by the day for the time the insured is in the hospital. The benefit is based on actual expenses. As a rule, premiums are lower than those for other insurance, the benefits are paid directly to the insured, and the benefits need not be applied to medical expenses. These policies are often used to supplement other insurance, especially policies with high deductibles and coinsurance.
Benefits paid for customary charges incurred during an examination by an ophthalmologist or optometrist are included in A) vision care insurance B) basic physician's expense insurance C) disability income insurance D) surgical expense insurance
vision care insurance Explanation Vision care coverage, normally found in a group health insurance policy, usually pays for reasonable and customary charges incurred during eye examinations by ophthalmologists and optometrists.
Individuals who choose not to purchase qualifying health care coverage A) will serve jail time B) will be denied access to doctors C) will be fined a minimum of $5,000 D) will pay a tax penalty
will pay a tax penalty Explanation The Affordable Care Act states that all U.S. citizens and legal residents must have qualifying health care coverage either through their employer or individually. Those who do not purchase health care coverage will pay a penalty tax.
One of the first changes in health care due to the ACA was providing dependent coverage until a child's A) 25th birthday B) 21st birthday C) 18th birthday D) 26th birthday
26th birthday Explanation Coverage for dependent children was extended until the child's 26th birthday as one of the earliest health care reforms.
Naomi is killed in an auto accident before she is able to pay the semiannual $80 premium on her $30,000 accident policy. Under the policy's unpaid premium provision, her beneficiary will receive a check for A) 29920 B) 0 C) 29840 D) 30000
29920 Explanation Under a health insurance policy's unpaid premium provision, any due and unpaid premium (in this case, $80) is deducted from the settlement amount ($30,000). Therefore, Naomi's beneficiary will receive a check for $29,920.
Patricia has a health insurance policy for which she pays a semiannual premium. If the premium is due on July 1, her grace period will end in A) 31 days B) 60 days C) 20 days D) 7 days
31 days Explanation A semiannual premium policy usually has a 31-day grace period in which the policyowner can pay the premium due. For policies with weekly premium payments, the grace period is 7 days, and policies with monthly premiums have 10-day grace periods.
An accident and health policy whose premiums are paid on a quarterly basis must contain a grace period of at least A) 15 days B) 31 days C) 60 days D) 45 days
31 days Explanation Accident and health insurance policies must provide a grace period of 7 days for premiums paid weekly, 10 days for premiums paid monthly, and 31 days for all other premiums, such as those paid quarterly.
Under the standard cancellation provision, an insurance company has the right to cancel a policy at any time with how many days' written notice to the insured? A) 60 days B) 30 days C) 15 days D) 5 days
5 days Explanation Under the standard cancellation provision, the insurance company has the right to cancel the policy at any time with 5 days' written notice to the insured. This provision is prohibited in many states.
What is the minimum grace period that an individual accident and health insurance policy must include, if the premiums are due weekly? A) 7 days B) 20 days C) 90 days D) 2 days
7 days Explanation All individual accident and health insurance policies must contain a grace period for the payment of overdue premiums, except for the first premium. The grace period is 7 days for weekly premium policies, 10 days for monthly premium policies, and 31 days for annual premium policies.
The required grace period for weekly premium health insurance policies is A) 31 days B) 10 days C) 14 days D) 7 days
7 days Explanation The grace period is 7 days for weekly premium policies, 10 days for monthly premium policies, and 31 days for all other premium policies.
How many days from the date of loss does the insured have to submit a completed claim form to the insurer? A) 20 days B) 90 days C) 10 days D) 60 days
90 days Explanation All individual accident and health insurance policies must contain a proof of loss provision stating that the insured must furnish a completed claim form to the insurer within 90 days of the date of loss. Policies must also contain a time of payment of claims provision stating that indemnities payable under the policy for any loss will be paid immediately upon receipt of the written proof of loss.
Which of the following falls under the definition of a limited policy? A) Long-term care insurance B) Accidental death and dismemberment (AD&D) insurance C) A flat-benefit disability policy D) A prescription drug plan
A prescription drug plan Explanation Prescription drug policies may be sold as supplements to individual policies or as stand-alone limited plans. LTC insurance covers a broad range of expenses involving long-term care. AD&D insurance generally also covers numerous perils related to accidental injury. A flat-benefit DI plan pays a fixed benefit for disabling accidents and injuries.
An individual accident and health insurance policy must include which of the following provisions? A) A misstatement of age provision B) A provision limiting benefits if the insured has insurance with other insurers C) A change of occupation limitation D) A provision that the policy, including any endorsements or riders, constitutes the entire contract
A provision that the policy, including any endorsements or riders, constitutes the entire contract Explanation One of the 12 mandatory provisions for an individual accident and health insurance policy is the entire contract provision. This provision states that the policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. This would include any riders applicable to the policy.
Which of the following statements regarding reinstatement of a sickness and accident insurance policy is NOT correct? A) If an application is required, the policy is automatically reinstated 45 days after the application is submitted so long as the application is not approved or disapproved before that time. B) A reinstated policy only covers loss due to sickness for the first 10 days. C) The reinstatement provision must be included in every sickness and accident insurance policy. D) The insurer's acceptance of a late premium without requiring a reinstatement application constitutes automatic reinstatement.
A reinstated policy only covers loss due to sickness for the first 10 days. Explanation A reinstated policy covers only loss due to accidental injury for the first 10 days after reinstatement, after which it covers loss from sickness as well.
Carson is a driller on an oil rig. While coverage through his group plan is adequate, he wants an inexpensive way to continue at least some of his income and possibly pick up some of the expenses his group plan may not cover in the event he is injured. Which of the following policies would best meet his objectives? A) Accident-only insurance B) Disability income insurance C) Accidental death and dismemberment coverage D) Long-term care insurance
Accident-only insurance Explanation The most cost-effective way for Carson to obtain the coverage he is looking for is through accident-only insurance, a limited policy that indemnifies only for injuries resulting from accidental causes. Under these types of policies, benefits may be paid for any combination of the following: death, disability, dismemberment, and hospital and medical expenses.
What kind of policy provides coverage only for death, dismemberment, disability, or hospital and medical care caused by accidents? A) Specialized death policy B) Medicare supplement policy C) Accident-only policy D) Major medical type II policy
Accident-only policy Explanation Accident-only coverage provides for death, dismemberment, disability, or hospital and medical care when the insured suffers injuries caused by accident.
What kinds of risks does a health insurance policy cover during the 10-day waiting period after it has been reinstated? A) Neither accidents nor sickness B) Accidents and sickness C) Sickness D) Accidents
Accidents Explanation For the first 10 days after reinstatement, the reinstated policy covers only loss resulting from accidental injury. After 10 days, it must cover loss resulting from sickness as well.
Which of the following statements regarding individual and group health plans is NOT correct? A) In a group plan, there is no individual underwriting. B) In an individual policy, coverage is renewable at the option of the insured or insurer. C) An individual plan issues a policy. D) All accidents are covered in a group plan.
All accidents are covered in a group plan. Explanation Only off-the-job accidents are covered under a group plan. Accidents that occur in the course of employment are covered by workers' compensation.
All of the following are examples of government insurance EXCEPT A) Social Security disability B) Blue Cross and Blue Shield coverage C) Medicare D) Medicaid
Blue Cross and Blue Shield coverage Explanation Social insurance is provided by the federal and state governments and includes Social Security (death, old-age, and disability benefits), Medicare, Medicaid, and workers' compensation. Blue Cross and Blue Shield are examples of service insurers.
Which of the following is a required policy provision? A) Change of occupation B) Change of beneficiary C) Insurance with other insurers D) Misstatement of age
Change of beneficiary Explanation Change of beneficiary is a required provision. The insured can change the beneficiary by signing a change form when the beneficiary is revocable. If the insured has named an irrevocable beneficiary, then the insured needs the written permission of the irrevocable beneficiary.
Which of the following statements pertaining to notice of claim and claim forms provisions in health insurance policies is NOT correct? A) Furnishing claim forms is the responsibility of the insurance company. B) Charlotte is injured on January 5. Later, she wishes to file a policy claim for expenses incurred in connection with the injury. Generally, she would be required to submit a notice of claim to the company by February 5. C) Rex, the insured in a disability income policy, has been totally disabled and receiving benefits for 25 months. The notice of claim provision in his policy requires that he submit a proof of loss every 6 months. D) Gail submits a notice of claim to her insurance company after she becomes totally disabled. The company must supply a claim form to her within 15 days.
Charlotte is injured on January 5. Later, she wishes to file a policy claim for expenses incurred in connection with the injury. Generally, she would be required to submit a notice of claim to the company by February 5. Explanation Generally, a claimant must notify the insurance company within 20 days of an accident under a health insurance policy. A proof of loss must be submitted within 90 days of the loss, but if it is not reasonably possible for the insured to do so, the deadline will be extended to 1 year. The company must supply its claim forms to the insured within 15 days of receiving the notice of claim.
What is credit disability insurance? A) Disability insurance on a debtor B) Life insurance on the life of a creditor C) Disability insurance that is paid for with a credit card D) Homeowners insurance for a mortgagee
Disability insurance on a debtor Explanation Credit life insurance and disability insurance are policies that cover debtors of a creditor in connection with a specific loan or other credit transaction. Credit life insurance covers the life of a debtor. Credit disability insurance provides indemnity for loan payments that become due while the debtor is disabled.
Hearing aids might be covered under what type of health policy? A) Hospital indemnity B) Hearing insurance C) Short-term medical expense D) Prescription drug
Hearing insurance Explanation Hearing policies cover some hearing exams and hearing aids that are not covered under comprehensive health insurance.
Which of the following is the most valid reason for a person to purchase a specified (dread) disease health insurance policy? A) She wants to make sure that she and her family are protected against a major illness. B) Her family has a history of cancer, and she is concerned that she might contract the disease. C) She wants coverage against the risk of illnesses such as AIDS, tuberculosis, and diabetes. D) She has been diagnosed with heart disease.
Her family has a history of cancer, and she is concerned that she might contract the disease. Explanation Dread disease policies provide benefits only if the insured contracts the specific disease listed in the policy. It does not provide comprehensive coverage, nor does it cover multiple diseases. A person cannot obtain coverage if she has already been diagnosed with the disease.
Which of the following statements is CORRECT? A) Medical expense insurance provides periodic payments to the insured when he is unable to work due to sickness or an injury. B) Hospital and medical expense coverage helps pay doctor and hospital bills. C) Long-term care insurance provides benefits to the insured for hospital care immediately following a surgical procedure. D) Disability income insurance reimburses the insured for medical care, hospital care, and related services for disabled insureds.
Hospital and medical expense coverage helps pay doctor and hospital bills. Explanation Disability income insurance pays a periodic benefit to the insured as a supplement to his salary when he is disabled and unable to work because of sickness or an accident. Medical expense insurance reimburses the insured for actual expenses incurred for medical and hospital care and related services. Long-term care insurance provides benefits to cover care for an extended period of time, usually in a nursing home, in an adult care center, or at home.
Which of the following policies pays a fixed hospital benefit directly to the insured, regardless of the actual hospital expenses incurred? A) Supplementary major medical B) Hospital indemnity C) Basic hospital D) Industrial health
Hospital indemnity Explanation A hospital indemnity policy pays benefits directly to the insured. These benefits are provided on a daily, weekly, or monthly basis for a specified amount, and they are based on the number of days the insured is hospitalized.
Which of the following statements pertaining to the optional misstatement of age provision is NOT correct? A) If the age of the insured is misstated at the time of application, all amounts payable under the policy would be what the premiums paid would have purchased at the correct age. B) If the insured actually was older at the time of application than shown in the policy, benefits would be reduced. C) If the insured actually was older at the time of application than shown in the policy, the excess premiums paid would be refunded. D) If the insured actually was younger at the time of application than shown in the policy, benefits would be increased.
If the insured actually was older at the time of application than shown in the policy, the excess premiums paid would be refunded. Explanation According to the optional misstatement of age provision, if the insured was actually older at the time of application than shown in the policy, benefits would be reduced accordingly.
Thomas, an insured, submits a claim and a proof of loss for medical expenses covered by his major medical policy. According to the time of payment of claims provision, how soon must the company pay the claim? A) Within 30 days B) Immediately C) Within 150 days D) Within 90 days
Immediately Explanation According to the time payment of claims provision of a major medical policy, the company must pay the claim immediately.
Kurt's medical expense policy states that it will pay him a flat $50 a day for each day he is hospitalized. The policy pays benefits on which basis? A) Reimbursement B) Indemnity C) Partial D) Service
Indemnity Explanation Indemnity medical expense policies do not pay expenses or bills. They merely provide the insured with a stated benefit amount for each day he is confined to a hospital as an inpatient. The money may be used by the insured for any purpose.
Which of the following statements regarding blanket health insurance is CORRECT? A) Benefits change as the group changes. B) It covers a group of people who may be exposed to the same risks. C) It provides insurance for members of associations. D) Persons insured are named in the policy.
It covers a group of people who may be exposed to the same risks. Explanation Blanket health insurance covers a changing group of people who are classified as members of the group; they are not named individually. For example, a bus company may take out a blanket policy to cover its passengers. The benefits do not change as members of the group change.
Debbie is concerned that her health insurance coverage is inadequate. Which of the following is the best reason for her to purchase an indemnity-type medical expense policy? A) It will pay the difference between what her other insurance covers and her actual expenses. B) It will pay all or part of her deductible. C) It will pay a specified per-day benefit. D) It will pay a percentage of her coinsurance.
It will pay a specified per-day benefit. Explanation Indemnity-type medical expense policies pay a flat, per-day benefit for each day the insured is hospitalized. This will help Debbie meet the expenses of her confinement that are not covered.
Agnes purchases a round-trip travel accident policy at the airport before leaving on a business trip. Her policy would be which type of insurance? A) Limited risk B) Credit accident and health C) Industrial health D) Business overhead expense
Limited risk Explanation Limited risk policies are a type of AD&D coverage that provide protection against accidental death or dismemberment only in the event of certain specified accidents, such as a death or an injury resulting from an aviation accident during a specified trip.
Agnes purchases a round-trip travel accident policy at the airport before leaving on a business trip. Her policy would be which type of insurance? A) Industrial health B) Credit accident and health C) Business overhead expense D) Limited risk
Limited risk Explanation Limited risk policies provide coverage for specific kinds of accidents or illnesses. A traveler who purchases an accident policy at an airport would be covered in the event of an accident during that specific trip. The risk covered is limited to the trip.
Which of the following statements regarding blanket health insurance is CORRECT? A) Blanket health insurance benefits for a volunteer fire department require individual applications and underwriting. B) New members of a group do not need to fill out an application. C) It usually provides benefits for both accidents and sickness. D) Coverage is for all events occurring within a specific or limited period.
New members of a group do not need to fill out an application. Explanation In blanket health insurance policies, coverage is usually for accidents only and includes coverage of volunteer groups, such as a volunteer fire department. No application is required to add new members when they become eligible.
Which of the following statements regarding emergency medical services under the ACA is FALSE? A) Emergency services are considered to be essential health benefits. B) Insureds may use in-network or out-of-network providers. C) Pre-authorization must be obtained by the insured or family member. D) Out-of-network providers must comply with normal cost sharing requirements.
Pre-authorization must be obtained by the insured or family member. Explanation Emergency medical services are essential health benefits. As such, pre-authorization is not required whether the provider is in-network or out-of-network. Out-of-network providers must adhere to normal cost-sharing requirements and may not impose administrative requirements or coverage limits that are more restrictive than services provided by in-network providers.
Jasmine is covered under her employer's health plan. She is called to active military duty. Upon her return, which of the following statements regarding her coverage is CORRECT? A) She will be conditionally covered for up to 2 years. B) She will be fully covered, without the need to provide proof of insurability. C) She must reapply for coverage in the group at the next open enrollment period. D) She will not be covered because she receives veterans benefits.
She will be fully covered, without the need to provide proof of insurability. Explanation Upon her release from military service, she can be readmitted to the group upon her return to work without the need to provide proof of insurability. However, as long as she is on active military duty, she is not covered under her group plan.
All of the following types of health insurance coverage can be written on an individual basis EXCEPT A) disability income B) medical expense C) accidental death and dismemberment D) Social Security
Social Security Explanation Disability income, medical expense, and AD&D insurance can all be written on an individual basis. Social Security is a federally administered program that provides retirement, death, and disability benefits for qualified workers.
Which of the following statements about the Affordable Care Act is TRUE? A) The health care law includes reforms to the affordability, availability, and quality of health insurance. B) The health care law was passed by state legislation and only exists in certain states. C) The Affordable Care Act is administered through Social Security. D) The law was created specifically to provide affordable care for senior citizens.
The health care law includes reforms to the affordability, availability, and quality of health insurance. Explanation The Affordable Care Act was passed by Congress and signed into law by President Obama on March 23, 2010. The law includes reforms to the affordability, quality, and availability of health insurance and affects how public and private health insurance companies are regulated.
In which of the following situations would an accidental death and dismemberment (AD&D) policy most likely NOT pay a benefit? A) The insured injures a finger while using a chainsaw in his workshop. B) The insured trips over a computer cable at the office, strikes his head on a steam radiator, and dies from his injury 1 week later. C) While serving as a camp counselor during a class field trip, the insured loses an arm in a boating accident. D) The insured becomes distracted while talking on her cell phone when driving, collides with a telephone pole, and loses a leg as a result.
The insured injures a finger while using a chainsaw in his workshop. Explanation AD&D policies would not pay a benefit for the injury of a single finger. However, some policies may pay a reduced benefit for the loss of 1 limb.
Which of the following statements regarding a conditionally renewable policy is NOT correct? A) The insured has the conditional right to renew the policy up to a given date. B) The insurer may refuse to renew the contract as the result of the insured's retirement. C) The insured has the conditional right to renew the policy up to a given age. D) The insurer may refuse to renew the contract as the result of the insured's deteriorating health.
The insurer may refuse to renew the contract as the result of the insured's deteriorating health. Explanation Although an insurer may refuse to renew the policy as the result of specific circumstances (such as the insured's retirement), it may not refuse renewal as the result of the insured's deteriorating health.
If total disability (loss-of-time) benefits from all disability income coverage for the same loss exceed the insured's monthly earnings at the time of disability, what is the insurer's liability to the insured? A) The insurer can cancel the policy, claiming overinsurance. B) The insurer can reduce the benefits payable by half. C) The insurer must pay the total benefits as specified in the policy. D) The insurer must pay the proportionate amount of benefits that the insured's earnings bear to the total benefits.
The insurer must pay the proportionate amount of benefits that the insured's earnings bear to the total benefits. Explanation If total disability (loss-of-time) benefits from all disability income coverage for the same loss exceed the insured's monthly earnings at the time of disability, the insurer is liable for that proportionate amount of benefits as the insured's earnings bear to the total benefits. Total indemnities must be the lesser of $200 or total benefits under applicable coverage.
Which of the following statements pertaining to provisions in health insurance policies is CORRECT? A) The misstatement of age provision allows the insurer to adjust the benefits payable under the policy if the age of the insured was misstated in the policy application. B) The physical exam and autopsy provision entitles an insurance company, at the insured's expense, to conduct physical exams of the insured during a claim period. C) The legal action provision prohibits the insurer from taking legal action against the insured in a claim dispute until 60 days from the time the claim was filed. D) The change of occupation provision describes the changes the insured must make at her job to remain in compliance with the terms of a health or accident policy.
The misstatement of age provision allows the insurer to adjust the benefits payable under the policy if the age of the insured was misstated in the policy application. Explanation Physical exams are conducted at the insurer's expense. The change of occupation provision describes changes that may be made to premium rates or benefits if the insured changes jobs. The legal action provision prevents the insured from taking legal action against the insurer any sooner than 60 days from the date the claim was filed.
Which of the following statements about blanket accident and sickness insurance policies is NOT correct? A) The insurer does not need to furnish each person with a certificate. B) They can be issued on a group basis or an individual basis. C) They are issued to groups such as common carriers and educational institutions. D) Individual applications are not required.
They can be issued on a group basis or an individual basis. Explanation Blanket accident and sickness insurance includes policies issued to special groups such as common carriers and educational institutions. The policies are not issued on an individual basis. Covered individuals do not have to complete applications and do not receive certificates of insurance.
Which of the following statements about the grace period and reinstatement provisions in a health insurance policy is NOT correct? A) Craig's health policy has a grace period of 31 days. He had a premium due June 15, while he was on vacation. He returned home July 7 and mailed his premium the next day. The insurer received it July 10. His policy would have remained in force. B) Warren's medical expense policy was reinstated on September 30. He became ill and entered the hospital on October 5. His hospital expense will not be paid by the insurer. C) Gillian submits a reinstatement application and delinquent premiums to her insurance company on May 1. If the company has not sent a notice declining coverage by June 16, her coverage will automatically be reinstated. D) Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement.
Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement. Explanation A policy that has lapsed may be reinstated. However, to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date. Losses due to accidental injury are covered immediately upon reinstatement of the policy. The other answer choices are correct statements.
Which of the following statements pertaining to the grace period and reinstatement provisions in health insurance policies is NOT correct? A) Warren's medical expense policy was reinstated on September 30. He became ill and entered the hospital on October 5. His hospital expense will not be paid by the insurer. B) Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement. C) Craig's health policy has a grace period of 31 days. He had a premium come due June 15 while he was on vacation. He returned home July 7 and mailed his premium the next day. His policy remained in force. D) States may require grace periods of 7, 10, or 31 days, depending on the mode of premium payment or term of insurance.
Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement. Explanation Under a health insurance policy's reinstatement terms, insured losses from sickness will not be covered unless they occur at least 10 days after reinstatement. This is to prevent adverse selection against the insurer. Accidental injuries, however, are covered immediately.
At the time the policy was applied for, to the best of her knowledge Mary answered all of the questions on her individual health insurance application truthfully. Two and a half years later she is diagnosed with cancer. Is her insurer obligated to cover her expenses? A) Yes, as long as Mary did not make any fraudulent misstatements and this condition was not excluded from coverage. B) No, because she most likely had the cancer when she completed the application, even if she didn't know it at the time. C) Yes, if she can prove she developed the cancer after she signed the application. D) No, because she must have known there was something wrong with her health when she signed the application.
Yes, as long as Mary did not make any fraudulent misstatements and this condition was not excluded from coverage. Explanation Even though the cancer could have existed before the effective date of the policy, this policy has now been in force beyond the 2-year incontestability period. As long as Mary did not make any fraudulent statements, and cancer was not excluded at the time of issue, the insurer will be obligated to cover Mary's expenses.
Exclusions for pre-existing conditions help to avoid A) claims for long hospital confinements B) adverse selection against an insurer C) insuring persons who are accident prone D) more complicated underwriting procedures
adverse selection against an insurer Explanation Exclusions for pre-existing conditions help to avoid adverse selection against an insurer by preventing individuals with an existing illness from receiving benefits attributable to that illness. Please note that under the Affordable Care Act, insurance companies are not allowed to exclude for a pre-existing condition. Other forms of insurance, such as long-term care, disability income, and Medicare supplement, do allow exclusion for a pre-existing condition subject to the state law or statute pertaining to an insurer that seeks to limit its exposure to adverse selection.
Health and accident insurance that covers special groups of persons who are not required to be named or fill out an application is called A) group insurance B) blanket insurance C) franchise insurance D) limited insurance
blanket insurance Explanation Blanket insurance covers groups of people engaged in similar activities, such as students while on school campuses, members of a soccer team, or members of a health club. Underwriting is based on the nature of the group rather than on the individual.
Under the relation of earnings to insurance provision, the insured's benefit A) cannot exceed earnings B) must equal earnings C) must equal annual earnings D) must equal average earnings
cannot exceed earnings Explanation If the insured's total disability income benefit exceeds the greater of the insured's earnings at the time of the disability or the insured's average monthly earnings for the past 2 years, the benefit is reduced accordingly and the premium paid for excess coverage is refunded to the insured.
Common exclusions in health insurance include all of the following EXCEPT A) cosmetic surgery to repair a cleft palate B) workers' compensation C) elective cosmetic surgery D) intentionally self-inflicted injuries
cosmetic surgery to repair a cleft palate Explanation Common exclusions include intentional injuries, war or acts of war, elective cosmetic surgery, workers' compensation, and commission of or attempted felony.
All of the following are essential health benefits EXCEPT A) ambulance B) hospitalization C) dental care D) emergency services
dental care Explanation Essential health benefits cover the essential needs, such as ambulance, emergency, hospital, and maternity and newborn care.
Dread disease policies generally cover diseases that A) do not occur frequently, and do not involve significant costs when they do occur B) do not occur frequently, but involve significant costs when they do occur C) occur frequently, and involve significant costs when they occur D) occur frequently, but do not involve significant costs when they occur
do not occur frequently, but involve significant costs when they do occur Explanation Dread disease policies are generally designed to cover diseases that do not occur frequently, but involve significant costs when they do occur.
When it is used, the time limit on the certain defenses provision in a health insurance policy provides that the policy cannot be contested and claims cannot be denied after 2 (or 3) years EXCEPT A) for incomplete policy records B) for nonpayment of premiums C) for mental incompetence of the insured D) for fraudulent statements in the application
for fraudulent statements in the application Explanation According to the time limit on the certain defenses provision, also known as the incontestability clause, a policy cannot be contested until after 2 (or 3) years from the date of policy issue for misstatements. A fraudulent misstatement on a health insurance application is grounds for contest at any time.
Lisa's private dental expense plan might deny a portion of her claim for all the following reasons EXCEPT A) her teeth were injured in an occupational accident B) the claim was for replacement of lost dentures C) she did not comply with the predetermination of benefits provision in her policy D) her care was diagnostic
her care was diagnostic Explanation Under many dental expense plans, diagnostic care is covered. A portion of claims may be denied, however, if Lisa does not follow the predetermination (prior authorization) requirements. Also, most policies exclude costs for replacement of lost dentures.
Vision coverage includes all of the following coverages EXCEPT A) the cost of lenses and frames B) eye examinations C) contact lenses D) loss of sight caused by disease
loss of sight caused by disease Explanation Vision policies do not cover injury to or disease of the eyes. Vision coverage is intended to help defray the costs of eye exams, corrective lenses, frames, contacts, and other corrective items.
When compared to the premiums for major medical expense coverage policies, the premiums for dread disease policies are typically A) lower B) identical C) higher D) about the same
lower Explanation Since dread disease policies only cover the specific disease stated in the policy, the coverage provided by these types of policies is very limited. As a result, the premiums for dread disease policies are often fairly inexpensive compared to those of major medical expense coverage policies.
An accident-only policy would pay for A) expenses related to cancer B) expenses related to HIV C) necessary medical care for dismemberment due to a motorcycle accident D) hospitalization due to a heart attack
necessary medical care for dismemberment due to a motorcycle accident Explanation Accident-only policies specifically exclude disease and sickness while paying for disability, death, or dismemberment due to accidental injuries.
A policy that covers one specific type of life-threatening or serious condition is known by all of the following names EXCEPT A) critical illness plan B) dread disease policy C) specified disease policy D) obscure disease policy
obscure disease policy Explanation A specified or dread disease policy or critical illness plan provides benefits explicitly for the disease or condition specifically named in the policy.
If the insurer cancels policy, unearned premium will be returned to the insured A) as a flat cancellation B) on a short rate basis C) on a pro rata basis D) via registered mail
on a pro rata basis Explanation Under the optional "Cancellation" provision, an insurer must give the insured 5 days' written notice of cancellation and return unearned premium on a pro rata basis.
One of the major differences between individual and group health coverages is that with group coverage, A) all accidents are covered regardless of when or where they occur B) once an individual becomes eligible to enroll, no evidence of insurability is required C) each group member is given a policy D) group members have the option to renew or cancel coverage
once an individual becomes eligible to enroll, no evidence of insurability is required Explanation With group health insurance plans, group members are not generally individually underwritten if they enroll within the time frame of becoming eligible. The other statements refer to individual group health coverage.
All of the following reforms began in 2010 under the Affordable Care Act EXCEPT A) dependent coverage until age 26 B) no lifetime limits on essential services C) pre-existing coverage for all insureds, regardless of age D) pre-existing coverage for children under age 19
pre-existing coverage for all insureds, regardless of age Explanation Pre-existing coverage was extended to all insureds in 2014.
The scope of an entire contract does NOT include A) a copy of the application B) riders C) premium computations D) policy provisions
premium computations Explanation The entire contract comprises the insurance policy provisions, a copy of the application, and any riders or attachments.
All of the following provisions in an individual health insurance policy are optional EXCEPT A) proof of loss B) misstatement of age C) change of occupation D) unpaid premium
proof of loss Explanation All health insurance policies must include a proof of loss provision. According to this provision, the insured must furnish a completed claim form to the insurer within 90 days of the date of loss.
Credit health insurance A) covers creditors only B) covers both debtors and creditors C) provides payments on loans if the debtor dies D) provides payments on loans that become due while the debtor is disabled
provides payments on loans that become due while the debtor is disabled Explanation Credit health insurance and credit life insurance cover debtors of a creditor in connection with a specific loan or other credit transaction. Credit health insurance provides payments on loans that become due while the debtor is disabled, while credit life insurance covers the life of a debtor.
The purpose of medical expense insurance is to A) pay for the recuperative or nursing care needed after a long illness B) reimburse the insured for expenses incurred for medical care, hospital care, and related services C) provide periodic payments to an insured who is disabled and unable to work D) pay for the medical costs of injuries or disabilities contracted in the course of a worker's employment
reimburse the insured for expenses incurred for medical care, hospital care, and related services Explanation Medical expense insurance reimburses insureds for expenses incurred for medical and hospital care and related services. In contrast, the purpose of disability income insurance is to provide periodic payments to an insured who cannot work because of a disability. Long-term care insurance pays for rehabilitative or recuperative care needed after a long illness. Workers' compensation insurance pays for care related to an injury, disability, or illness incurred on the job.
All the following are types of limited benefit policies EXCEPT A) umbrella B) accident-only C) vision D) credit disability
umbrella Explanation Umbrella policies provide liability coverage. Limited benefit policies include accident, dread disease, critical illness, hospital indemnity, credit disability, blanket coverage, prescription drugs, vision, hearing, and short-term medical expense.
Limited plans are characterized by all of the following EXCEPT A) very broad or open perils B) limited perils C) limited benefits D) notice to the insured
very broad or open perils Explanation Limited plans are characterized by limited perils, limited benefits, and notice to the insured of the limited nature of the coverage.
Which of the following is the best example of overinsurance? A) The client's hospital bills total $1,000 a day. His 3 health insurance policies pay $900 a day. B) The client's income is $4,000 a month. He becomes disabled. His individual disability policy provides a flat benefit of $1,200, and his Social Security benefit is $1,000. C) The client earns $1,500 a month and becomes disabled on the job. He is eligible for $800 a month from workers' compensation and $850 from Social Security. D) The client's hospital bill comes to $1,300 a day. His major medical plan pays $1,000, whereas his hospital indemnity plan pays $400.
The client's hospital bill comes to $1,300 a day. His major medical plan pays $1,000, whereas his hospital indemnity plan pays $400. Explanation In the first choice, the client would receive benefits in excess of actual costs. With a disability policy, the total benefit cannot exceed 60% of the client's income. Additionally, his benefit may be reduced by his Social Security benefits, which is also the case when workers' compensation is involved.
Which of the following situations involves a loss that would typically NOT be excluded under a health insurance policy? A) The insured is injured in combat while serving in the military. B) The insured is injured with a self-inflicted injury. C) The insured is injured while vacationing in a state that is not her state of residence. D) The insured intentionally injures himself while committing a felony.
The insured is injured while vacationing in a state that is not her state of residence. Explanation Most health insurance policies typically exclude losses due to war and acts of war, self-inflicted injuries, military service, and overseas residence. Being injured while vacationing in a state other than one's state of residence is not something that would be excluded.
All of the following statements regarding a hospital indemnity plan are correct EXCEPT A) another name for the plan is a hospital expense plan B) the plan pays a flat dollar amount as a daily benefit each day the insured is hospitalized C) payment is made directly to the insured, not the insurer D) the benefits from the policy may be used toward deductibles and coinsurance payments
another name for the plan is a hospital expense plan Explanation The other name for a hospital indemnity plan is a hospital income plan. The benefit may be used any way the insured sees fit; however, it is not designed to reimburse the insured for the expenses of being in the hospital.
Don just bought a new car. On the way home from the dealer, he had an accident and was disabled. Under the credit disability plan that he purchased at the time he picked up the car, the insurer will pay A) a lump sum to pay off the car loan B) benefits directly to the lender to cover Don's car payments while he is disabled C) benefits to Don to meet his living expenses D) benefits to cover Don's medical expenses
benefits directly to the lender to cover Don's car payments while he is disabled Explanation With credit disability insurance, the benefit is paid only to cover the debtor's payments on the loan until either the debt is paid off or the insured is no longer disabled.
All of the following are classified as types of accident and sickness insurance coverage EXCEPT A) medical expense insurance B) survivorship insurance C) disability income insurance D) dental insurance
survivorship insurance Explanation Disability income, medical expense, and dental insurance represent major categories of accident and sickness insurance. Within these categories is a wide range of coverages. Survivorship life insurance is also known as second to die insurance. This specialized policy insures two people and pays the death benefit when the last insured dies.
