Health Insurance Chapter 3 Health insurance basics

Which of the following is an example of a peril covered in an accident and health insurance policy? A. Alcoholism B. Smoking C. Death D. Sickness

Sickness

What is the best way to change an application? A White-out the previous answer B Draw a line through the incorrect answer and insert the correct one. C Start over with a fresh application D Erase the previous answer and replace it with the new answer

Start over with a fresh application - Most companies require that the app be filled out in ink. The agent might make a mistake when filling out the app or the applicant might answer a question incorrectly and want to change it. There are two ways to correct an application. The first and best is to simply start over with a fresh application. If that is not practical, draw a line through the incorrect answer and insert the correct one. The applicant must initial the correct answer. Review Content Next Question

Which of the following groups would most likely be covered under a blanket accident policy? A Students at a public school B Office workers for a retail business C Factory workers at the automobile assembly plant D Independent contractors who work for a general contractor

Students at a public school - Blanket insurance is issued on those groups that have members that are constantly changing.

Which of the following may NOT be included in an insurance company's advertisement? A Their policies' limitations or exclusions B The name of a specific agent C An identification of a limited policy as a limited policy D That its policies are covered by a state Guaranty Association

That its policies are covered by a state Guaranty Association - It is illegal for insurers to state that their policies are guaranteed by the existence of a Guaranty Association.

An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy? A The capital amount in monthly installments B The principal amount in monthly installments C The capital amount in a lump sum D The principal amount in a lump sum

The capital amount in a lump sum - Accidental Death and Dismemberment policies pay a capital amount (a percentage of the principal amount) for the loss of one limb or loss of sight in one eye. The principal amount is paid for death or often for the loss of 2 limbs or loss of sight in both eyes. Benefits are paid in a lump sum.

All of the following would be factors in rating a health insurance policy EXCEPT A The nationality of the applicant. B The occupation of the applicant. C Type of benefits provided in the contract. D The deductible and copayment selected.

The nationality of the applicant. - Race, nationality, or religion cannot be used as underwriting considerations in health insurance.

The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have? A Restrictive B Accidental Death C Comprehensive D Accident-only

Accident-only - Accident-only policies cover medical benefits related to an accident. Medical conditions related to sickness are not covered.

Which term describes a situation in which people who are the most likely to have claims are also the most likely to seek insurance? A Adverse selection B Insurable interest C Double indemnity D Law of large numbers

Adverse selection - The concept of adverse selection means that the people who are most likely to have claims are also the most likely to seek insurance. This concept is used primarily in the process of underwriting, when insurers decide which applicants to cover; insurers try to minimize adverse selection as much as possible.

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? A When the applicant's credit is checked B When the policy is delivered C At the initial interview D At the time of application

At the time of application - A notice to the applicant must be issued to all applicants for health insurance coverage.

A policy which covers medical costs related to a specific condition is called a A Condition-Specific Policy. B Specific Condition Policy. C Limited Coverage Policy. D Dread Disease Policy.

Dread Disease Policy. - Dread Disease policies cover medical expenses for a particular medical condition, such as cancer or heart disease.

Which document is used to assess risk associated with an applicant's lifestyle and character? A Investigative Consumer Report B Character Assessment C Non-medical Risk Assessment D Applicant Lifestyle Assessment

Investigative Consumer Report - An Investigative Consumer Report is considered to be a part of an insurance application. This report is used in the underwriting process in order to assess non-medical risk factors related to moral standing and avocations. Friends and colleagues are interviewed in order to evaluate the applicant's character, reputation, and habits. The applicant must be informed in writing if the insurer decides to conduct the investigation.

Which of the following is the most common time for errors and omissions to occur on the part of an insurer? A Policy delivery B Policy renewal C Underwriting D Application process

Policy delivery - Insurers are encouraged to document all conversations and correspondence that occurs with an insured, in the event that crucial errors and omissions should occur. The most common times for these errors are during the sales interview and policy delivery. It is essential to have proof of these interactions, in the events that an insured would sue the insurer.

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death? A Refund of premiums B Principal sum C Capital sum D Double the amount of the death benefit

Principal sum - Accidental Death and Dismemberment coverage only pays for accidental losses and is thus considered a pure form of accident insurance. The principal sum is paid for accidental death. In case of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as the capital sum.

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action? A Policies must overlap to cover pre-existing conditions. B The old policy must be cancelled before the new one can be issued. C The old policy should stay in force until the new policy is issued. D There should be at least a 10-day gap between the policies.

The old policy should stay in force until the new policy is issued - The agent must make sure that the current policy is not cancelled before the new policy is issued.

Which of the following statements regarding conditional receipts is true? A They guarantee the insurer will approve the application. B They purchase temporary insurance, up to 6 months. C They become part of the policy. D They are temporary insuring agreements.

They are temporary insuring agreements. - With a conditional receipt, insurance coverage is effective as of the date of the receipt, so long as the application is approved.

Under a credit disability policy, until what point will payments to the creditor be made for the insured? A Until the disability ends or the debt is satisfied, whichever is sooner B Only for 6 months after the onset of a disability C Until the insurer cancels the policy D Until age 65.

Until the disability ends or the debt is satisfied, whichever is sooner - A credit disability policy is issued only to those in debt to a specific creditor. In case of disability, payments to the creditor will be made for the insured until he or she is able to return to work.