Xcel Solutions TENNESSEE Final Exam

A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013?

$1,000

M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?

$1,600

Q is hospitalized for 3 days and receives a bill for $10,100. Q has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying on this claim?

$2,100

B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary?

$300,000

How long is a temporary license valid?

180 days

A producer needs to complete __ of continuing education every __ years.

24;2

How long is the typical free look period for Long Term care insurance policies?

30 days

S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations?

36

V is insured under an individual Disability Income policy with a 30-day Elimination period. On July 1, he is involved in an accident and temporarily disabled. He returns to work on December 1. How many months of benefit are payable?

4 months

Who would qualify for a temporary license in Tennessee?

A surviving spouse of a deceased producer

In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments:

After an insured has become totally disabled as defined in the policy

Common exclusions to the continuation of group coverage include:

All of the above

Which of the following is the purpose of the Tennessee Guaranty Association?

All of the above

When an insurance application is taken by a producer, which of these statements is true?

Any changes made on the application require the applicant's initials

Before a health insurance policy is issued, which of these components of the contract is required?

Applicant's signature on application

Which of the following medical expenses does Cancer insurance NOT cover?

Arthritis

When does a Probationary Period provision become effective in a health insurance contract?

At policy's inception

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:

Bilateral

Accidental Death coverage is provided to commercial airline passengers in which of the following types of policies?

Blanket Accident policy

G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is:

Business Overhead Expense

What is issued to each employee of an employer health plan?

Certificate

For a change to a health policy to be valid, what is required?

Changes in the policy must be approved by an executive officer of the insurer

Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures?

Commercial insurer

Who determines the education credits needed for a producer's continuing education?

Commissioner of Commerce and Insurance

Which of the following would be a likely candidate for disability income insurance on a key employee?

Company executive

Insurance policies are offered on a "take it or leave it" basis, which make them:

Contracts of Adhesion

When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans?

Contributory

Which of the following does Social Security NOT provide benefits for?

Dismemberment

A provision that the policy, application, and all attachments shall constitute the between the parties.

Entire Contract

Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?

Entire Contract

Long Term Care policies will usually pay for eligible benefits using which of the following methods?

Expense incurred

P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to the

Fair Credit Reporting Act

Taking receipt of premiums and holding them for the insurance company is an example of:

Fiduciary responsibility

Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT?

If the employee paid for qualified medical expenses, the reimbursements may be tax-free

T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?

Increase her policy's coverage amount

If the insured and primary beneficiary are both Killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

Insured's contingent beneficiary

Which of the following health insurance policy provisions specifies the health care services a policy will provide?

Insuring clause

Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?

Issue the policy with an altered Time of Payment of Claims provision

In Major Medical Expense policies, what is the objective of a Stop Loss provision?

Limits an insured's out-of-pocket medical expenses

Which type of plan normally includes hospice benefits?

Managed care plans

Which of these factors do NOT play a role in the underwriting of a health insurance policy?

Marital status

Which statement is true regarding a minor beneficiary?

Normally, a guardian is required to be appointed in the Beneficiary clause of the contract

P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to:

P only

When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?

Residual disability

P is a producer who notices 5 questions on a health application were not answered. What actions should P take?

Set up a meeting with the applicant to answer the remaining questions

P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?

Sign an enrollment card

Which mode of payment is NOT used by health insurance policies?

Single premium

Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party?

Subrogation

Which of the following statements about the classification of applicants is INCORRECT?

Substandard applicants are never declined by underwriters

Which of these is a valid Tennessee regulation for referral fees?

The Commissioner may establish by rule a maximum amount for each referral

A policy of adhesion can only be modified by whom?

The insurance company

J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age, as stated on the application five years ago, was found to be understated by ten years. Which of the following actions will the insurance company take?

The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age

R becomes disabled and owns an individual Disability Income policy. When is R eligible to receive disability benefits?

Upon satisfying the elimination period requirement

The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the:

Waiting Period

If an individual is covered under an Accidental Death Policy and dies, an autopsy can be performed in all these situations, EXCEPT:

When the state prohibits this by law

Unfair discrimination is BEST described as

charging a different rate for someone in the same actuarial class

An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to:

determine if the applicant is an acceptable risk by completing standard underwriting procedures

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)

extended Contestable period

Basic Medical Expense insurance:

has lower benefit limits than Major Medical insurance

T applied for a Disability Income policy and has a history of back injuries. The insurer issued the policy with a statement that excludes coverage for back injuries. This statement is called a(n)

impairment rider

Pre-hospitalization authorization is considered an example of:

managed care

The Notice of Claims provision requires a policyowner to:

notify an insurer of a claim within a specified time

Insurance policies are considered aleatory contracts because

performance is conditioned upon a future occurrence

XYZ Corp was issued a group Accident and Health policy for its employees. Under this plan a

policy must be issued to XYZ, and a certificate must be issued to each employee

B is an insurance producer who occasionally engages in financial planning. If B sells an insurance policy during the course of a financial planning seminar, B must disclose to the client

that a commission will be earned in addition to any fee charged for financial planning

J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?

$25,000

The Commissioner notifies the association of an insolvent insurer no later than __ days after receiving notice of the insurer's insolvency.

3

Qualified Long-Term Care policies may take into consideration an applicant's pre-existing conditions for a maximum of not more than __ month(s) prior to the effective date of coverage.

6

Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?

Aleatory

What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled?

Waiver of Premium rider

All of these are considered sources of underwriting information about an applicant, EXCEPT:

Rating Services

In order to establish a Health Reimbursement Arrangement (HRA), it MUST:

be established by the employer

Insurance contracts may be sold, solicited, or negotiated by an insurance producer ONLY upon

becoming an appointed producer of an insurer

D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D, MUST:

correct the information and have the prospect initial the change

The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the:

initial deductible

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of

$0

What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy?

Premiums may increase at time of renewal

Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT?

Premiums normally increase at time of renewal

The individual who provides general medical care for a patient as well as the referral for specialized care is known as a:

Primary Care Physician

Which contract permits the remaining partners to buy-out the interest of a disabled business partner?

Disability Buy-Sell

A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant?

Disability Income

A producer does not have the authority to change a policy or waive any of its provisions". The health provision that best describes this statement is called the

Entire Contract

X is insured with a Disability Income policy that provides coverage until age 65. This policy allows the insurer to change the premium rate for the overall risk class assigned. Which of these renewability features does this policy contain?

Guaranteed Renewable

Which of the following types of health coverage frequently uses a deductible?

Major Medical policy

Comprehensive Major Medical policies usually combine:

Major Medical with Basic Hospital/Surgical coverage

Which of the following BEST describes a warranty?

Statement guaranteed to be true

Which of the following BEST describes a short-term medical expense policy?

Nonrenewable

A licensed producer can be BEST described as a(n)

individual who places insurance on behalf of anyone seeking insurance

What is Medicare?

A hospital and medical expense insurance program

T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provision that limits the time period during which the company may dispute a claim's validity is called

Free-look

Which of these is considered a true statement regarding Medicaid?

Funded by both state and federal governments

An insurance application may be rejected on the basis of all of these factors EXCEPT

Gender

Dental care coverage is designed to cover the costs of all of the following EXCEPT:

Loss of income

Which of the following characteristics is associated with a large group disability income policy?

No medical underwriting

P is insured under a basic cancer plan. Which of the following conditions would be covered under this plan?

Operation for a malignant tumor

Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)?

PPO's are NOT a type of managed care systems

C is the policyowner of a Comprehensive individual Major Medical policy. C pays an annual premium which is due September 1. If C forgets to pay the premium and is hospitalized September 10, how will the insurer handle this claim?

Pay the claim in full minus the premium due

J applies for an insurance policy. What BEST describes the particular terms of this policy?

Policy Summary

X owns a Disability Income policy. X recently suffered a disability which was due to the same cause as a previous disability. These disabilities both occurred over a four-month span. Which of the following provisions allows X's second disability to be covered without a new elimination period?

Recurrent Disability