chapter 10 - Health Insurance Underwriting

Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application?

A good health statement

Major risk factors in health insurance underwriting include all of the following EXCEPT? A) Habits or lifestyle. B) Marital status. C) Occupation. D) Physical condition.

B) Marital status.

One of the most important considerations when replacing health insurance would be the: Age of the insured Exclusions on a new policy Occupation of the insured Cost

Exclusions or limitation on a new policy

Premium mode is a term used to describe the: premium past due method of payment frequency of the premium payment premium paid

Frequency of the premium payment

Backdating

The practice of making a policy effective at an earlier date than the present

what is the purpose of the medical information bureau (MIB) ?

To help underwriters evaluate risk

For any changes in an insurance application requires an initial made by the producer an initial made by the applicant approval by the insurer submitting a new application

an initial made by the applicant

Underwriting

The analysis of information pertaining to an applicant that was obtained from various sources and the determination of whether the insurance should be issued or decline

XYZ Corp pays the tax-deductible insurance premiums for a key employee disability policy. Which of the following would be the appropriate tax consequence? Premiums are paid with tax credits Benefits are partially taxable Benefits are fully taxable Premiums are paid with after-tax dollars

benefits are fully taxable

Lorenzo is self employed with an S corporation. He is unmarried and had a net profit for the tax year. What are the tax ramifications of his health insurance premiums paid for the year? - 50% of his health insurance costs can be deducted from his gross income - 75% of his health care costs can be paid with pre-tax income - 100% of his health insurance costs can be deducted from his gross income - 100% of his health insurance costs can be paid with tax credits

100% of his health insurance costs can be deducted from his gross income. The s corporations "pass through" their taxable income

Which of the following is considered to be a point of service (POS) plan? Preferred provider organization Managed care plan Protected care provider Restricted provider organization

Managed care plan

Which of these is likely to occur when life or health insurance is being applied for? The Medical Information Bureau (MIB) will determine the risk classification The agent is required to report all medical information to the Medical Information Bureau (MIB) Physical examinations are required Medical history from the insured may be reviewed and reported

Medical history from the insured may be reviewed and reported

Which of these is likely to occur when life or health insurance is being applied for? The Medical Information Bureau (MIB) will determine the risk classification The agent is required to report all medical information to the Medical Information Bureau (MIB) Physical examinations are required Medical history from the insured may be reviewed and reported

Medical history from the insured may be reviewed and reported

All of these are considered sources of information that can assist an underwriter in determining whether or not to accept a risk EXCEPT Agent's report Medical Information Bureau (MIB) Inspection reports National Association of Insurance Underwriters

National Association of Insurance Underwriters

A person who is a nonsmoker, of average weight, and in excellent health would most likely be in which risk classification? Standard Substandard Acceptable Preferred

Preferred

Which of the following statements most aptly describes health insurance benefits? A) The greater the benefits, the higher the premium. B) Each policy offers a single type of benefit. C) Policyowners who have policies with identical benefits pay the same premiums. D) Claims, not benefits, affect premium rates.

The greater the benefits, the higher the premium.

Which of the following pertains to the analysis of an applicant's personal information and determining whether insurance should be issued or declined? Adverse calculation Underwriting Risk classification Actuarial determination

Underwriting

When does a life insurance policy typically become effective? -When the policy is issued -When initial premium is collected and policy is issued -When the application is completed and signed -When the completed application is signed and initial premium is collected

When initial premium is collected and policy is issued

Pierre is covered by his employer's group major medical plan. His employer pays for 75% of the premium and he pays for 25%. How much would a $10,000 benefit be taxable as income under this plan? $10,000 $7,500 $2,500 $0

$0- Benefits that fall under a major medical plan are considered to be a reimbursement for a loss, and is not taxable as income.

Which of the following signatures is not required on an individual insurance application? Producer Applicant Insured Insurer

Insurer

An applicant's character and personal habits can be obtained for underwriting purposes from which source? Investigative consumer report Attending physician's statement Medical Information Bureau (MIB) Credit report

Investigative consumer report

The IRS allows a taxpayer to deduct medical expenses that exceed 7.5% of their adjusted gross income. Which of the following is considered a tax deductible medical expense under this rule? -Long Term Care insurance premiums -Dread Disease insurance premiums -Travel accidental insurance prmeiums -Individual disability income Insurance premiums

Long Term Care insurance premiums

Which of the following typically does NOT provide a form of managed care? Preferred Provider Organization (PPO) Point-of-Service (POS) plan Major medical indemnity plan Health Maintenance Organization (HMO)

Major medical indemnity plan

An insurance company needs to obtain personal information from a third party concerning an applicant. Which law do all insurers and their producers need to comply with? USA Patriot Act Personal Information Act Fair Credit Reporting Act McCarran-Ferguson Act

Fair Credit Reporting Act

Which of the following is the purpose of medical cost management? To influence hospital charges and doctors' fees To discourage individuals from utilizing health care services To control health claim expenses To encourage individuals to seek medical help only as a last resort To control health claim expenses.

To control health claim expenses

Preferred risk policies with reduced premiums are issued by insurance companies because the insured has -a higher face amount than average - a better ability to pay premiums over a long period of time - worse than average mortality or morbidity experience - better than average mortality or morbidity experience

better than average mortality or morbidity experience

Field underwriting performed by the producer involves

completing the application and collecting inital premium

Underwriters can acquire information from all of the following sources EXCEPT Medical Information Bureau (MIB) consumer reports attending physician's statements genetic testing

genetic testing

An example of a primary care physician would be a(n) internist psychologist endocrinologist chiropractor

internist

An insured was injured as an innocent bystander when someone committed a felony. The insurer is: likely to void the policy partially liable for the loss not liable for the loss liable for the loss

liable for the loss

Tara the producer is delivering a specified disease insurance policy to a new policyowner. Upon delivery, she may be expected to collect all of the following EXCEPT a(n) -initial premium -signed impairment rider acknowledgement -modified application with a new signature -good health statement

modified application with a new signature

An insurance applicant with a below-average likelihood of loss is typically considered to be a preferred risk subpar risk declined risk standard risk

preferred risk

A field underwriter's main task is assign a risk classification to the insured report medical information to the Medical Information Bureau (MIB) to ensure an applicant's medical information is accurate and complete to approve or decline an applicant

to ensure an applicant's medical information is accurate and complete

An attending physician's statement would be appropriate for which life insurance purpose? Attending physician's statements are mandatory during the application process At the request of the applicant to assist in the underwriting decision At the request of the producer to assist in the underwriting decision At the request of the insurer to assist in the underwriting decision

At the request of the insurer to assist in the underwriting decision

All of the following factors would affect a health insurance policy's premium rate EXCEPT? A) Occupation of the insured. B) Residential address of the insured. C) Age of the insured. D) Type of benefit provided

B) Residential address of the insured. The insured's residence is not considered when determining the policy's premium rate.

Which of the following would be considered an underwriting duty of an agent? Requesting medical information from the Medical Information Bureau (MIB) Completing all applications and collecting initial premiums Accepting or declining an application Assigning a risk classification

Completing all applications and collecting initial premiums

In which of the following processes will the insurer oversee the insured's hospital stay to confirm everything is going according to schedule and that the insured will be released as planned? Pre-certification review Pretense review Congruent review Concurrent review

Concurrent review

All of these are typically sources of underwriting information for life or health insurance EXCEPT * Consumer reports * Medical Information Bureau (MIB) reports * Disclosure authorization response * Attending physician's statement (APS)

Disclosure authorization response

XYZ Company has applied for group health insurance for its employees. What information would the insurer's underwriters likely use to determine the appropriate coverage and final premium rate given to the group? Experience rating Credit reports Arrest reports AM Best rating

Experience rating - is used to determine how much a specific group will have to spend on medical care

All of the following are primary risk factors in underwriting individual health insurance policies EXCEPT Geographical location Moral hazard Occupation Physical condition

Geographical location

Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies? Standard risk Preferred risk Unacceptable risk Substandard risk

Substandard risk

Bill the producer is collecting the initial premium on a health policy. Which of the following statements is true? The contract is not in force without the initial premium being paid A partial initial premium is acceptable The insured has no advantage to pay the initial premium at the time of application A claim must be honored by the insurer even if an initial premium is not paid

The contract is not in force without the initial premium being paid

An underwriter's primary responsibility to an insurer is to protect against natural selection inverse selection adverse selection risk selection

adverse selection

Which of these characteristics of an applicant is NOT taken into consideration when assessing risk for Disability coverage? health of applicant gender of applicant number of children occupation of applicant

number of children

The difference between pre-certification and concurrent review is that pre-certification: -costs more to the patient -costs less to the patient -is considered a cost containment measure -occurs before the treatment is provided

occurs before the treatment is provided

Which of the following is not an example of utilization review? monitoring length of hospital stay ongoing inspection of accident prone individuals monitoring the appropriateness of care setting a hospital release date for a patient

ongoing inspection of accident prone

Statements made by an insurance applicant on an application are considered to be irrevocable warranties representations guarantees

representations