Insurance Ch 6

An insured purchased a disability income policy with a 10-year benefit period. The policy stated a 20 day probationary period for illness. If the insured is hospitalized with an illness 2 weeks after the policy was issued, how much will the policy pay? A Nothing; illness is not covered during the first 20 days of the contract. B The insured will receive a return of premium. C It will pay up to 10 years of benefits. D It will pay until the insured is released from the hospital.

A Nothing; illness is not covered during the first 20 days of the contract. Loss by illness is not covered if it occurs during the probationary period.

Todd has been informed that he has a hernia which requires repair. When Todd researches the cost, he learns that his insurance plan will cover 200 points worth of surgical expenses. Each point represents $10, which means that $2000 of his surgery will be covered by his insurance plan. What system is Todd's insurance company using? A Relative value B Basic Surgical C Point-based medical D Conversion factor

A Relative value In a relative-value approach, a surgical procedure is assigned an amount of points relative to the maximum coverage allowed for a given surgery.

The primary purpose of disability income insurance is to A Replace income lost due to a disability. B Reimburse medical expenses and/or loss income due to accidents at work. C Reimburse lost income while in the hospital. D Reimburse loss of income to a family due to the death of the insured.

A Replace income lost due to a disability. Disability income insurance is designed to replace income loss because the insured is disabled.

How do employer contributions to a Health Savings Account affect the insured's taxes? A The employer contributions are not included in the individual insured's taxable income. B The employer contributions are taxed at the same rate as the Social Security tax rate. C The employer contributions are taxed to the individual insured as earned income. D The employer contributions are deducted from the individual insured's tax calculations.

A The employer contributions are not included in the individual insured's taxable income. HSA contributions made by an employer are not included in the determination of an individual's taxable income.

Hospital indemnity/hospital confinement indemnity policy will provide payment based on A The number of days confined in a hospital. B The type of illness. C The premiums paid into the policy. D The medical expense incurred.

A The number of days confined in a hospital. Hospital indemnity/hospital confinement indemnity policy provides payment based only on the number of days confined in a hospital.

Another term used to describe "no deductible" is A Comprehensive. B Total coverage. C Immediate cooperative D First-dollar basis.

D First-dollar basis. Another term used to describe "no deductible" is " first-dollar basis".

Which of the following is NOT a characteristic or a service of an HMO plan? A Contracting with insurance companies B Providing free annual checkups C Encouraging early treatment D Providing care on an outpatient basis

A Contracting with insurance companies HMOs seek to identify medical problems early by providing preventive care. They encourage early treatment and whenever possible provide care on an outpatient basis rather than admitting the member into the hospital. Contracts are between the insured and the HMO, not an insurance company.

Can an individual who belongs to a POS plan use an out-of-network physician? A Yes, and they may use any preferred physician, even if not part of the HMO B No C Yes, but they must use the POS physician first D Yes, but they must use the HMO physician first

A Yes, and they may use any preferred physician, even if not part of the HMO In a POS plan the individuals can visit an in-network provider at their discretion. If they decide to use an out-of-network physician, they may do so.

Which of the following disability income policies would have the highest premium? A 15-day waiting period / 5-year benefit period B 15-day waiting period / 10-year benefit period C 30-day waiting period / 10-year benefit period D 30-day waiting period / 5-year benefit period

B 15-day waiting period / 10-year benefit period The waiting, or elimination, period is the time from the onset of disability the insured must wait before becoming eligible for benefits. The shorter the waiting period, the higher the premium. After the insured satisfies the waiting period, they will receive benefits from the insurer for a limited benefit period. The longer the benefit period, the higher the premium. A disability income policy that includes the shortest waiting period and the longest benefit period would be most expensive.

How is emergency care covered for a member of an HMO? A An HMO emergency specialist will cover the patient. B A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area. C A member of an HMO may receive care at any emergency facility, at the same cost as if in his or her own service area. D HMOs have salaried member physicians, but they do not cover emergency care. Incorrect!

B A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area. Emergency care must be provided for the member in or out of the HMO's service area. If emergency care is being provided for a member outside the service area, the HMO will be eager to get the member back into the service area so that care can be provided by salaried member physicians.

The gatekeeper of an HMO helps A Determine which doctors can participate in an HMO plan. B Control specialist costs. C Determine who will be allowed to enroll in an HMO program. D Prevent double coverage.

B Control specialist costs. Initially the member chooses a primary care physician, or gatekeeper. If the member needs the attention of a specialist, the primary care physician must refer the member. This helps keep the member away from the higher priced specialists unless it is truly necessary.

The HMO Act of 1973 required employers to offer an HMO plan as an alternative to regular health plans if the company had more than 25 employees. How has this plan since changed? A The minimum number of employees has increased. B Employers are no longer forced to offer HMO plans. C The source of funding has changed. D The minimum number of employees has decreased.

B Employers are no longer forced to offer HMO plans. The HMO Act of 1973 forced employers with more than 25 employees to offer an HMO plan as an alternative to their regular health plans. The part of the act requiring dual choice has expired and has not been reinstated.

The corridor deductible derives its name from the fact that it is applied between the basic coverage and the A Limited coverage. B Major medical coverage. C Comprehensive expense coverage. D Interval expense coverage.

B Major medical coverage. The corridor deductible derives its name from the fact that it is applied between the basic coverage and the major medical coverage.

Don has both a basic expense and a major medical policy. He is injured in an accident, which requires several major surgeries. This quickly exhausts Don's basic expense policy. What must Don do before his major medical policy can pick up where the basic expense policy left off? A Submit written notification to his major medical insurance company B Pay a special deductible on his major medical policy C Wait 6 months in order to be covered again D Nothing needs to be done. The hospital's billing staff will make the appropriate arrangements.

B Pay a special deductible on his major medical policy Before a major medical policy pays benefits not covered under an exhausted basic medical policy, the insured must pay a corridor deductible.

Which statement accurately describes group disability income insurance? A Short-term plans provide benefits for up to 1 year. B The extent of benefits is determined by the insured's income. C In long-term plans, monthly benefits are limited to 75% of the insured's income. D There are no participation requirements for employees.

B The extent of benefits is determined by the insured's income. Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

Insurers usually do not reimburse claimants for 100% of income lost due to disability. What is the reason for insurer limitations on coverage amounts? A To pay no more than 50% of the pre-disability income B To provide an incentive for the insured to return to work C To make sure there is enough money to reimburse all the claims D To reimburse only for the premiums paid into the policy

B To provide an incentive for the insured to return to work The reason that insurers don't pay benefits that are equal to the insured's prior earnings is to reduce the chance of malingering on the part of the insured. Limiting the amount of coverage provides an incentive for the insured to return to work after a disability, as opposed to collecting benefits when he or she is capable of returning to work.

A disability income policy is written with a 10-month benefit period, a 30-day elimination period, and a 30-day probationary period. If the insured becomes disabled due to illness 9 days after the effective date, the policy will pay benefits for a maximum of A 21 days. B 6 months. C 10 months. D 270 days.

C 10 months. Benefit period refers to how long monthly disability benefit payments will last an elimination period has been satisfied.

How can a new physician be added to the PPO's approved list? A Pay an annual fee for being on the PPO list. B New physicians are only added once a year, and are selected by the PPO's Board of Directors. C Agree to follow the PPO standards and charge the appropriate fees. D Fill out the appropriate paperwork and wait the 12 month pre-certification period.

C Agree to follow the PPO standards and charge the appropriate fees. Any physician or hospital that qualifies for and agrees to follow the PPO's standards and charges the established fees can be added to the PPO's approved list at any time. The providers may withdraw their name from the list at any time, as well.

Long-term care policies MUST cover A Alcoholism. B A pre-existing condition. C Alzheimer's disease. D Treatment payable by Medicare.

C Alzheimer's disease. While normally mental and nervous disorders or disease are excluded in long-term care policies, Alzheimer's disease is not. The rest are all possible exclusions.

Which of the following statements regarding Business Overhead Expense policies is NOT true? A Any benefits received are taxable to the business. B Leased equipment expenses are covered by the plan. C Benefits are usually limited to six months. D Premiums paid for BOE are tax-deductible.

C Benefits are usually limited to six months. Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.

In a disability policy, the probationary period refers to the time A Between the 10th day of an illness-related disability and the first payment. B Between the first day of disability and the actual receipt of payment for the disability incurred. C During which illness-related disabilities are excluded from coverage. D Between the first day of disability and the day the disability must continue before the insured receives any benefits.

C During which illness-related disabilities are excluded from coverage. The probationary period limits coverage on new policies for certain illness-related conditions.

Which of the following is NOT covered by Health Maintenance Organizations (HMOs)? A Routine physicals B Well-baby care C Elective services D Immunizations

C Elective services HMOs emphasize preventive health care as a method of reducing medical expenses by early detection of health problems before they may require more costly treatment.

In long-term care insurance, what type of care is provided with intermediate care? A Daily care, but not nursing care B Intensive care C Occasional nursing or rehabilitative care D Nonmedical daily care

C Occasional nursing or rehabilitative care Intermediate care is nursing and rehabilitative care provided by medical personnel for stable conditions that require assistance on a less frequent basis than skilled care.

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 Double the amount of the death benefit B Refund of premiums C Principal sum D Capital sum

C 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.

How does a member of an HMO see a specialist? A HMOs do not cover specialists. B The member is allowed to choose his or her own specialist. C The primary care physician refers the member. D The insurer chooses the specialist.

C The primary care physician refers the member. In order for the member to get to see a specialist, the primary care physician must refer the member. If the member feels that the specialist should be treating him or her but is unable to get the referral from the primary care physician, the member might consider changing primary care physicians. In some HMOs there is a financial cost to the primary care physician for referring a patient to a more expensive specialist.

Regarding a PPO, which of the following is correct when selecting a primary care physician? A The insured may choose medical providers not found on the preferred list and still retain coverage. B The insured is allowed to receive care from any provider, but if the insured selects a PPO provider, the insured will realize lower out-of-pocket costs. C If a non-network provider is used, the insured's out-of-pocket costs will be higher. D All of the above are correct

D All of the above are correct In a PPO, the insured does not have to select a primary care physician. Conversely, In a PPO, all network providers are considered "preferred," and you can visit any of them, even specialists, without first seeing a primary care physician. Certain services may require Plan precertification, an evaluation of the medical necessity of inpatient admissions and the number of days required to treat your condition.

Which of the following provides coverage on a first-dollar basis? A Accident expense B Supplementary major medical C Limited major medical D Basic expense

D Basic expense A basic expense policy will provide coverage on a first-dollar basis (no deductible). After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits.

What is the goal of the HMO? A Providing free health services B Limiting the deductibles and coinsurance to reduce costs C Providing health services close to home D Early detection through regular checkups

D Early detection through regular checkups The goal of the HMO is early detection so members are encouraged to participate in regular checkups. In this way the HMO hopes to catch disease in its earliest stages when treatment has the greatest chance for success.

How are HMO territories typically divided? A Type of physician services available B Community rating system C By where the HMO can find the least expensive physicians D Geographic areas

D Geographic areas The HMO offers services to those living within specific geographic boundaries (for example, along county lines). Persons who live within the boundaries are eligible to belong to the HMO, but if they do not live within the boundaries, they are ineligible.

What are the three basic coverages for medical expense insurance? A Basic, Major, Overhead B Medical, Dental, Vision C Reimbursement, Preventive, Service D Hospital, Surgical, Medical

D Hospital, Surgical, Medical Basic medical policies and major medical policies are commonly grouped into medical expense insurance. The three basic coverages are hospital, surgical and medical, and may be purchased separately or as a package.

In long-term care (LTC) policies, as the benefit period lengthens, the premium A Remains unchanged. B LTC premiums are not based on benefit periods. C Decreases. D Increases.

D Increases. LTC policies define the benefit period for how long coverage applies, after the elimination period. The longer the benefit period, the higher the premium will be.

Which of the following is NOT true of a major-medical health insurance policy? A It usually has a maximum benefit amount. B The benefits are subject to deductibles. C It is designed to cover hospital and medical expenses of a catastrophic nature. D It is designed to pay on a first dollar of expense basis.

D It is designed to pay on a first dollar of expense basis. A major medical policy usually has deductibles and a copayment requirement. Basic medical, but not major medical, expense policies pay on a first dollar basis.

What type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled? A Group Disability B Disability Buy-Sell C Business Overhead D Key Person Disability

D Key Person Disability Key person disability is purchased by the employer on the life of a key employee to cover the expense of hiring and training a replacement for the key person.

In a disability policy, the elimination (or waiting) period refers to the period between A The effective date of the policy and the date the first premium is due. B Coverage under a disability policy and coverage under Social Security. C During which any specific illness or accident is excluded from coverage. D The first day of disability and the day the insured starts receiving benefits.

D The first day of disability and the day the insured starts receiving benefits. The elimination, or waiting, period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start.

What is the typical deductible for basic surgical expense insurance? A $0 B $100 C $200 D $500

A $0 As with the other types of basic medical expense coverage, there is no deductible, but coverage is limited.

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage? A $102 B $25 C $25.50 D $100

A $102 The employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individual's group premium rate (in this scenario, 102% of $100 total premium is $102). The 2% charge is to cover the employer's administrative costs.

If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days? A Conversion B Replacement C Grace period D Renewability

A Conversion Conversion provisions are required by law. It allows terminated employees to convert their group health coverage to individual insurance without evidence of insurability, within a specified amount of time, and for eligible reasons.

Which of the following statements is NOT correct concerning the COBRA Act of 1985? A It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. B It covers terminated employees and/or their dependents for up to 36 months after a qualifying event. C It applies only to employers with 20 or more employees that maintain group health insurance plans for employees. D COBRA stands for Consolidated Omnibus Budget Reconciliation Act.

A It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. COBRA Act applies to only employers with 20 or more employees.

A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay? A 10 days B 15 days C 25 days D 45 days

B 15 days A probationary period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days.

The type of dental plan which is incorporated into a major medical expense plan is a/an A Blanket dental plan. B Integrated dental plan. C Supplemental dental plan. D Stand-alone dental plan.

B Integrated dental plan. When dental coverage is covered under the benefits of a major medical plan, the dental coverage and medical coverage would be an integrated plan. Any deductible amount can be met by either dental or medical expenses.

Who chooses a primary care physician in an HMO? A A referral physician B The individual member C HMO subscribers do not have a primary care physician D The insurer

B The individual member When an individual becomes a member of the HMO, he or she will choose a primary care physician. Once chosen, the primary care physician will be regularly compensated for being responsible for the care of that member.

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

D 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.

Which of the following would basic medical expense coverage NOT cover? A Surgeon's services B Mental illness C Maternity D Hospice

A Surgeon's services Basic medical expense coverage offers a wide range of limited benefits that typically result in high out-of-pocket costs. Basic medical expense coverage provides coverage for nonsurgical services a physician provides and can be used for emergency accident benefits, maternity benefits, mental and nervous disorders, hospice care, home health care, outpatient care, and nurses' expenses.

Which of the following is true regarding optional benefits with long-term care policies? A They are available for an additional premium. B Only standard benefits are available with LTC policies. C They are offered at no additional cost to the insured. D They are included in all policies.

A They are available for an additional premium. Optional benefits, such as guarantee of insurability and return of premium, are available with Long-Term Care policies for an additional premium.

Social Security Supplement (SIS) or Social Security Riders would provide for the payment of income benefits in each of the situations below EXCEPT A When the amount payable under Social Security is more than the amount payable under the rider. B When used to replace or supplement benefits payable under other social insurance programs. C When the insured is eligible for Social Security benefits but before the benefits begin. D If the insured has been denied coverage under Social Security.

A When the amount payable under Social Security is more than the amount payable under the rider. These riders provide benefits when the amount payable under Social Security is less than the amount payable under the rider (in this case only the difference will be paid).

Long-term care coverage may be available as any of the following options EXCEPT A Endorsement to a life policy. B Endorsement to a health policy. C Group long-term care. D Individual long-term care.

B Endorsement to a health policy. Long-term care insurance policies may be purchased on an individual or group basis, or as an endorsement to a life insurance policy.

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? A No benefits B Full benefits C Partial benefits D Full benefits for 2 years

B Full benefits Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies.), total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work.

A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT A Life. B Income. C Eyesight. D Limb.

B Income. Accidental Death & Dismemberment policies cover loss of body parts or life only.

Regarding the taxation of Business Overhead policies, A Premiums are not deductible, but expenses paid are deductible. B Premiums are deductible and benefits are taxed. C Premiums are not deductible and benefits are taxed. D Premiums are not deductible, but benefits are deductible. Incorrect!

B Premiums are deductible and benefits are taxed. The premiums paid for BOE insurance are tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received.

How many consecutive months of coverage (other than in an acute care unit of a hospital) must LTC insurance provide in this state? A 36 B 6 C 12 D 24

C 12 Long-term care policies, which can be marketed in the form of individual policies, group policies, or as riders to life insurance policies, provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility. They must provide coverage for at least 12 consecutive months in a setting other than an acute care unit of a hospital.

Which of the following is a feature of a disability buyout plan? A Taxable benefits B A short elimination period C A lump-sum benefit payment option D Tax deductible premiums

C A lump-sum benefit payment option Buyout plans usually allow for a lump-sum payment of the benefit.

In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible? A Half B None C Corridor D Full

C Corridor The basic expense policy will provide coverage on a first-dollar basis (no deductible). After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits. The corridor deductible derives its name from the fact that it is applied between the basic coverage and the major medical coverage.

Which of the following is NOT true regarding Basic Surgical Expense coverage? A Contracts include a surgical schedule. B It is commonly written in conjunction with Hospital Expense policies. C Coverage is unlimited. D There is no deductible.

C Coverage is unlimited. Basic Surgical Expense Coverage is commonly written in conjunction with Hospital Expense policies. These policies pay for the costs of surgeons' services, whether the surgery is performed in or out of the hospital. Coverage includes surgeons' fees, anesthesiologist, and the operating room when it is not covered as a miscellaneous medical item. As with the other types of basic medical expense coverage, there is no deductible, but coverage is limited.

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled? A Absolute assignment B Transfer of Ownership C Disability Buy-Sell D Proprietary Transfer

C Disability Buy-Sell The Disability Buy-Sell agreement specifies how a business will pass between business owners if one of the owners dies or becomes disabled.

This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled. A Key-person insurance B Employee benefit plan C Disability buyout D Business overhead expense

C Disability buyout The disability buyout agreement specifies who will purchase a disabled partner's interest and legally obligates that person or party to purchase such interest upon disability.

Who can provide skilled nursing care? A Family Member B Community volunteer C Doctor D Spouse

C Doctor Skilled nursing care is daily nursing and rehabilitative care that can only be provided by medical personnel, under the direction of a physician. Skilled care is almost always provided in an institutional setting

What type of care is Respite care? A Institutional care B 24-hour care C Relief for a major care giver D Daily medical care, given by medical personnel

C Relief for a major care giver Respite Care is designed to provide relief to the family care giver, and can include a service such as someone coming to the home while the care giver takes a nap or goes out for a while. Adult day care centers also provide this type of relief for the caregiver.

What is a penalty tax for nonqualified distributions from a health savings account? A 8% B 10% C 12% D 20%

D 20% An HSA holder who uses the money for a nonhealth expenditure pays tax on it, plus a 20% penalty.

A hospital indemnity policy will pay A Income lost while the insured is in the hospital. B All expenses incurred by the stay in the hospital. C Any expenses incurred by the stay in the hospital, minus coinsurance payments and deductibles. D A benefit for each day the insured is in a hospital.

D A benefit for each day the insured is in a hospital. Hospital confinement indemnity policies pay specific amounts that depend on the amount of time the insured is confined to the hospital.

Kevin and Nancy are married; Kevin is the primary breadwinner and has a health insurance policy that covers both him and his wife. Nancy has an illness that requires significant medical attention. Kevin and Nancy decide to legally separate, which means that Nancy will no longer be eligible for health insurance coverage under Kevin. Which of the following options would be best for Nancy at this point? A Apply for social security benefits B Apply for coverage under the same group policy that covers Kevin C Convert to an individual insurance policy with 31 days so she won't have to provide evidence of insurability D COBRA

D COBRA Dependents of employees are eligible to receive group health insurance under the employee's plan. If the employee and the dependent become legally separated or divorced, or if the employee dies, the dependent will be eligible for COBRA benefits for up to 36 months. This is best for Nancy, since she has endured a long-term illness. Otherwise, being approved for individual health insurance would be difficult.

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe? A Dismemberment disability B Partial disability C Residual disability D Presumptive disability

D Presumptive disability Presumptive disability is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.

Benefit periods for individual short-term disability policies will usually continue from A Two years to age 65. B One week to 4 weeks. C Three months to 3 years. D Six months to 2 years.

D Six months to 2 years. Short-term disability is defined as a disability lasting not more than 2 years.

Your client wants to know what the tax implications are for contributions to a Health Savings Account. You should advise her that the contributions are A Subject to personal income taxes. B Post-tax dollars. C Subject to capital gains taxes. D Tax deductible.

D Tax deductible. Contributions to HSAs by individuals are deductible, even if the taxpayer does not itemize. Contributions by an employer are not included in the individual's taxable income.

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen? A The PPO will not pay any benefits at all. B The insured will be required to pay a higher deductible. C The PPO will pay the same benefits as if the insured had seen a PPO physician. D The PPO will pay reduced benefits.

D The PPO will pay reduced benefits. The group health plan will not pay the full amount charged by the non-PPO doctor.

Which of the following is considered a presumptive disability under a disability income policy? A Loss of two limbs B Loss of one eye C Loss of hearing in one ear D Loss of one hand or one foot.

A Loss of two limbs Presumptive disability is a provision that is found in most disability income policies that specifies conditions that will automatically qualify the insured for full disability benefits, such as the loss of two limbs.

Most policies will pay the accident death benefits as long as the death is caused by the accident and occurs within A 30 days. B 60 days. C 90 days. D 120 days.

C 90 days. Most policies will pay the accidental death benefit as long as the death is caused by the accident and occurs within 90 days.

What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan? A A low monthly premium B Low cost deductibles C Diagnostic and preventive care D A broad coverage area

C Diagnostic and preventive care Dental expense insurance is a form of medical expense health insurance that covers the treatment, care and prevention of dental disease and injury to the insured's teeth. An important feature of a dental insurance plan which is typically not found in a medical expense insurance plan is the inclusion of diagnostic and preventive care (teeth cleaning, fluoride treatment, etc.).

Which of the following is considered a qualifying event under COBRA? A Relocation B Promotion C Divorce D Marriage

C Divorce Other qualifying events include the voluntary termination of employment; an employee's change from full time to part time; or the death of the employee.

What is NOT a benefit of a POS plan? A It allows the employee to use a doctor not covered under the HMO. B With the Point-Of-Service plan the employees do not have to make a decision between the HMO or PPO plans that lock them in. C It allows guaranteed acceptance of all applicants. D It allows the employee to use an HMO provided doctor.

C It allows guaranteed acceptance of all applicants. A different choice can be made every time a need arises for medical services.

In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point? A Relative value B Translation factor C Practical value D Conversion factor

D Conversion factor In order to determine the amount payable for a given procedure, the assigned points (relative value) of 200 are multiplied by a conversion factor. This conversion factor represents the total amount payable per point. For example, if the conversion factor is $10 and the point value is 200, the policy would pay $2,000 for the procedure (200 x 10).

COBRA applies to employers with at least A 20 employees. B 80 employees. C 60 employees. D 50 employees.

A 20 employees. Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), any employer with 20 or more employees must extend group health coverage to terminated employees and their families.

What is the period of coverage for events such as death or divorce under COBRA? A 36 months B 60 days C 31 days D 12 months

A 36 months The maximum period of coverage under COBRA is 36 months, in the event of the covered employee's death or divorce.

Which of the following would be an example of a limited accident and health insurance policy? A A dread disease policy B An accidental death and dismemberment policy C A Medicare policy D A long-term care policy

A A dread disease policy Limited risk policies cover specific illness or accidents.

Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care? A Attending physician B Registered nurses C Licensed practical nurses D Community-based organization professionals

A Attending physician Home health care is care provided in one's home and could include occasional visits to the person's home by registered nurses, licensed practical nurses, licensed vocational nurses, or community-based organizations like hospice. Home health care might include physical therapy and some custodial care such as meal preparations.

When an insurer combines two periods of disability into one, the insured must have suffered a A Recurrent disability. B Partial disability. C Residual disability. D Presumptive disability.

A Recurrent disability. Recurrent disability is the period of time (usually within 3-6 months) during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability.

Which is NOT a characteristic of group health insurance? A The actual policy is called the "master contract". B A policy is issued to each insured individual. C Dependents of insureds can be covered under group health plans. D Group coverage may be converted to individual coverage if the group contract is ended.

B A policy is issued to each insured individual. The actual policy, called the "master contract", is issued to the group sponsor only; the individuals covered under the policy are issued certificates of insurance as proof that they are covered under the master contract. Dependents are covered under group plans. If the group contract is terminated, insureds may convert to individual policies without having to provide proof of insurability.

A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called A Recurrent Disability B Business Overhead Expense. C Credit Accident and Health coverage D Partial Disability

B Business Overhead Expense. Business Overhead insurance is often purchased by small employers to pay the ongoing business expenses (such as payroll) in the event the owner of the business becomes disabled. Premiums paid are tax deductible as a business expense, but proceeds paid are taxable as income.

Most LTC plans have which of the following features? A Open enrollment B Guaranteed renewability C No elimination period D Variable premiums

B Guaranteed renewability The benefit amount payable under most LTC policies is usually a specific amount per day, and some policies pay the actual charge incurred per day. Most LTC policies are also guaranteed renewable; however, insurers do have the right to increase the premiums.

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 Accidental Death B Comprehensive C Accident-only D Restrictive

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

An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This would indicate that his policy was probably written with a 30-day A Probationary period. B Disability period. C Elimination period. D Black-out period.

C Elimination period. The elimination period is the time immediately following the start of a disability when benefits are not payable. This is used to reduce the cost of providing coverage and eliminates the filing of many claims.

When health care insurers negotiate contracts with health care providers or physicians to provide health care services for subscribers at a favorable cost, it is called A Indemnity plans. B Point of Service Plans (POS). C Preferred Provider Organization (PPO). D Managed care.

C Preferred Provider Organization (PPO). The insurer negotiates the rates for specific procedures for their subscribers. If the subscriber chooses to go to a provider outside the preferred provider, they will have to pay a part of the cost of service.

An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged a $100 per day. How much will the insurance company pay? A $100 a day B 80% of the total cost C 20% of the total cost D $120 a day

D $120 a day Most LTC policies will pay the benefit amount in a specific fixed dollar amount per day, regardless of the actual cost of care.

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized? A 55 B 59 1/2 C 62 D 65

D 65 After age 65, a withdrawal from an HSA used for a nonhealth purposes will be without a penalty, although taxed.

Which of the following terms describes a specific dollar amount of the cost of care that must be paid by the member? A Cost share B Prepayment C Contractual cost D Copayment

D Copayment A copayment is a specific dollar amount of the cost of care that must be paid by the member.

Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account? A Joe is 40 and is not covered by any other health insurance B Amanda is 67 and is covered by a basic medical expense policy C Andy is 55 and is covered under a dental care policy D Jenny is 60 and also has a long-term care insurance plan

B Amanda is 67 and is covered by a basic medical expense policy To be eligible for a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP), must not be covered by other health insurance except for specific injury, accident, disability, dental care, vision care, or long-term care insurance, must not be eligible for Medicare (usually age 65), and can't be claimed as a dependent on someone else's tax return.

All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT A Accidental death and dismemberment insurance is considered to be limited coverage. B Death benefits are paid only if death occurs within 24 hours of an accident. C Accidental death benefits are paid only if death results from accidental bodily injury as defined in the policy. D Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent.

B Death benefits are paid only if death occurs within 24 hours of an accident. Under an Accidental Death and Dismemberment insurance policy, the death benefit will be paid if the accidental death occurs within 90 days of the accident, not 24 hours.

Regarding long-term care coverage, as the elimination period gets shorter, the premium A Gets lower. B Gets higher. C Remains constant. D Premiums are not based on elimination periods.

B Gets higher. LTC policies also define the benefit period for how long coverage applies, after the elimination period. The benefit period is usually 2 to 5 years, with a few policies offering lifetime coverage. Obviously the longer the benefit period, the higher the premium will be; and the shorter the elimination period, the higher the premium will be.

To be eligible for a Health Savings Account, an individual must be covered by a A Health plan with no deductible. B High-deductible health plan. C Low-deductible health plan. D Nonqualified plan.

B High-deductible health plan. To be eligible for an HSA, an individual must be covered by a high-deductible health plan.

In which of the following locations would skilled care most likely be provided? A At a physician's office B In an institutional setting C At the patient's home D In an outpatient setting

B In an institutional setting Skilled nursing care is performed under the direction of a physician, usually in an institutional setting.

All of the following are differences between individual and group health insurance EXCEPT A Individual policies are renewable at the option of the insured, while group usually terminates when the individual leaves the group. B Individual insurance does not require medical examinations, while group insurance does require medical examinations. C In individual policies, the individual selects coverage options, while in a group plan all employees are covered for the same coverage which is chosen by the employer. D Individual coverage can be written on an occupational or nonoccupational basis; group plans cover only nonoccupational.

B Individual insurance does not require medical examinations, while group insurance does require medical examinations. In individual coverage, policies are issued based upon individual underwriting. In group plan, everyone is covered for the same coverage and there is no individual underwriting selection.

All of the following are true regarding key person disability income insurance EXCEPT A The employee is the insured. B Premiums are tax deductible as a business expense. C The employer receives the benefits if the key person is disabled. D The employer pays the premiums.

B Premiums are tax deductible as a business expense. In key person disability insurance, the contract is owned by the business, the premium is paid by the business, and the business is the beneficiary. The key person is the insured, and the business must have the key person's consent to be insured in writing.

In the event of a loss, business overhead insurance will pay for A Medical bills of the business owner. B Rent. C Loss of profits. D Salary of the business owner.

B Rent. Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It does not pay the salary of the business owner or their loss of profits. However, it will provide the funds needed to pay the salary of employees other than the owners and their other ongoing business expenses, such as rent.

All of the following long-term care coverages would allow an insured to receive care at home EXCEPT A Home health care. B Skilled care. C Custodial care in insured's house. D Respite care.

B Skilled care. Custodial care, respite care, home health care, and adult day care are all coverages used to reduce the necessity of admission into a care facility. Skilled care is almost always provided in an institutional setting.

Which of the following would basic medical expense coverage NOT cover? A Hospice B Surgeon's services C Mental illness D Maternity

B Surgeon's services Basic medical expense coverage offers a wide range of limited benefits that typically result in high out-of-pocket costs. Basic medical expense coverage provides coverage for nonsurgical services a physician provides and can be used for emergency accident benefits, maternity benefits, mental and nervous disorders, hospice care, home health care, outpatient care, and nurses' expenses.

Which of the following is NOT covered under Basic Hospital Expense Coverage? A X-ray charges B Surgeons' fees C Hospital room and board D Lab charges

B Surgeons' fees Hospital expense policies cover hospital room and board, and miscellaneous hospital expenses, such as lab and x-ray charges, medicines, use of operating room and supplies, while the insured is confined in a hospital.

Which of the following would an accident-only policy NOT cover? A Amputation of a leg that was burned during a house fire B Surgery to repair a wrist damaged by tendonitis. C Hospitalization costs due to a boating accident D Death from a motorcycle accident

B Surgery to repair a wrist damaged by tendonitis. Accident-only policies cover medical costs caused by accidents, not sickness. Because the wrist was damaged by a sickness, not an accident, the policy would not cover any medical claims relating to the surgery or the condition itself.

Which of the following would be a qualifying event as it relates to COBRA? A Eligibility for Medicare B Termination of employment due to downsizing C Termination of employment for stealing D Eligibility for coverage under another group plan

B Termination of employment due to downsizing Employee qualifying events include the termination of employment for reasons other than for misconduct; dependents' qualifying events include the death of the employee, divorce or legal separation.

What happens if a non-member physician is utilized under the Point-Of-Service plan? A The member patient will have to pay all costs out-of-pocket. B The attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount. C The non-member physician will be paid a fee for service. D The non-member physician will be paid a fee for service, but the member patient will be penalized per visit on his/her monthly premium.

B The attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount. If a non-member physician is utilized under the Point-Of-Service plan, then the attending physician will be paid fee for service, but the member patient will have to pay a higher coinsurance amount or percentage for the privilege.

Which of the following statements concerning group health insurance is CORRECT? A Under group insurance, the insurer may reject certain individuals from coverage. B The employer is the policyholder. C Only the employer receives a certificate of insurance. D Each employee receives a policy.

B The employer is the policyholder. The employer receives the master policy; each employee receives a certificate of insurance. All employees have the same coverage under the master contract.

Which of the following best describes the "first-dollar coverage" principle in basic medical insurance? A Deductibles and coinsurance are taxed first. B The insured is not required to pay a deductible. C The insured must first pay a deductible. D The insurer covers the first claim on the policy.

B The insured is not required to pay a deductible. The three basic types of coverage (hospital, surgical and medical) are often referred to as first-dollar coverage because they usually do not require the insured to pay a deductible.

What is the purpose of COBRA? A To protect the insureds against insolvent insurers B To provide continuation of coverage for terminated employees C To provide coverage for the dependents D To provide health coverage for people with low income

B To provide continuation of coverage for terminated employees The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event.

After a person's employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true? A The employee can convert from group to individual insurance within 31 days of termination. B The premium of the individual health insurance policy can be higher than the original policy. C By law, the new, individual policy must provide the same benefits as the group insurance policy. D Continuation of group coverage need not include dental, vision, or prescription drug benefits.

C By law, the new, individual policy must provide the same benefits as the group insurance policy. Terminated employees have 31 days to convert to an individual health insurance policy, without having to provide proof of insurability. The insurer can adjust the new, individual health policy's premium as it sees fit, as long as coverage is provided. The new policy could offer lesser benefits than the original group health policy.

In disability income insurance, another name for the waiting period is the A Enrollment period. B Probationary period. C Elimination period. D Eligibility period.

C Elimination period. The waiting period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start. This is also called the elimination period.

As it pertains to group health insurance, COBRA stipulates that A Terminated employees must be allowed to convert their group coverage to individual policies. B Group coverage must be extended for terminated employees up to a certain period of time at the employer's expense. C Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. D Retiring employees must be allowed to convert their group coverage to individual policies.

C Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. COBRA requires employers with 20 or more employees to continue group medical insurance for terminated workers and dependents for up to 18 months to 36 months. The employee can be required to pay up to 102% of the coverage's premium.

Which of the following is NOT true regarding a flexible spending account? A It provides an opportunity to receive benefits on a pretax basis. B It is a cafeteria plan. C It does not have limits on contributions. D It operates on "use-or-lose" basis.

C It does not have limits on contributions. A Flexible Spending Account (FSA) is a form of cafeteria plan benefit funded by salary reduction. The employees are allowed to deposit a certain amount of their paycheck into an account before paying income taxes. FSA benefits are subject to annual maximum and "use-or-lose" rule.

Which is true regarding HMO coverage? A It is divided by state. B HMOs provide nationwide coverage. C It is divided into geographic territories. D It is divided based on the average tax bracket of a family.

C It is divided into geographic territories. HMOs offer services to those living within specific geographic boundaries that may be formed by county lines or city limits. If one lives within the boundaries, they are eligible to belong to the HMO, but if they do not live within the boundaries, they are ineligible.

Which of the following is true of a PPO? A Claim forms are completed by members on each claim. B No copayment fees are involved. C Its goal is to channel patients to providers that discount services. D A most common type of PPO is the staff model.

C Its goal is to channel patients to providers that discount services. Insureds are treated by providers who have agreed to discount their charges.

If your health care plan has characteristics of an HMO and PPO, what type of plan do you have? A MET B FSA C POS D HIPAA

C POS Point-of-Service (POS) plans are a combination of HMOs and PPOs.

Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and Dismemberment coverage? A Specified Disease Policy B Credit Disability C Special Risk Policy D Limited Risk Policy

C Special Risk Policy The Special Risk Policy will cover unusual types of risks that are not normally covered under AD&D policies. It covers only the specific hazard or risk identified in the policy, such as a racecar driver test-driving a new car.

Which of the following would an accident-only policy NOT cover? A Death from a motorcycle accident B Amputation of a leg that was burned during a house fire C Surgery to repair a wrist damaged by tendonitis. D Hospitalization costs due to a boating accident

C Surgery to repair a wrist damaged by tendonitis. Accident-only policies cover medical costs caused by accidents, not sickness. Because the wrist was damaged by a sickness, not an accident, the policy would not cover any medical claims relating to the surgery or the condition itself.

Which statement is NOT true regarding underwriting group health insurance? A The cost of the policy is partially determined by the ratio of males to females in the group. B Everyone in the group is covered, regardless of their medical history. C The group is assessed individually for insurability. D The premium can be made retroactive for the year.

C The group is assessed individually for insurability. Group health insurance policies must cover everyone in the group, regardless of age, health history, and occupation. Because of this blanket coverage, the group as a whole is assessed for insurability. The size, average age, gender ratio, persistency, and industry of the group are considered, along with other factors, when determining premiums. Groups can be reassessed annually in order to adjust premium amounts.

Which statement is NOT true regarding underwriting group health insurance? A The cost of the policy is partially determined by the ratio of males to females in the group. B Everyone in the group is covered, regardless of their medical history. C The group is assessed individually for insurability. D The premium can be made retroactive for the year. Correct!

C The group is assessed individually for insurability. Group health insurance policies must cover everyone in the group, regardless of age, health history, and occupation. Because of this blanket coverage, the group as a whole is assessed for insurability. The size, average age, gender ratio, persistency, and industry of the group are considered, along with other factors, when determining premiums. Groups can be reassessed annually in order to adjust premium amounts.

Which of the following is NOT covered under a long-term care policy? A Adult day care B Hospice care C Home health care D Acute care in a hospital

D Acute care in a hospital A long-term care policy may provide coverage for home health care, adult day care, hospice care or respite care. Acute care is not covered under a long-term care policy

Group health insurance is characterized by all of the following EXCEPT A A master contract. B Lower administrative costs. C Conversion privilege. D Adverse selection.

D Adverse selection. If an insurer issues a group health insurance policy, they must cover everyone in the group under the master contract. Group underwriting process is designed to avoid adverse selection.

Which of the following individuals is eligible for a Health Savings Account? A Margaret is 68 years old B Suzie is a dependent on her parent's tax returns C Tomas is insured by a Low Deductible Health Plan (LDHP) D Allison is insured by a High Deductible Health Plan (HDHP)

D Allison is insured by a High Deductible Health Plan (HDHP) To be eligible for a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP), must not be covered by other health insurance except for specific injury, accident, disability, dental care, vision care, or long-term care insurance, must not be eligible for Medicare, and can't be claimed as a dependent on someone else's tax return.

What are the 2 types of Flexible Spending Accounts? A Health care accounts and Health reimbursement accounts B Medical savings accounts and Dependent care accounts C Medical savings accounts and Health reimbursement accounts D Health care accounts and Dependent care accounts

D Health care accounts and Dependent care accounts There are 2 types of Flexible Spending Accounts: a Health Care Account for out-of-pocket health care expenses, and a Dependent Care Account to help pay for dependent care expenses which make it possible for an employee and his or her spouse, if applicable, to work.

Which of the following types of LTC is NOT provided in an institutional setting? A Custodial care B Skilled nursing care C Intermediate care D Home health care

D Home health care Home health care is given in the home, but skilled nursing, intermediate, and custodial care may all be provided in an institutional setting.

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital? A Surgical B Blanket C Medigap D Indemnity

D Indemnity A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.

Underwriting a group health insurance plan that is paid for by the employer requires all of the following EXCEPT A The plan is based on other than individual selection. B All eligible employees must be covered. C Coverage for plan participants is uniform. D Individual members of the group may select the level of benefits for their own coverage.

D Individual members of the group may select the level of benefits for their own coverage. In group health insurance, all individuals are covered under the master policy for the same coverages.

All of the following would be qualified as a dependent under a Dependent Care Flexible Spending Account, EXCEPT A Joe was paralyzed from the neck down in a car accident and is cared for by his wife B Matt must be constantly watched due to his violent muscle spasms which often lead to Matt injuring himself C Pete is severely autistic and refuses to take care of his own personal needs, which are taken care of by his father D Jeremy had to have both legs amputated, but has learned how to take care of himself and to get around in a wheelchair

D Jeremy had to have both legs amputated, but has learned how to take care of himself and to get around in a wheelchair Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves.

Insurance that would pay for hiring a replacement for an important employee who becomes disabled is called A Blanket disability insurance. B Long-term disability. C Business overhead expense disability insurance. D Key employee disability insurance.

D Key employee disability insurance. The business is the contract holder and would receive benefits if a specified key employee became disabled.

In a Disability Income policy, all of the following are considered presumptive disabilities EXCEPT A Loss of hearing. B Loss of two limbs. C Loss of speech. D Loss of one eye.

D Loss of one eye. The definition of a presumptive disability varies by company, but generally includes a total loss of sight, speech, hearing or the use of any two limbs.

Which of the following would NOT be considered a limited coverage policy? A Accident insurance B Cancer insurance C Credit insurance D Major medical expense insurance

D Major medical expense insurance Limited policies cover only expense incurred from specific diseases, or specific causes.

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives? A Full B 50% C 25% D None

D None General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

All of the following are the most common variations in a Long-Term Care policy EXCEPT A The amount paid for nursing home care. B Number of days of confinement covered. C Number of home health visits covered. D Number of family dependents.

D Number of family dependents. Long-Term Care policies can vary in the number of days of confinement covered, the number of home health visits covered, the amount paid for nursing home care, and other contract provisions.

Under which of the following organizations are the practicing providers compensated on a fee-for-service basis? A HMO B Blue Cross/Blue Shield C Open panel D PPO

D PPO PPOs contract on a Fee-for-service basis.

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT A Utilities. B Employee payroll. C Loss of the owner's income. D Rent.

C Loss of the owner's income. If business owners want coverage for the loss of their own income due to total disability, they need to purchase a separate individual disability income policy.

Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis? A Adult day care B Residential care C Assisted living D Home health care

A Adult day care Adult day care is designed for those who require assistance with various ADLs on a daily basis, but not around the clock. Custodial care is usually the only service provided by adult day care facilities.

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as A Medical expense. B Critical illness. C Major medical. D AD&D.

B Critical illness. A critical illness policy covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to the insured upon the diagnosis (and survival) of any of the illnesses covered by the policy.

Long-term care insurance policies must cover which of the following? A Alzheimer's disease B All mental disorders C Treatment of alcoholism D Injuries caused by an act of war

A Alzheimer's disease Most long-term care policies exclude coverage for drug and alcohol dependency, acts of war, self-inflicted injuries and nonorganic mental conditions. Organic cognitive disorders such as Alzheimer's disease, senile dementia and Parkinson's disease are covered.

A small business owner is the insured under a disability policy that funds a buy-sell agreement. If the owner dies or becomes disabled, the policy would provide which of the following? A Cash to the owner's business partner to accomplish a buyout B The rent money for the building C The business manager's salary D Disability insurance for the owner

A Cash to the owner's business partner to accomplish a buyout If an owner dies or becomes disabled, the disability policy under the buy-sell agreement would provide enough cash to accomplish a buyout of the company.

A small company offers group health insurance to its employees, but recently has decided to terminate the health insurance contract, leaving the workers without insurance. What can the employees do regarding their insurance? A Convert to an individual health policy B Sue the employer C Apply for another group health insurance D Request a refund of unearned premium

A Convert to an individual health policy It is perfectly legal for a company to terminate the master contract of a group health insurance policy. When this happens, the insureds can convert to individual health policies within a specified period of time, without having to provide proof of insurability.

Health Savings Accounts (HSAs) are designed to A Insure against catastrophic losses. B Provide duplicate coverage for health care expenses. C Help individuals save for qualified health expenses. D Increase individual interest income.

C Help individuals save for qualified health expenses. HSAs help individuals save for qualified out-of-pocket health care expenses such as the deductible expense from a high deductible health plan.