Insurance

Under the uniform required provision proof of loss under a health insurance policy should normally be filed within how many days

90

The period of time over which the owner makes payments into an annuity

Accumulation period

A temporary license may be issued for all the following reasons except

Agent's retirement

What is the purpose of coinsurance provisions? a) To ensure payment to the doctors and hospitals b) To share liability among different insurance companies c) To help the insurance company to prevent overutilization of the policy d) To have the insured pay premiums to more than one company.

c

ho-6

condominium unit

A guaranteed renewable health insurance policy allows the

policyholder to renew the policy to a stated age with the company have the right to incease premiums on the entire class

Which of the following is a characteristic of reciprocal insurance exchange?

The chief administrator of the insurer called an attorney in fact

which of the following types of life insurance coverage is designed for groups of people who are exposed to a common hazard

Total Blanket

If only one part to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Unilateral

If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits? a) 6 credits b) 40 credits c) 12 credits d) 20 credits

c

If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare? a) Appear for a physical at the Social Security office b) Apply at a local Social Security office c) Nothing d) Apply for coverage through the state

c

A deli owner has a businessowners liability policy. When a customer slipped and hurt herself at the deli, the liability policy paid for medical expenses. The customer, however, is now suing the business owner because she claims there was no caution sign warning her that the floor was wet. What is the insurer obligated to do? a) Pay to defend the policyowner in the lawsuit because liability coverage contains a duty-to-defend provision b) Automatically renew the owner's policy, but they have nothing to do with the lawsuit c) Provide legal aid to the elderly woman suing the policyowner d) Nothing, they have paid the claim and their responsibility ends there.

a

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a) Mutual b) Reciprocal c) Nonprofit service organization d) Stock

a

How is the Commissioner of Commerce chosen to serve? a) By appointment of the Governor b) By popular vote c) By appointment of the Senate, with the approval of the Governor d) By election at the same time as other state officials are chosen

a

How soon after a notice of hearing is made may the hearing be conducted? a) No less than 20 days b) No less than 30 days c) No less than 45 days d) No less than 10 days

a

If an insured is not required to pay a deductible, what kind of coverage does he have? a) first dollar b) corridor c) major medical d) comprehensive

a

In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party? a) Insurer to the insured b) Insured to the insurer c) Insurer to the Department of Insurance d) Insured to the Department of Insurance

a

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) Accident-only b) Restrictive c) Accidental Death d) Comprehensive

a

When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. Which of the following statements correctly explains how this claim would be handled? a) The insurer is considered to be notified since the notification to agent equals notification to the insurer. b) The insurer may delay the payment of this claim for up to 6 months. c) The insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner. d) The insurer may deny the claim since it was not notified within the required 20-day time frame.

a

Which health insurance provision describes the insured's right to cancel coverage? a) Renewal provision b) Policy duration provision c) Insuring clause d) Cancellation provision

a

Which of the following homeowners coverage forms applies to condominium unit owners? a) HO-6 b) HO-8 c) HO-2 d) HO-4

a

All of the following are true about group disability Income insurance EXCEPT a) The longer the waiting period, the lower the premium. b) Coverage applies both on and off the job. c) Benefits are usually short term. d) The waiting period starts at the onset of the injury or sickness.

b

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of a) Misrepresentation. b) Rebating. c) Twisting. d) Defamation.

c

An agent is evaluating the needs of a client who is considering Businessowners Property Coverage. The client's business is dependent on the use of an air conditioning unit. Which of the following optional coverages should the agent recommend? a) Extra expense b) Preservation of property c) Mechanical breakdown d) Protective safeguards

c

An insurance contract must contain all of the following to be considered legally binding except a) consideration b) competent parties c) beneficiary's consent d) offer and acceptance

c

L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? a) $1,000 (deductible + 20% of the entire bill) b) $2,500 (the entire bill) c) $900 (deductible + 20% of the bill after the deductible [20% of $2,000]) d) $500 (amount of deductible)

c

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a) An offer of employment. b) Stocks, securities, or bonds. c) An offer to share in commissions generated by the sale. d) Dividends from a mutual insurer.

d

An insured is covered under a Medicare policy that provides a list of network healthcare providers that the insured must use to receive coverage. In exchange for this limitation, the insured is offered a lower premium. Which type of Medicare policy does the insured own? a) Medicare Part A b) Medicare Supplement c) Medicare Advantage d) Medicare SELECT

d

ho-8

homeowners policy to cover an older home

which of the following is true regarding the master policy

issued to the sponsor of the group

Which of the following best describes the MIB? a) It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. b) It is a government agency that collects medical information on the insured from the insurance companies. c) It is a member organization that protects insured against insolvent insurers. d) It is a rating organization for health insurance.

a

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? a) Making comparisons between different policies b) Stating that the insurance policy is a share of stock c) Exaggerating the benefits provided in the policy d) Stating that the competitors will arbitrarily increase their premiums each year

a

Which of the following riders would NOT increase the premium for a policyowner? a) Impairment rider b) Payor benefit rider c) Waiver of premium rider d) Multiple indemnity rider

a

Who makes up the Medical Information Bureau? a) Insurers b) Hospitals c) Former insured d) Physicians and paramedics

a

Who might receive dividends from a mutual insurer? a) Policyholders b) Subscribers c) Stockholders d) Agents

a

A guaranteed renewable disability insurance policy a) Cannot be cancelled by the insured before age 65. b) Is renewable at the insured's option to a specified age. c) Is renewable at the option of the insurer to a specified age of the insured. d) Is guaranteed to have a level premium for the life of the policy.

b

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid? a) The insured will have to select a plan from which to collect benefits. b) The benefits will be coordinated. c) Neither plan would pay. d) Each plan will pay in equal shares.

b

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) Representation b) Warranty c) Concealment d) Indemnity

b

While a claim is pending, an insurance company may require a) An independent examination only once every 45 days. b) An independent examination as often as reasonably required. c) The insured to be examined only within the first 30 days. d) The insured to be examined only once annually.

b

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? a) 7 days b) 10 days c) 31 days d) 60 days

b, The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point? a) Approved the application b) Issued the policy c) Neither approved the application nor issued the policy d) Both approved the application and issued the policy

c

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss? a) physical exam and autopsy b) legal actions c) time of payments of claims d) incontestability

c

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes a) Twisting. b) Coercion. c) Misrepresentation. d) Defamation.

c

Insured Z's health insurance policy year begins in January. His policy contains a carry-over provision. In November, he has a small claim which is less than his deductible. Which of the following is true? a) The insured is now eligible for an integrated deductible until the new policy year. b) The insured must satisfy this year's deductible, but next year's deductible will begin when or if he makes a claim in the following calendar year. c) The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible. d) The deductible will be waived.

c

The provision that provides for the sharing of expenses between the insured and the insurance company is a) Deductible. b) Divided cost. c) Coinsurance. d) Stop-loss.

c

What kind of deductible is applied between basic coverage and major medical coverage? a) Middle deductible b) Interval deductible c) Corridor deductible d) Bridging deductible

c

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization? a) Provide the subscriber a choice of hospitals b) Provide medical services at a reduced cost c) Provide medical services only from physicians in the network d) Provide the subscriber a choice of physicians

c

Representations are written or oral statements made by the applicant that are

considered true to the best of the applicant's knowledge

Which of the following applies to partial disability benefits? a) An insured is entitled to a principal sum benefit for the partial loss of a limb. b) Payment is based on termination of employment. c) Benefits are reduced once an insured is no longer under a doctor's care. d) Payment is limited to a certain period of time.

d

Ho-2

(broad form): covers the dwelling, other structures, and personal property on a named perils basis

On March 1st, a temporary license was granted to an applicant for a permanent producer license. On March 31st, the applicant received the permanent license. When will the temporary license terminate? a) March 31 b) April 15 c) May 15 d) August 31

a

Which of the following types of life insurance provides permanent protection? a) Annuities b) Decreasing term c) Whole life d) Term life

c

Coinsurance vs Copayment

Coinsurance: Percentage Copayment: set dollar amount

ho-4

Covers tenants from loss of personal property

Long-term care coverage may be available as any of the following options except?

Endorsement to a health policy

A policy with a 31-day grace period implies a) The policy will not lapse for 31 days if the premium is not paid when due. b) The policyholder may return the policy for a full refund within 31 days. c) The policy is incontestable after 31 days of delivery. d) The policy benefits must be paid within 31 days after a claim is submitted.

a

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 indicates that his policy is written with a 30-day a) Elimination period. b) Blackout period. c) Probationary period. d) Waiver of benefits period

a

An insurer can use MBI for all of the following EXCEPT a) Justifying denial of a policy. b) Logging codes after underwriting is complete. c) Investigating an applicant's medical history. d) Examining an applicant's moral history.

a

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 5 b) 3 c) 10 d) 7

a

If a health care plan has characteristics of an HMO and PPO, what type of plan is it? a) POS (point of service) b) HIPAA c) MET d) FSA

a

Incontestability, consideration and payment of premiums are examples of policy a) Provisions. b) Considerations. c) Riders. d) Nonforfeiture options.

a

What document describes an insured's medial history, including diagnoses and treatments? A) attending physician statement b) physician review, c) individual medical summary d) comprehensive medial history

a

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

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

b

Which of the following provides coverage on a first-dollar basis? a) Limited major medical b) Basic expense c) Accident expense d) Supplementary major medical

b

Which of the following statements is most correct concerning the changing of an irrevocable beneficiary? a) They may be changed only on the anniversary date of the policy. b) They can be changed only with the written consent of that beneficiary. c) They may be changed at any time. d) They can never be changed.

b

If an insurer become insolvent, which of the following would pay benefits to policyholders? a) state b) government c) guaranty association d) NAIC

c

Strict liability refers to damage caused by a) An individual under the age of 18. b) An unknown third party. c) A defective product. d) An employee of a business

c

Which of the following commercial property coverage forms is used to insure businesses that cannot afford to be closed for repairs? a) Business personal property b) Building and personal property c) Extra expense d) Business income

c

Which of the following determines whether the disability insurance benefits are taxed a) contract provisions b) if the total of benefits paid meets the minimum stat taxation c) whether the premiums were tax deductible d) state statutes

c

Which type of insurance is based on mutual agreements among subscribers? a) Limited liability b) Reinsurance c) Reciprocal insurance d) Mutual insurance

c

nsurance is the transfer of a) Hazard. b) Peril. c) Risk. d) Loss.

c

A corporation that contracts for health services for subscribers in exchange for the periodic payment by or on behalf of the subscribers, and that does not bill the subscriber directly, but bills the service plan, is classified as a a) Health Maintenance Organization. b) Preferred provider corporation. c) Small employer health plan. d) Nonprofit health service plan corporation.

d

An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary? a) Primary b) Contingent c) Irrevocable d) Revocable

d

How do employer contributions to a health savings account affect the insured's taxes? a) the employer contributions are taxed at the same rate as the social security tax rate b) the employer contribution are taxed to the individual insured as earned income c) the employer contribution are deducted from the individual insured's tax calculations d) the employer contributions are not included in the individual insured's taxable income

d

Paul is a producer in Michigan and wants to become a producer in Minnesota. The Department will waive certain examination requirements, provided that Michigan would waive these same requirements if a Minnesota producer sought licensure in Michigan. What term is used to describe this phenomenon? a) Equality b) Fair exchange c) Equanimity d) Reciprocity

d

The Commissioner must examine the affairs and conditions of every insurer licensed in the State not less frequently than a) Annually. b) Every 2 years. c) Every 3 years. d) Every 5 years.

d

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to a) Creditors. b) Beneficiary of the death benefit. c) The spouse of the insured. d) The insured.

d

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

What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered? a) Contestable period b) Elimination period c) Grace period d) Probationary period

d

nsurable interest can be best described by which of the following? a) The insured must be genuinely interested in the life of the applicant. b) All beneficiaries need to have notification of their status. c) It is not necessary for the insured to be aware of the insurable interest or give permission for the insurance that is to be written d) The applicant must experience a financial loss due to an accident or sickness that befalls the insured.

d

Which of the following insurance providers must be nonprofit and sell insurance only to its members?

Fraternal

According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT a) Unearned premiums are retained by the insurance company. b) The insurer must provide the insured a written notice of the cancellation. c) Claims incurred before cancellation must be honored. d) An insurance company may cancel the policy at any time.

a

If an insurer meets all the state's requirements, their Certificate of Authority should arrive within how many days of applying? a) 60 b) 90 c) 20 d) 30

a

In insurance, an offer is usually made when a) An applicant submits an application to the insurer. b) The insurer approves the application and receives the initial premium. c) The agent hands the policy to the policyholder. d) An agent explains a policy to a potential applicant.

a

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

a

Which of the following statements regarding the Change of Beneficiaries Provision is false? a) The policyowner has the right to change beneficiaries in any case. b) A policyowner can change beneficiaries without the consent of the former revocable beneficiary. c) The policyowner cannot change beneficiaries if he/she has chosen to have an irrevocable beneficiary, unless the policyowner has the permission of the irrevocable beneficiary. d) All policies that allow a death benefit must at least provide the option of a change of beneficiary provision.

a

All of the following are correct about the required provisions of a health insurance policy EXCEPT a) The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract. b) A reinstated policy provides immediate coverage for an illness. c) Proof-of-loss forms must be sent to the insured within 15 days of notice of claim. d) A grace period of 31 days is found in an annual pay policy.

b

All of the following statements concerning workers compensation are correct EXCEPT a) Benefits include medical, disability income, and rehabilitation coverage. b) A worker receives benefits only if the work related injury was not his/her fault. c) Workers compensation laws are established by each state. d) All states have workers compensation.

b

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the a) Eligibility Clause. b) Consideration Clause. c) Insuring Clause. d) Pre-existing Conditions Clause.

b

An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would a) Pay half of her claim because the insured had an outstanding premium. b) Pay the claim. c) Hold the claim as pending until the end of the grace period. d) Deny the claim.

b

How long must insurers keep records related to advertisement of insurance policies? a) 1 year b) 3 years c) 5 years d) Permanently

b

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of a) Rebating. b) Misrepresentation. c) Concealment. d) Unfair claim practice

b

Once an individual is licensed as an insurance producer for life or accident and health insurance, how many hours of training must he or she initially complete to sell long-term care insurance? a) 6 b) 8 c) 12 d) 4

b

Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? a) 90/10 b) 50/50 c) 75/25 d) 80/20

b

The insuring clause of a disability policy usually states all of the following EXCEPT a) The types of losses covered. b) The method of premium payment. c) The identities of the insurance company and the insured. d) That insurance against loss is provided.

b

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the a) Probationary period. b) Insuring clause. c) Incontestability clause. d) Consideration clause.

b

What is the major difference between a stock company and a mutual company? a) Types of whole life policies b) Ownership c) Amount of death benefit d) Number of producers

b

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization? a) Provide medical services at a reduced cost b) Provide medical services only from physicians in the network c) Provide the subscriber a choice of physicians d) Provide the subscriber a choice of hospitals

b

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? a) Reciprocal association b) Fraternal benefit society c) Mutual company d) Stock company

b

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? a) Fraternal b) Stock c) Mutual d) Reciprocal

b

Which of the following riders would NOT increase the premium for a policyowner? a) Waiver of premium rider b) Multiple indemnity rider c) Impairment rider d) Payor benefit rider

c

Which provision states that the insurance company must pay Medical Expense claims immediately? a) Legal Actions b) Relation of Earnings to Insurance c) Time of Payment of Claims d) Payment of Claims

c

Who determines the eligibility and contribution limits in a HRA? a) The insurer determines eligibility and the employer determines contribution limits b) The insurer determines both c) The employer determines both d) The employer determines eligibility and the insurer determines contribution limits

c

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as a) Relative-value schedule. b) Benefit schedule. c) Gatekeepers. d) Usual, customary and reasonable.

d

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do? a) Exclude pre-existing conditions from coverage under the supplement policies b) Look at the applicant's medical history to decide what premium to charge c) Send the applicant to a doctor for a physical. Nothing can happen until they get the results. d) Offer the supplement policy on a guaranteed issue basis

d

An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation? a) They are considered after-tax contributions. b) They are not deductible. c) They are taxed as income. d) They are tax deductible.

d

If a producer's license lapses, how much time does the producer have to apply for reinstatement without having to take an exam? a) 30 days b) 90 days c) 6 months d) 12 months

d

If more than one policy is in force and covering the same risk at the time of loss, which provision defines how each policy will respond? a) Assignment b) Proof of Loss c) Pro Rata d) Other Insurance

d

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost a) Must be covered by the insurer. b) Counts toward deductible. c) Counts toward coinsurance. d) Is not covered.

d

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? a) Unidirectional b) Aleatory c) Conditional d) Unilateral

d

In personal auto policies, which of the following types of coverage gives a total amount per claim to be used wherever needed, instead of setting maximums for bodily injury and property damage? a) Maximum combined payment b) Blanket total c) Comprehensive maximum d) Combined single limit

d

In replacement situation, all the following must be considered except a) benefits b) limitation c) exclusions d) assets

d

In which Medicare supplemental policies are the core benefits found? a) Plans A and B only b) Plan A only c) Plans A-D only d) All plans

d

Once an individual has successfully passed a licensing exam, for how many year(s) are the results valid? a) 1 b) 2 c) 5 d) 3

d

What mechanism allows individuals to spread their risk of loss to a larger group? a) Law of large numbers b) Exposure c) Indemnity d) Insurance

d

What type of property insurance is available to businesses? a) Personal lines b) Group insurance c) Blanket insurance d) Commercial lines

d

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy? a) Only if the insured is age 65 or older b) All LTC expenses are tax deductible. c) Only if the insured does not itemize the expenses d) When the expenses exceed a certain percentage of the insured's adjusted gross income

d

Which of the following is INCORRECT concerning Medicaid? a) It provides medical assistance to low-income people who cannot otherwise provide for themselves. b) It pays for hospital care, outpatient care, and laboratory and X-ray services. c) The federal government provides about 56 cents for every Medicaid dollar spent. d) It is solely a federally administered program.

d

Which of the following is the closest term to an authorized insurer? a) Certified b) Licensed c) Legal d) Admitted

d

Which of the following provisions specifies the dollar amount that the insured must pay before the insurer will start to pay policy benefits? a) Consideration b) Claim forms c) Payment of claims d) Deductible

d

Who makes up the Medical Information Bureau? a) Hospitals b) Former insured c) Physicians and paramedics d) Insurers

d