Simulated Exam - Health Insurance
A producer who fails to segregate premium monies from his own personal funds is guilty of a) Theft. b) Commingling. c) Larceny. d) Embezzlement.
b) Commingling
An intermediary holding a Wisconsin insurance license in any major line of insurance must complete how many credit hours of continuing education every 2 years? a) 12 b) 20 c) 22 d) 24
d) 24
A surplus lines agent or broker may be required to supply a bond of no greater than what amount? a) $100,000 b) $200,000 c) $300,000 d) $500,.000
a) $100,000
What fee is the insured required to pay to the IRO in order to have an independent review conducted? a) $25, conditionally refundable b) $50, nonrefundable c) $50, conditionally refundable d) $25, nonrefundable
a) $25, conditionally refundable The insured is responsible for paying a $25 fee to the IRO that is refundable should the dispute be resolved in the insured's favor.
A policyholder may return (for a full premium refund) any individual disability policy within how many days of receiving it? a) 10 b) 15 c) 30 d) 90
a) 10 (A policyholder may return any individual disability policy within 10 days after receiving it. This10-day period is known as the free look period. If the policyholder returns the policy within the 10-day period, the insurance contract is invalid and all payments made under the contract must be refunded.)
In franchise insurance, premiums are usually a) Lower than individual policies, but higher than group policies. b) Lower than individual policies or group policies. c) Higher than individual policies or than group policies. d) Higher than individual policies, but lower than group policies.
a) Lower than individual policies, but higher than group policies. Premiums charged are generally less than for an individual policy, but more than group coverage.
The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over what period of time? a) 1 year b) 18 months c) 2 years d) 6 months
c) 2 years (The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last 24 months.)
Which of the following best describes the aleatory nature of an insurance contract? a) Ambiguities are interpreted in favor of the insured b) Policies are submitted to the insurer on a take-it-or-leave-it basis c) Exchange of unequal values d) Only one of the parties being legally bound by the contract
c) Exchange of unequal values
An intermediary's license remains in effect for how long? a) 1 year b) 2 years c) 3 years d) Indefinitely
d) Indefinitely An intermediary's license remains in effect until it is revoked, suspended, or limited by the commissioner or when it is voluntarily surrendered by the agent.
What is the elimination period for Social Security disability benefits? a) 5 months b) 6 months c) 12 months d) 3 months
a) 5 months The elimination period for Social Security disability benefits is 5 months.
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days b) 5 days c) 10 days d) 14 days
a) 3 days
In group insurance, what is the policy called? a) Certificate of insurance b) Master policy c) Entire contract d) Certificate of authority
b) Master policy (In group insurance the policy is called the master policy and is issued to the policyowner, which could be the employer, an association, a union, or a trust.)
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 5 days b) 7 days c) 10 days d) 3 days
a) 5 days Consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.
For how many days of skilled nursing facility care will Medicare pay benefits? a) 100 b) 30 c) 60 d) 90
a) 100 Treatment in a skilled nursing facility is covered in full for the first 20 days. From the 21st to the 100th day, the patient must pay the daily copayment. There are no Medicare benefits provided for treatment in a skilled nursing facility beyond 100 days.
In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective? a) 100% b) 75% c) 50% d) 25%
a) 100% (One hundred percent of eligible employees must participate in a non-contributory health insurance plan for the plan to become effective.)
An insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified? a) 15 b) 20 c) 30 d) 10
a) 15 When the appointment of an individual agent is terminated, the insurer must notify the intermediary in writing, prior to or within 15 days of filing the termination notice.
Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days? a) 20 b) 100 c) 80 d) 3
a) 20 Following hospitalization for at least three days, if medically necessary, Medicare pays for all covered services during the first 20 days in a skilled nursing facility. Days 21 through 100 require a daily copayment.
A policy may be issued for a term longer than one year or for an indefinite term as long as there is a clause in the policy providing for cancellation by giving how much notice prior to the anniversary date? a) 60 days b) 90 days c) 100 days d) 30 days
a) 60 days A policy may be issued for a term longer than one year or for an indefinite term as long as there is a clause in the policy providing for cancellation by giving a 60-day notice prior to the anniversary date.
Which of the following describes self-insurance? a) A business engages in the same types of activities as a commercial insurer and deals with its own risks. b) A plan to which the law of large numbers does not apply. c) A company purchases a participating policy. d) An individual funds his or her own insurance policy.
a) A business engages in the same types of activities as a commercial insurer and deals with its own risks. Under some circumstances, it is possible for a business or other organization to engage in the same types of activities as a commercial insurer dealing with its own risks. When these activities involve the operation of the law of large numbers and predictions regarding future losses, they are commonly referred to as self-insurance.
What is the amount a physician or supplier bills for a particular service or supply? a) Actual charge b) Assignment c) Coinsurance d) Approved amount
a) Actual charge Actual Charge is the amount a physician or supplier bills for a particular service or supply.
All of the following are true of the Key Person disability income policy EXCEPT a) Benefits are considered taxable income to the business. b) Premiums are not deductible to the business. c) It is typically written to protect the company in the event a key employee becomes disabled and is unable to work. d) The income may be used to find a replacement for the key employee.
a) Benefits are considered taxable income to the business. Key person disability benefits are not considered taxable income to the business.
A health insurance plan that covers all accidents and sicknesses that are not specifically excluded from the policy is referred to as a a) Comprehensive plan. b) General plan. c) Service plan. d) Broad plan.
a) Comprehensive plan (Comprehensive health plans cover all accidents and sicknesses, with the exception of those conditions specifically stated in policy exclusions. Limited health insurance covers only those conditions that are stated in the policy.)
All of the following are advantages of an HMO or PPO for a Medicare recipient EXCEPT a) Elective cosmetic procedures are covered. b) Prescriptions might be covered, unlike Medicare. c) Health care costs can be budgeted. d) There are no claims forms required.
a) Elective cosmetic procedures are covered. The advantages of an HMO or PPO for a Medicare recipient may be that there are no claims forms required, almost any medical problem is covered for a set fee so health care costs can be budgeted, and the HMO or PPO may pay for services not usually covered by Medicare or Medicare supplement policies, such as prescriptions, eye exams, hearing aids, or dental care.
In which of the following locations would skilled care most likely be provided? a) In an institutional setting b) At the patient's home c) In an outpatient setting d) At a physician's office
a) In an institutional setting Skilled nursing care is performed under the direction of a physician, usually in an institutional setting.
Issue age policy premiums increase in response to which of the following factors? a) Increased benefits b) Increased deductible c) Inflation d) Age
a) Increased benefits The premiums of issue age policies can only increase in response to an increase in benefits.
Which document is used to assess risk associated with an applicant's lifestyle and character? a) Investigative Consumer Report b) Character Assessment c) Non-medical Risk Assessment d) Applicant Lifestyle Assessment
a) Investigative Consumer Report (An Investigative Consumer Report is considered to be a part of an insurance application. This report is used in the underwriting process in order to assess non-medical risk factors related to moral standing and avocations. Friends and colleagues are interviewed in order to evaluate the applicant's character, reputation, and habits. The applicant must be informed in writing if the insurer decides to conduct the investigation.)
What is franchise insurance? a) It is health coverage for small groups whose numbers are too small to qualify for true group insurance b) It provides insurance for franchises, such as a restaurant or hotel chain c) It is group insurance d) It is blanket insurance
a) It is health coverage for small groups whose numbers are too small to qualify for true group insurance Franchise insurance provides health coverage for small groups whose numbers are too small to qualify for true group insurance. Franchise insurance is not group insurance, since individual policies are issued for each participant. Individual underwriting is done for each person, submitting his or her own application and medical history. Premiums charged are generally less than for an individual policy, but more than group coverage.
Which of the following is INCORRECT concerning Medicaid? a) It is solely a federally administered program. b) It provides medical assistance to low-income people who cannot otherwise provide for themselves. c) It pays for hospital care, outpatient care, and laboratory and X-ray services. d) The federal government provides about 56 cents for every Medicaid dollar spent.
a) It is solely a federally administered program. (Medicaid is an assistance program for persons with insufficient income and/or resources to pay for health care. States administer the program that is financed by federal and state funds.)
Which of the following is not a limited line of insurance? a) Life insurance b) Credit insurance c) Title insurance d) Legal expense insurance
a) Life insurance Life insurance is not a limited line of insurance: it is a major line
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? a) Material misrepresentation b) Waiver c) Utmost Good Faith d) Estoppel
a) Material misrepresentation A material misrepresentation will affect whether or not a policy is issued. If the insured had been truthful, it is very likely that the policy would not be issued.
Which of the following statements is INCORRECT concerning Medicare Part B coverage? a) Part B coverage is provided free of charge when an individual turns age 65. b) Participants under Part B are responsible for an annual deductible. c) Part B will pay 80% of covered expenses, subject to Medicare's standards for reasonable charges. d) It is a voluntary program designed to provide supplementary medical insurance to cover physician services, medical services and supplies not covered under Part A.
a) Part B coverage is provided free of charge when an individual turns age 65.
When a group disability insurance policy is paid entirely by the employer, benefits paid to disabled employees are: a) Taxable income to the employee. b) Deductible income to the employee. c) Deductible business expense to the employer. d) Taxable income to the employer.
a) Taxable income to the employee. (Disability benefit payments that are attributed to employee contributions are not taxable, but benefits payments that are attributed to employer contributions are taxable.)
Which of the following definitions would make it easier to qualify for total disability benefits? a) The more liberal "own occupation" b) The more strict "any occupation" c) The more liberal "any occupation" d) The more strict "own occupation"
a) The more liberal "own occupation" Total disability is defined differently under some disability income policies. The more liberal "own occupation" definition of disability makes it easier to qualify for benefits.
An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer? a) $0 b) $500 c) $1,000 d) $2,000
b) $500 (Once the primary insurer has paid the full available benefit, the secondary insurer will cover what the first company will not pay, such as deductibles and coinsurance. The insured will, then, be reimbursed for out-of-pocket costs.)
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.
Long-term care insurance policies must cover which of the following? a) Injuries caused by an act of war b) Alzheimer's disease c) All mental disorders d) Treatment of alcoholism
b) Alzheimer's disease ( Most long-term care policies exclude coverage for drug and alcohol dependency, acts of war, self-inflicted injuries and non organic mental conditions. Organic cognitive disorders such as Alzheimer's disease, senile dementia and Parkinson's disease are covered.)
Which of the following statements is correct concerning taxation of long-term care insurance? a) Premiums are not deductible in any case. b) Excessive benefits may be taxable. c) Benefits may be taxable as ordinary income. d) Premiums may be taxable as income.
b) Excessive benefits may be taxable. (Regardless of whether or not the insured can deduct individual long-term care premiums, the benefits are received income tax free by the individual. Excessive benefits as determined by statute are taxable as ordinary income.)
All of the following violations may result in an agent's imprisonment EXCEPT: a) Engaging in the business of insurance after being convicted of breach of trust. b) Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction c) Embezzling funds from the insurer. d) Knowingly obtaining information about a consumer under false pretenses.
b) Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction
Which of the following statements is correct? a) All HMOs and PPOs charge premiums beyond what is paid by Medicare. b) HMOs may pay for services not covered by Medicare. c) HMOs do not pay for services covered by Medicare. d) Medicare Advantage is Medicare provided by an approved Health Maintenance Organization only.
b) HMOs may pay for services not covered by Medicare. (The advantages of an HMO or PPO for a Medicare recipient may be that there are no claims forms required, almost any medical problem is covered for a set fee so health care costs can be budgeted, and the HMO or PPO may pay for services not usually covered by Medicare or Medicare supplement policies, such as prescriptions, eye exams, hearing aids, or dental care.)
Medicare Part A is a) Medical insurance. b) Hospital Insurance. c) Long-term care insurance. d) Prescription drug insurance
b) Hospital insurance Medicare Part A is Hospital Insurance. Medicare Part B is Medical Insurance. Medicare Part A includes Inpatient Hospital Insurance, Skilled Nursing Facility Insurance, Home Health Care and Hospice Insurance.
Which benefits would a disability plan most likely pay? a) Medical expenses associated with a disability b) Income lost by the insured's inability to work c) Rehabilitation costs d) Copayments
b) Income lost by the insured's inability to work (Disability benefits are paid to those who are unable to work as they normally would, due to an accident or illness. Benefits are designed to help the insured recover income lost as a result of the disability. The amount of benefits that an insured receives is determined by the insured's earned income and is usually limited to a certain percentage of that amount.)
What is the benefit of experience rating? a) It allows employers with high claims experience to obtain insurance. b) It allows employers with low claims experience to get lower premiums. c) It helps employers with high claims experience to get group coverage. d) It helps employees with low claims experience to become exempt from group premiums.
b) It allows employers with low claims experience to get lower premiums. (Group health insurance is usually subject to experience rating where the premiums are determined by the experience of this particular group as a whole. Experience rating helps employers with low claims experience because they get lower premiums.)
Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs? a) Risk classification b) Metal level classification c) Guaranteed and nonguaranteed d) Grandfathered and nongrandfathered
b) Metal level classification Plans other than self-insured plans will be classified into four levels determined by how much of one's expected health care costs are covered. The four plans are bronze, silver, gold, and platinum. This is called metal level classification.
Premium payments for personally-owned disability income policies are: a) Tax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions. b) Not tax deductible. c) Eligible for tax credits. d) Tax deductible.
b) Not tax deductible. (Premiums for personally-owned individual disability income policies are not deductible.)
The part of Medicare that helps pay for inpatient hospital care, inpatient care in a skilled nursing facility, home health care and hospice care, is known as a) Part D. b) Part A. c) Part B. d) Part C.
b) Part A. (Medicare Part A pays for these services, subject to copayments and limitations on the number of days of care.)
Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT a) Benefits may change. b) Premiums always stay the same. c) Due to age or health, the policy may change dramatically. d) Pre-existing conditions that were previously covered may not be covered under the replacing policy.
b) Premiums always stay the same (Underwriting is important when replacement is involved. It is an underwriter's duty to evaluate risk and decide whether or not a person is eligible for coverage. When replacement is involved, the insured may be under the assumption that a replacing policy is in his/her best interests, but after being evaluated by an underwriter, where premium and risk are exchanged, an insured may not be paying the same premium or receiving the same benefits.)
Which of the following describes taxation of individual disability income insurance premiums and benefits? a) Premiums are tax deductible, and benefits are taxable. b) Premiums are not tax deductible, and benefits are not taxable. c) Premiums are not tax deductible, but benefits are taxable. d) Premiums are tax deductible, but benefits are not taxable.
b) Premiums are not tax deductible, and benefits are not taxable. In individual disability income, benefits are not taxable, and premiums are not tax deductible
All of the following are true regarding rebates EXCEPT: a) Dividends are not considered to be rebates b) Rebates are allowed if it's in the best interest of the client. c) Rebates are only allowed if specifically stated in the policy d) Rebating can be anything of economic value, given as an inducement to buy
b) Rebates are allowed if it's in the best interest of the client. (A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium)
When an employee is still employed upon reaching age 65 and eligible for Medicare, which of the following is the employee's option? a) Wait until the next birthday to enroll b) Remain on the group health insurance plan and defer eligibility for Medicare until retirement c) Enroll in Medicare, while the company must provide additional retirement benefits d) Enroll in Medicare when eligible; otherwise, Medicare benefits will be forfeited.
b) Remain on the group health insurance plan and defer eligibility for Medicare until retirement (If an employee is still employed upon reaching age 65, federal laws require keeping the employee on the group health insurance rolls and deferring their eligibility for Medicare until retirement. The employee has the right to reject the company's plan and elect Medicare but the company can offer no incentives for switching to Medicare.)
How do employer contributions to a Health Savings Account affect the insured's taxes? a) The employer contributions are deducted from the individual insured's tax calculations. b) The employer contributions are not included in the individual insured's taxable income. c) The employer contributions are taxed at the same rate as the Social Security tax rate. d) The employer contributions are taxed to the individual insured as earned income.
b) 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.
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.)
Which of the following is NOT a characteristic of an insurable risk? a) The loss exposure must be large b) The loss must be catastrophic. c) The loss must be due to chance d) The loss must be measurable
b) The loss must be catastrophic (In order to be characterized as pure risk, the loss must be due to chance, definite, measurable, and predictable, but not catastrophic.
In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this? a) The right to raise premiums as a result of court rulings b) The right to determine the wording of a policy c) The right to refute the rulings d) The right to revoke the policy
b) The right to determine the wording of a policy In contracts in which only the insurer has the right to determine the wording of a policy, the policyholder will receive benefits denied due to a contract ambiguity.
What is the purpose of the ADEA? a) To allow leave to employees for family needs b) To prohibit age discrimination in employment c) To ensure employees receive pension and other benefits d) To promote employment of minorities
b) To prohibit age discrimination in employment (The Age Discrimination in Employment Act of 1967 serves to promote employment of older persons based on their ability rather than age, to prohibit arbitrary age discrimination in employment; to help employers and workers, and to find ways of meeting problems arising from the impact of age on employment.)
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) Conditional b) Unilateral c) Unidirectional d) Aleatory
b) Unilateral In a unilateral contract, the insured is not legally bound to do anything. The insurer, however, must pay losses covered by the policy.
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce a) Without receiving written consent from a Federal Judge. b) Without receiving written consent from an insurance regulatory authority. c) Under any circumstances. d) Unless they have served an appropriate prison sentence.
b) Without receiving written consent from an insurance regulatory authority. (Title 18, US Code, sections 1033-1034 makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce without receiving written consent from an insurance regulatory authority.)
If a person does not comply with an order issued within 2 weeks after the Commissioner has given notice, for each day that the violation continues, the Commissioner may issue a fine of up to a) $2,000. b) $3,000. c) $5,000. d) $1,500.
c) $5,000 The Commissioner may obtain a temporary or permanent injunction or restraining order for any violations of insurance laws. If a person does not comply with an order issued within 2 weeks after the Commissioner has given notice, the Commissioner may issue a forfeiture of up to $5,000 for each day that the violation continues
An insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified? a) 30 b) 10 c) 15 d) 20
c) 15 When the appointment of an individual agent is terminated, the insurer must notify the intermediary in writing, prior to or within 15 days of filing the termination notice.
An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? a) She would not receive any benefits. b) 3 years c) 2 years d) 1 month
c) 2 years (Under an Own Occupation plan, if the insured cannot perform his/her current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period. After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.)
What is the duration of the free-look period for Medicare supplement policies? a) 10 days b) 15 days c) 30 days d) 60 days
c) 30 days All Medicare Supplement policies must contain a 30-day free look period where the insured may return the policy for a complete refund for any reason.
Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months? a) 12 months b) 24 months c) 30 months d) 36 months
c) 30 months (The Omnibus Budget Reconciliation Act of 1990 as amended by the Balanced Budget Act of 1997 requires the employer health plan to provide primary coverage for 30 months for individuals with end-stage renal (kidney) disease before Medicare becomes primary.)
The Commissioner issues an order without holding a hearing. The person aggrieved by this order demands a hearing shortly after receiving the order. The hearing must be held within a maximum of how many days? a) 10 b) 30 c) 60 d) 90
c) 60 Before the Commissioner can issue an order, a hearing must be held. If an order is issued without a hearing, any person aggrieved by the order may demand a hearing, in writing, within 30 days after the date on which the order was mailed. If a hearing is not demanded within the specified time frame, the person waived his/her opportunity for a hearing. The Commissioner must conduct a hearing within 10 to 60 days after service of the demand.
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? a) Conditional b) Personal c) Adhesion d) Unilateral
c) Adhesion (A contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written)
Which of the following is the closest term to an authorized insurer? a) Licensed b) Legal c) Admitted d) Certified
c) Admitted
Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? a) An individual who doesn't qualify for Medicare may be eligible. b) The gap of coverage for eligibility is a period of 63 or less days. c) An individual who was previously covered by group health insurance for 6 months is eligible. d) An individual who has used up COBRA continuation coverage is eligible.
c) An individual who was previously covered by group health insurance for 6 months is eligible. All of these eligibility requirements are correct, except an individual who was previously covered for at least 6 months. HIPAA requires that the individual have a previous continuous creditable health coverage for at least 18 months.
All of the following qualify for Medicare Part A EXCEPT a) Anyone who is at the end stage of renal disease. b) Anyone who is over 65, not covered by Social Security, and is willing to pay premium. c) Anyone who is willing to pay a premium. d) Anyone that qualifies through Social Security.
c) Anyone who is willing to pay a premium. For Medicare Part A, a person must be age 65 or otherwise qualify.
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? a) Implied b) Assumed c) Apparent d) Express
c) Apparent (Apparent authority (aka perceived authority) is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.)
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 Wisconsin, producers are permitted to share or split commissions, providing that a) The insurance department knows of the arrangement. b) There is a written agreement between the producers. c) Both are properly licensed for the line of insurance. d) The insured knows and agrees to the arrangement.
c) Both are properly licensed for the line of insurance For producers to receive commissions from the sale of insurance, they must be properly licensed for that line of insurance.
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a) Contract of adhesion b) Acceptance c) Consideration d) Legal purpose
c) Consideration Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.
All of the following may be excluded from coverage in a Major Medical Expense policy, EXCEPT: a) Cosmetic surgery. b) Coverage provided under workers compensation. c) Emergency surgery. d) Custodial care.
c) Emergency surgery. (These are all standard exclusions in a Major Medical Expense policy, except for emergency surgery.)
The type of dental plan which is incorporated into a major medical expense plan is a/an: a) Stand-alone dental plan. b) Blanket dental plan. c) Integrated dental plan. d) Supplemental dental plan.
c) Integrated dental plan.
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) Nonprofit service organization b) Stock c) Mutual d) Reciprocal
c) Mutual Funds not paid out after paying claims and other operating costs are returned to the policyowners in the form of a dividend. If all funds are paid out, no dividends are paid.
Which of the following is NOT specifically prohibited by state law as an unfair trade practice? a) Using incomplete comparisons of policies to induce uncalled-for action by the insured b) Failing to disclose that the solicitations of an insurance contract are the result of a marketing method c) Reducing the premiums paid by employers for group insurance based on loss experience d) Using misleading representations to induce uncalled-for action by the insured
c) Reducing the premiums paid by employers for group insurance based on loss experience Insurers are permitted to lower the premiums of employers' group insurance because of loss experience. This is called experience rating. All the other practices would be considered unfair trade practices.
All of the following coverages are usually included under a dental insurance plan EXCEPT a) Routine examinations. b) Braces and appliances. c) Teeth whitening. d) Oral surgery.
c) Teeth whitening Diagnostic care and preventative care are both included in a dental insurance plan, including oral surgery, routine examinations, and braces or other appliances.
The Commissioner conducts an examination of a domestic insurer and believes that the costs of examination places an unreasonable financial burden on the insurer. Which of the following will happen? a) The federal government will absorb part of the cost, and the state government will absorb the rest of the cost. b) The costs will be reduced to the amount that the examinee can reasonably pay; the rest will be paid by the federal government c) The Commisioner's office may pay all or part of the costs d) The federal government will absorb the full cost
c) The Commissioner's office may pay all or part of the costs
Which of the following is NOT covered under Plan A in Medigap insurance? a) The 20% Part B coinsurance amounts for Medicare approved services b) The first three pints of blood each year c) The Medicare Part A deductible d) Approved hospital costs for 365 additional days after Medicare benefits end
c) The Medicare Part A deductible (Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.)
If an insurer decides to stop providing all group health insurance coverage, it must send notice of the discontinuance to all of the following EXCEPT the: a) Commissioner. b) Affected employees. c) The NAIC. d) Affected employers.
c) The NAIC (If an insurer decides to discontinue providing group health insurance in general, it must notify the Commissioner and each employer and (if applicable) plan sponsor for whom the insurer provides coverage, and to the participants and beneficiaries covered. Notice must be provided at least 180 days before the date on which the coverage will be discontinued.)
All of the following are ways in which a Major Medical policy premium is determined EXCEPT a) The coinsurance percentage. b) The stop-loss amount. c) The average age of the group. d) The amount of the deductible.
c) The average age of the group Major medical policy premiums vary depending on the amount of the deductible, the coinsurance percentage, the stop-loss amount and the maximum amount of the benefit.
What type of information is NOT included in a certificate of insurance? a) The procedures for filing a claim b) The length of coverage c) The cost the company is paying for monthly premiums d) The policy benefits and exclusions
c) The cost the company is paying for monthly premiums The individuals covered under the insurance contract are issued certificates of insurance. The certificate tells what is covered in the policy, how to file a claim, how long the coverage will last, and how to convert the policy to an individual policy.
On a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform: a) Any job that they are suited for by prior training. b) Any job that they are suited for by prior experience. c) Their regular job. d) Any job that they are suited for by prior education.
c) Their regular job. (If a disability income policy contains the own occupation definition, then the insured will be considered disabled if they cannot perform that particular job, regardless of other jobs that they may be able to do.)
A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses? a) "Own occupation" - more restrictive than other definitions b) "Any occupation" - less restrictive than other definitions c) "Any occupation" - more restrictive than other definitions d) "Own occupation" - less restrictive than other definitions
d) "Own occupation" - less restrictive than other definitions (In theory, the brain surgeon could find other work, but because her disability income policy specifies that she is covered for her own occupation, she would be wholly covered.)
To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan? a) 5 years b) 12 months c) 63 days d) 18 months
d) 18 months Under HIPAA regulations, to be eligible to convert health insurance coverage from a group plan to an individual policy, the insured must have 18 months of continuous creditable health coverage.
How long does the free look period last for a Medicare supplement policy? a) 10 days b) 15 days c) 20 days d) 30 days
d) 30 days In the case of a Medicare supplement policy, a Medicare replacement policy, or a long-term care policy, the right to return the policy and receive a full premium refund is extended to 30 days from receipt of the policy.
Policies other than weekly and monthly-pay require a grace period that last for how many days? a) 7 b) 10 c) 15 d) 31
d) 31 Every disability insurance policy with weekly premiums must contain a provision for a grace period of at least 7 days. Policies with monthly premiums must provide for a grace period of at least 10 days. All other policies require a 31-day grace period. This requirement also applies to group policies for health insurance.
What is the maximum period of coverage for most short-term care policies? a) 3 months b) 6 months c) 24 months d) 36 months
d) 36 months (Federal regulations limit the duration of short-term health insurance to an initial period of less than 12 months, and, taking into account any extensions, a maximum duration of no longer than 36 months in total.)
When must the Medicare Supplement Buyer's Guide be presented? a) When the policy is delivered b) Within 30 days of policy delivery c) When the prospective policyholder inquires about a policy or at the time of application, depending on which occurs first. d) At the time of application
d) At the time of application Issuers of accident and sickness policies which provide hospital or medical expense coverage on an expense incurred or indemnity basis to a person eligible for Medicare by reason of age, must provide to that applicant a Medicare Supplement Buyer's Guide. Except for direct response issuers, delivery of the Buyer's Guide must be made at the time of application, and the insurance company must obtain a receipt.
Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. her policy would be classified as what type of policy? a) Family History Cancer Policy b) Specified Health Policy c) Term Health Policy d) Dread Disease Policy
d) Dread Disease Policy (A Dread Disease Policy is a limited policy that is written to specifically cover cancer expense)
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) Partial benefits b) Full benefits for 2 years c) No benefits d) Full benefits
d) 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.
Which of the following expenses is NOT covered by a health insurance policy? a) Hospital b) Disability c) Dental d) Funeral
d) Funeral Health insurance policies cover losses caused by accidents and/or sickness. Funeral expenses are not expressly covered.
Medicare and Choice insurance is a special arrangement between certain HMOs and what other entity? a) NAIC b) GRAF c) CIHF d) HCFA
d) HCFA Medicare and Choice insurance is a special arrangement between the federal Health Care Financing Administration (HCFA) and certain HMOs. Under these arrangements, the federal government pays the HMO a set amount for each Medicare enrollee. The HMO agrees to provide all Medicare benefits. The HMO will also provide some additional benefits which may be at an additional cost.
An association could buy group insurance for its members if it meets all of the following requirements EXCEPT a) Has a constitution and by-laws. b) Holds annual meetings. c) Is contributory. d) Has at least 50 members.
d) Has at least 50 members. (All of the above characteristics would make an association group eligible for buying group insurance, except the group must have at least 100 members.)
Which of the following entities must approve all Medicare supplement advertisements? a) NAIC b) Federal Association of Insurers c) Consumer Protection Agency d) Insurance Commissioner or Director
d) Insurance Commissioner or Director An insurance company must provide a copy of any Medicare Supplement advertisement intended to be used in this state to the Insurance Director for review or approval.
A person who assists another in soliciting, negotiating, or placing insurance or annuities on behalf of an insurer or a person seeking insurance or annuities is called a(n): a) Mediator b) Representative c) Middleman d) Intermediary
d) Intermediary
Insurers may not terminate or limit a contract entered into or renewed with an agent based on all of the following EXCEPT: a) Claims experience b) Health status c) Industry d) None of the above. All are unfair grounds of termination.
d) None of the above. All are unfair grounds of termination. (Insurers may not terminate or limit a contract entered into or renewed with an agent based on the health status, claims experience, industry, occupation, or geographic location of the small employers or their employees placed by the agent with the insurer.)
Events in which a person has both the chance of winning or losing are classified as a) Insurable. b) Pure risk. c) Retained risk. d) Speculative risk.
d) Speculative risk Speculative risk involves the chance of gain or loss and is not insurable.
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a) Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest b) Charging a client a higher premium for the same policy as another client in the same insuring class c) Making deceptive statements about a competitor d) Telling a client that his first premium will be waived if he purchased the insurance policy today
d) Telling a client that his first premium will be waived if he purchased the insurance policy today Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.
What authority must approve an agent's sales presentation? a) The Guaranty Association b) The Consumer Protection Agency c) The Department of Insurance d) The agent's insurer
d) The agent's insurer (Insurers must require agents to submit all proposed advertising to them for approval prior to use with the public. A sales presentation by the agent could be construed as an advertisement for the company and its products.)
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) Usual, customary and reasonable. (The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.)
What types of services may NOT be provided under the long-term care's assisted living care? a) Linens and personal laundry service b) Assistance with dressing and bathing c) Reminders regarding medication d) Visits by a registered nurse
d) Visits by a registered nurse The following services may be provided: linens and personal laundry service, assistance with dressing and bathing, reminders regarding medication, assistance with eating. Assisted living offers nonmedical assistance.