State exam
M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for?
Determined by the terms of the policy
Which contract permits the remaining partners to buy-out the interest of a disabled business partner?
Disability Buy-Sell
Which of the following statements does NOT accurately describe the tact treatment of premiums and benefits of a individual accident and health insurance?
Disability income policy premiums are tax deductible
A characteristic of preferred provider organizations (PPOs) would be:
Discounted fees for the patient
A characteristic of preferred provider organizations (PPO) would be:
Discounted fees to the patient
Which of the following statements best describes the intent of a coinsurance clause in a major medical policy?
Discourages overutilization of the insurance coverage
The federal income tax treatment of employer-provided group medical expense incurable can be accurately described as:
Employee's premiums paid by the employer is tax-deductible to the employer as a business expenditure
Which type of provider is known for stressing preventative medical care?
Health Maintenance Organizations (HMO's)
A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary?
Her group health plan
S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a
High Deductible Health Plan
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?
Increase her policy's coverage amount
An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the:
insurer dates the policy
Which of the following is an example of rebating?
returning a portion of a premium as inducement to purchase insurance
Circulation of a maliciously critical statement about any insurer's financial condition to injure the insurer is called:
defamation
An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to
determine if the applicant is an acceptable risk by completing standard underwriting procedures
Which of the following does social security not provide benefits for?
dismemberment
Non-occupational Disability coverage is designed for:
employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation
Health insurance benefits not covered due to an act of war are:
excluded by the insurer in the contract provisions
With Optionally Renewable Health policies, the insurer may
review the policy annually and determine whether or not to renew it
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)
exclusion for the medical conditions
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT
free-look period has expired
Basic Medical Expense Insurance
has lower benefit limits than Major Medical insurance
Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for:
health information
Medicare Part B does NOT cover
hospital charges
With a Basic Medical Expense policy, what does the hospitalization expense cover?
hospital room and board
The coordination of benefits provision:
in group health insurance is designed to prevent overinsurance and the duplication of benefits if one person is covered under more than one group health insurance plan
When determining the monthly benefit amount for a disability income policy, the factor that limits the amount a prospective insured may purchase is:
income
Medicare Part B does NOT cover
inpatient hospital services
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
inspection report
A life insurance policy would be considered a wagering contract without
insurable interest
Who makes the legally enforceable promises in a unilateral insurance policy?
insurance company
P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?
$0
M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?
$1,600
Q is hospitalized for 3 days and receives a bill for $10,100. Q has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying on this claim?
$2,100
An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?
$3,000
A producer who violates a cease and desist order order may, after a hearing, be fined up to
$500
An individual has a major medical policy with at $5,000 deductible and an 80/20 coinsurance clause. How much will the insured have to pay if a total of $15,000 in covered medical expenses are incurred?
$7,000
Qualified Long-Term Care policies may take into consideration an applicant's pre-existing conditions for a maximum of not more than __ month(s) prior to the effective date of coverage.
6
What is the maximum social security disability benefit amount an insured can receive?
100% of the insured's Primary Insurance Amount (PIA)
An insurer must provide an insured with claim forms within __ days after receiving notice of a loss.
15
T calls to file a claim on his health insurance policy. Within how many days must the insurer provide T's proof of loss forms?
15 days
An insured must notify an insurer of a medical claim within how many days after an accident?
20
Insurers may request a hearing within ___ if their policy is rejected
20 days
An insurer that terminates a producer's appointment must inform the Commissioner within how many days?
30
How long is a typical free look period for Long Term care insurance policies?
30 days
An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision?
31
According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid?
31 days
S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations?
36
A producer must remit premiums to the insurer within ___ days after receipt.
45 days
M's insurance company denied a reinstatement application for her lapses health insurance policy. The company did not notify M of this denial. How many days from the reimbursement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?
45 days
How long must a replacing insurer maintain the records of a replacement transaction?
5 years
Which of the following is correct regarding a producers fiduciary responsibility with clients funds?
A producer may never commingle personal funds with funds paid by or to a client
Which of the following statements describes what an accidental and health policyowner may not do?
Adjust the premium payments
In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments:
After an insured has become totally disabled as defined in the policy
According to the affordable care act (ACA) a dependent child's eligibility status is determined by
Age
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
Aleatory
All of the following statements regarding group health insurance is true, except
An individual policy is given to each member
Which of the following statements BEST describes what the legal actions provision of an accident and health policy require?
An insured must wait 60 days after proof of loss has been submitted before a lawsuit can be filed
T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable?
Benefits are taxable to T
All of the following statements about major medical benefits are true, except
Benefits have no maximum limit
Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?
Business owner becoming disabled
Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deductible?
Carryover provision
Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures?
Commercial insurer
Which of the following reimburses its insureds for covered medical expenses?
Commercial insurers
An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?
Consideration clause
Which of the following best describes a hospital indemnity policy?
Coverage that pays a stated amount per day of a covered hospitalization
When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the
Entire Contract provision
After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms?
File written proof of loss
What action should a producer take if the initial premium is not submitted with the application?
Forward the application to the insurer without the initial premium
Which of the following offers an insurance applicant the right to review the contract and receive a full refund?
Free look period
A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?
Guaranteed Insurability Option rider
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate?
Guaranteed renewable
Which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and that have agreements?
HMO
Which of these actions should a producer take when submitting an insurance application to an insurer?
Inform insurer of relevant information not included on the application
What is the initial requirement for an insured to become eligible for benefits under the waiver of premium provision?
Insured must be under a physician's care
T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?
Insurer will likely treat as a pre-existing condition which may not be covered for one year
The clause identifying which losses resulting from an accident or sickness are insured by the policy is called the:
Insuring clause
The clause in an accident and health policy which defines the benefit amounts the insurer will pay is called the:
Insuring clause
A policyowner would like to change the beneficiary on a Accidental death and dismemberment insurance policy and make the change permanent. Which type of designation would fulfill this need?
Irrevocable
Which of the following statements best describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition?
Less restrictive
Which of the following is NOT a limited benefit plan?
Life insurance policies
In major medical expense policies, what is the intent of a stop loss provision?
Limits an insured's out-of-pocket medical expenses
The phrase "This policy will only pay for a semi-private room" is an example of a(n):
Literal limit
Comprehensive major medical policies usually combine:
Major Medical with Basic Hospital/Surgical coverage
Which of the following best describes how a preferred provider organization (PPO) is less restrictive than a health maintenance organization (HMO)?
More physicians to choose from
Which of the following is correct regarding a producers fiduciary responsibility with clients funds?
Never commingle funds
Which of the following characteristics is associated with a large group disability income policy?
No medical underwriting
J purchased a Disability Income Policy that ONLY J can terminate and on which the rates will never increase above those illustrated in the policy. Which of the following types of policies did J purchase?
Noncancelable
J has a Disability Income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?
Nonoccupational coverage
Which of these statements concerning an individual disability income policy is TRUE?
Normally includes an Elimination period
Which of these statements concerning an individual disability income policy is true?
Normally includes an Elimination period
The provision that defines to whom the insurer will pay benefits to is called:
Payment of Claims
Which of these is considered a mandatory provision?
Payment of Claims
Insurance contracts are considered aleatory contracts because
Performance is conditioned upon a future occurrence
Which of these do NOT constitute policy delivery?
Policy issued with a rating
On an Accidental Death and Dismemberment (AD&D) insurance policy, who is qualified to change the beneficiary designation?
Policyowner
Which of these statements accurately describes the waiver of premium provision in an accident and health policy?
Premiums are waived after the insured has been totally disabled for a specified time period
Which of the following statements about a guaranteed renewable health insurance policy is correct?
Premiums normally increase at time of renewal
T is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. When T submits a claim, his employer's plan is considered what type of carrier under the Model Group Coordination of Benefits provision?
Primary carrier
All of these are considered sources of underwriting information about an applicant EXCEPT
Rating Services
In Colorado, all of the following are considered unfair trade practices except
Replacement
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
Request of the change will be refused
Which provision allows a portion of any used medical benefits to be restored following s particular amount of benefit has been used, or after the policy has been in effect for a particular period of time?
Restoration of used benefit
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
Revocable
Which mode of payment is NOT used by health insurance policies?
Single Premium
The insuring clause
States the scope and limits of the coverage
What would the Medical Information Bureau (MIB) identify?
Testing positive for marijuana use from a previous screening
What does a Guaranteed Insurability rider provide a Disability Income policyowner?
The ability to periodically increase the amount of coverage without evidence of insurability
J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?
The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age
T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?
The insurer will rescind the policy, deny the claim, and recover all payments made
Which of the following statements best defines usual, customary, and reasonable (UCR) charges?
The maximum amount considered eligible for reimbursement by an insurance company under a health plan
The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is:
Time Limit on Certain Defenses
Which Accident and Health policy provision addresses preexisting conditions?
Time Limit on Certain Defenses
What is the elimination period of an individual disability policy?
Time period a disabled person must wait before benefits are paid
The provision in a health insurance policy that suspends premiums being paid to the insurer while the insured is disabled is called the
Waiver of Premium
Which parts of a health insurance policy are guaranteed to be true?
Warranty
A fiduciary responsibility is defined as
a relationship of special trust and confidence when a person is entrusted with another's funds
An incomplete health insurance application submitted to an insurer will result in which of these actions?
application will be returned to the writing procedure
Group/voluntary long-term care policy premiums are typically deducted from the employee's income and
are less costly as compared to individual long term care coverage
Who is not required to sign a health insurance application?
beneficiary
All of the following are considered to be typical characteristics describing the nature of an insurance contract, except
bilateral
The guarantee of insurability option provides a long-term care policyowner the ability to:
buy additional coverage at a later date
The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n):
closed panel
K applies for a health insurance policy on herself and submits the initial premium with the application. She is given a receipt by the producer stating that coverage begins immediately if the application is approved. What kind of receipt was used?
conditional
Major medical policies typically:
contain a deductible and coinsurance
Which of the following consists of an offer, acceptance, and consideration?
contract
When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans?
contributory
A policyowner's rights are limited under which beneficiary designation?
irrevocable
Nursing home benefits must be provided for at least 12 consecutive months in which of the following types of policies?
long term care
Basic hospital and surgical policy benefits are:
lower than the actual expenses incurred
Pre-hospitalization authorization is considered an example of
managed care
Which of these is NOT considered to be an element of an insurance contract?
negotiating
What type of renewability guarantees premium rates and renewability?
noncancellable
Which of the following best describes a short-term medical expense policy?
nonrenewable
The notice of claims provision requires a policyowner to:
notify an insurer of a claim within a specified time
An accident policy will most likely pay a benefit for a(n)
off-the-job accident
Insurance policies are considered aleatory contracts because
performance is conditioned upon a future occurrence
The coordination of benefits provision:
prevents an insured covered by two health plans from making a profit on a covered loss
Consumer reports requested by an underwriter during the application process of a health insurance policy can be used to determine
probability of making timely premium payments
A major medical policy typically:
provides benefits for reasonable and necessary medical expenses, subject to policy limits
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called
representations
Business Disability Buyout plan policy is designed:
to pay benefits to the Corporation or other shareholders
An assignment of benefits of a health policy:
transfers payments to someone other than the policyowner
According to the time limit of certain defenses provision in an individual health insurance policy, nonfraudulent misstatements first become incontestable:
two years from the date of the policy was issued
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
unilateral
Life and health insurance policies are:
unilateral contracts
What is the primary factor that determines the benefits paid under a disability income policy?
wages
