HEALTH FINAL
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.
A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013?
$1,000.
Chemical dependency treatment under a Group Health policy MUST include (over the life of the contract) a minimum benefit of:
$16,000.
Every Group Health Policy providing benefits for chemical dependency treatments must include a MINIMUM BENEFIT of _______________ for the life of the contract.
$16,000.
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. $10,000 x 20% coinsurance + $100 deductible = $2,100.
J has an AD&D policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?
$25,000 (MAXIMUM sum = CAPITAL sum).
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. $1,000 deductible + 20% of the remaining bill = $3,000.
An individual has a Major Medical policy with a $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. $5,000 + 20% of the remaining bill= $7,000.
To be eligible for a Health Savings Account, an individual:
(1) Must be covered by a: high-deductible health plan (HDHP), (2) Must NOT be covered by other health insurance (does not apply to accident insurance, disability, dental care, vision care, long-term care), (3) Must NOT be eligible for Medicare, and (4) Can't be claimed as a dependent on someone else's tax return.
Which of these actions is NOT considered an act of rebating? (a) Sharing commissions with other licensed and appointed agents. (b) Sharing commissions with a client in exchange for their business. (c) Offering employment to an individual in exchange for writing a large insurance contract. (d) Offering anything of value not specified in the policy.
(a) Sharing commissions with other licensed and appointed agents.
Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT? (a) If Employee had a qualified medical leave from work, lost wages can be reimbursed. (b) If Employee paid for qualified medical expenses, the reimbursements may be tax-free. (c) Any unused amounts are added to Employee's gross income. (d) Health insurance premiums can be reimbursed to Employee.
(b) If Employee paid for qualified medical expenses, the reimbursements may be tax-free.
Which of the following characteristics is associated with a large group disability income policy? (a) NO waiting periods (b) NO medical underwriting (c) NO elimination periods (d) NO limit of benefits
(b) NO medical underwriting.
Which of the following statements BEST describes what the Legal Actions provision of an Accident and Health policy requires? (a) An insured must SETTLE a claim within 60 days after Proof of Loss is submitted. (b) An insured must WAIT at least 30 days after Proof of Loss has been submitted before a lawsuit can be filed. (c) An insured must WAIT at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed. (d) An insured must SETTLE a claim within 30 days after Proof of Loss is submitted.
(c) An insured must WAIT at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed.
Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business? (a) Company becoming insolvent (b) Death of the business owner (c) Business owner becoming disabled (d) Key employee becoming disabled
(c) Business owner becoming disabled
The Legal Actions provision of an insurance contract is designed to do all of the following, EXCEPT: (a) Provide the insurer adequate time to research a claim. (b) Protect the insured from having claim research delayed. (c) Protect the producer. (d) Give the insured guidelines for pursuing legal action against and insurer.
(c) Protect the producer.
An insured must notify an insurer of a medical claim within how many days after an accident?
20 days.
Insurers may request a hearing within ____ if their policy is rejected.
20.
An insurer must maintain grievance records for:
3 years.
North Carolina requires that an insurance agent must complete _____ hours of continuing education on the subject of ethics every two years.
3.
ABC Insurance Company fails to pay death proceeds after satisfactory proof of loss was submitted. ABC must then begin paying interest on the death proceeds after _____ days of receiving proof of loss.
30.
ABC Insurance Company fails to pay death proceeds after satisfactory proof of loss was submitted. ABC must then begin paying interest on the death proceeds after______ days of receiving proof of loss.
30.
According to the Information and Privacy Protection Act, when access to recorded personal information is requested following an adverse underwriting decision, Insurer must make the information available WITHIN _____ days.
30.
An insurance applicant was recently denied insurance coverage. The applicant is requesting access from the insurer to recorded personal information regarding this decision. Under the Information and Privacy Protection Act, the insurer MUST make the information available within _______ business days.
30.
Before an insurer can increase the rates for individual accident and health policyowners, the insurer must provide written notice at least ______ days before the effective rate increase .
30.
Insurer must provide WRITTEN NOTICE at least ______ days before the effective date of a rate increase.
30.
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.
Anyone who knowingly provides an untrue, false or fraudulent claim to an insurance company is guilty of:
A felony.
Which policy provision prohibits an insurance company from incorporating external documents into an insurance policy?
Entire Contract.
The Carryover provision permits:
Expenses incurred DURING THE LAST 3 MONTHS of the calendar year to be carried over into the new year if needed to satisfy the deductible for the next year.
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?
Fair Credit Reporting Act.
Which Federal law allows an insurer to obtain an inspection report on a potential insured?
Fair Credit Reporting Act.
What type of deductible provision waives the deductible for all family members after some of them have satisfied individual deductibles within the same year?
Family Maximum Deductible Provision.
This type of deductible provision waives the deductible for all family members after some of them have satisfied individual deductibles within the same year:
Family maximum deductible.
After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms?
File written proof of loss.
M completes an application for health 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.
An insurer receives proof of loss for an acceptable medical expense claim under an Individual Health Insurance Policy. Under the Time of Payment of Claims provision, the insurer MUST pay the benefits:
Immediately.
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.
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Inspection report.
If a Health Policy applicant is being investigated into his/her PERSONAL CHARACTER and MODE OF LIVING, the applicant MUST be notified of this investigation. Which of the following makes this a requirement?
Insurance Information and Privacy Protection Act.
Under COBRA, does the conversion of group accident and health coverage to an individual policy require evidence of insurability?
No.
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?
Noncancellable.
What type of renewability guarantees premium rates and renewability?
Noncancellable.
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.
S filed a written Proof of Loss for a Disability Income claim on September 1. The insurance company did not respond to the claim. S can take legal action against the insurer beginning:
November 1.
An accident policy will most likely pay a benefit for a(n):
Off-the-job accident.
Generally, how long is a benefit period for a Major Medical Expense Plan?
One year.
Deductibles are used in health policies to lower:
Overuse of medical services.
How is a Preferred Provider Organization (PPO) LESS RESTRICTIVE than a Health Maintenance Organization?
PPO's normally provide a wider choice of physicians and hospitals.
A Business Disability Buyout plan policy is designed to:
Pay benefits to the Corporation or other shareholders.
Which provision is considered a MANDATORY provision?
Payment of Claims.
What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy?
Premiums may increase at time of renewal.
What is the purpose of the Time of Payment of Claims provision?
Prevents delayed claim payments made by Insurer.
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 Disability Income policyowner suffers a disability which was due to the same cause as a previous disability. Both disabilities occurred within a five-month period. The insurer may cover the second disability without a new elimination period under the:
Recurrent Disability provision.
P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?
Recurrent Disability.
When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?
Recurrent Disability.
D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits?
Residual Benefit clause.
R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?
Residual Disability.
When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called:
Residual Disability.
Which provision allows a portion of any used medical benefits to be restored following a 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.
With Optionally Renewable Health policies, Insurer may:
Review the policy annually AND determine whether or not to renew it .
P is a producer who notices 5 questions on a health application were not answered. What actions shouId P take?
Set up meeting with Applicant to answer the remaining questions.
Common Accident Deductible:
Should more than one family member be involved in a common accident, or suffer the same illness, only ONE individual deductible amount shall be applied.
The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in WHAT program?
Social Security Disability Income.
Essential Benefits without annual and lifetime limits are required on any health policy purchased:
Through the Federal Marketplace.
Under a Health Reimbursement Arrangement, reimbursements may be tax-free if:
EMPLOYEE paid for qualified medical expenses.
In health insurance policies, a Waiver of Premium provision keeps the coverage in force without premium payments after:
Insured has become totally disabled as defined in the policy.
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.
Which health insurance coverage is BEST suited for meeting the expenses of catastrophic illness?
Major Medical.
Which individual health insurance policies will provide the broadest protection?
Major Medical.
C was injured while deep sea diving and requires a hospital stay. C has a Major Medical policy with a 80/20 coinsurance clause and a $400 deductible. What is the MAXIMUM C will pay if the covered medical expenses are $2000?
$720. $400 deductible + 20% of the remaining medical bill = $720.
A Guaranteed Renewable Health Insurance policy can have ______(1)_______ premiums at ________(2)_________.
(1) Increasing (2) Time of renewal
A terminated employee must have been covered for at LEAST_ month(s) under a Group Health Insurance policy immediately prior to termination in order to be eligible for continuation of coverage.
3.
In order to establish a Health Reimbursement Arrangement (HRA), it MUST:
Be established by Employer.
This type of deductible provision states that should more than one family member be involved in a common accident, or suffer the same illness, only one individual deductible amount shall be applied:
Common accident deductible.
What is a Hospital Indemnity policy?
Coverage that pays a stated amount per day of a covered hospitalization.
A characteristic of Preferred Provider Organizations (PPOs) would be:
Discounted fees for the patient.
M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?
Earned, but unpaid benefits.
In a Disability Income policy, which of these clauses acts as a deductible?
Elimination period.
How is the Life and Health Insurance Guaranty Associated funded?
From member companies.
With Disability Income insurance, Insurance Company may limit the monthly benefit amount [prospective] Policyholder may obtain because of Insured's:
Gross income at the time of purchase.
Which type of plan normally includes hospice benefits?
Managed care plans.
What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision?
Submit the claim in any form.
A RESIDUAL amount benefit is based on:
The proportion of income actually lost due to the partial disability, taking into account the fact that Insured is able to work and earn SOME income.
A residual amount benefit is based on:
The proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income.
The INSURANCE PHRASE which considers a particular FEE charged by a physician or other health professional is:
Usual, customary, and reasonable expenses.
Which of these statements accurately describes the Waiver of Premium provision in an Accident and Health policy? (a) Past due premiums on a lapsed policy are waived and coverage is restored. (b) The insured is paid a monthly benefit to keep insurance premiums current in the event of total disability. (c) Premiums are waived after the insured has been unemployed for a specified time period. (d) Premiums are waived after the insured has been totally disabled for a specified time period.
(d) Premiums are waived after the insured has been totally disabled for a specified time period.
In North Carolina, monthly-premium health insurance policies must provide a grace period of at least:
10 days.
An Accident/Health policyholder has ____ days to return the policy and receive a full refund on premiums.
10.
Z is an agent who violated the Insurance Information and Privacy Protection Act. Z was then issued and served a statement of charges and notice of hearing by the Commissioner of Insurance. Z's hearing date must be at least _____ days after service of charges.
10.
What is the maximum Social Security Disability benefit amount Insured can receive?
100% of Insured's Primary Insurance Amount (PIA).
A group health policy's approved premium rate is guaranteed by the insurer for an initial period of at LEAST ______ months.
12.
Approved premium rates for GROUP HEALTH insurance shall be guaranteed by Insurer for an initial period of AT LEAST _____ months.
12.
An insurer must provide an insured with claim forms within _____ days after receiving notice of a loss.
15.
In North Carolina, life insurance policies have a contestability period of:
2 years.
V is insured under an individual Disability Income policy with a 30-day Elimination period. On July 1, he is involved in an accident and temporarily disabled. He returns to work on December 1. How many months of benefit are payable?
4 months. After the 30-day Elimination period has been satisfied, there will be 4 months of benefit payments.
If Insurer DENIES the reinstatement of Applicant's health insurance, the policy will automatically be placed back in force if Insurer FAILS TO NOTIFY Applicant within:
45 days that the reinstatement application was denied.
M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement 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 every insurance agent maintain all records, books, and documents related to each insurance transaction?
5 years.
Within _______ years a life policy can be reinstated upon meeting company requirements.
5.
A residual disability benefit is usually:
A percentage of the total disability benefit for periods when the insured is unable to perform some of the duties of his/her occupation.
A restoration of used benefit provision allows:
A portion of any used medical benefits to be restored following a particular amount of benefit has been used, or after the policy has been in effect for a particular period of time.
Free-look period:
An amount of time provided to Insured in order to examine the insurance policy.
An incomplete health insurance application submitted to an insurer will result in which of these actions?
Application will be returned to the writing producer.
The Life and Health Insurance Guaranty Association is funded by authorized insurers in this State. One of the roles of this organization is to:
Assist in the prevention of Insurer insolvencies.
How is the Life and Health Insurance Guaranty Association funded?
By insurance companies through assessments that will pay claims if an insurance company becomes insolvent.
Basic Medical Expense insurance typically has ___________ benefit limits than Major Medical insurance.
Basic Medical Expense insurance typically has LOWER BENEFIT LIMITS than Major Medical insurance.
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.
What type of policy would pay Employee's salary if Employer was injured in a bicycle accident and out of work for 6 weeks?
Business Overhead Expense.
A Health Reimbursement Arrangement MUST be established:
By Employer.
M applies for a health insurance policy and pays the initial premium. When the agent completes the application, a conditional receipt is left with the applicant. The insurance company's underwriting department request's M's medical records and determines that M has had asthma for many years. All of the following are probable underwriting outcomes, EXCEPT:
Changing the policy's provisions.
A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim?
Claim will be paid AND coverage will remain in force.
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.
A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will:
Continue coverage but exclude the heart condition.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to:
Continue group health benefits.
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.
Under Preferred Provider Organizations, patient fees are:
Discounted in return for using listed providers.
A purpose of the Coinsurance clause in a Major Medical Policy is to:
Discourage over-utilization of the insurance coverage.
Non-occupational disability coverage is designed for:
Employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation.
What is a Health Reimbursement Arrangement?
Employer-established benefit plans that must be funded by Employer.
A group life insurance policy can be converted to an individual whole life policy under which circumstance?
Employment termination.
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 for the overall risk class?
Guaranteed Renewable.
K has a health policy that must be renewed BY THE INSURER and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered:
Guaranteed renewable.
Guaranteed Insurability Rider:
Guarantees the insured the option of purchasing additional amounts of disability income coverage at predetermined times without requiring the insured to provide evidence of insurability.
What organization contains PREPAID GROUP HEALTH PLANS, where members pay in advance for the services of participating physicians and hospitals that have agreements?
HMO's.
What type of provider is known for stressing preventative medical care?
HMO's.
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.
What MUST be included with the continuation of coverage of a group Hospital, Surgical, and Major Medical policy?
Hospital expenses.
A Basic Hospital policy pays expenses for:
Hospital room and board, as well as other miscellaneous medical expenses incurred during hospitalization.
Who is NOT regulated by the Insurance Information and Privacy Protection Act?
Insurance regulators.
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.
Which health policy clause specifies the amount of benefits to be paid to INSURED?
Insuring.
What type of COVERAGE is best described as a short-term medical policy?
Interim coverage.
Which action will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?
Issue the policy with an altered Time of Payment of Claims provision.
T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect?
Less than $5,000 per month benefit regardless of the cause.
In a $5,000 per month Disability Income Policy, a covered partial disability will typically result in:
Less than $5,000 per month regardless of the nature of the disability.
In Major Medical Expense policies, what is the intent of a Stop Loss provision?
Limit Insured's out-of-pocket medical expenses.
Basic Hospital and Surgical policy benefits are:
Lower than the actual expenses incurred.
Z owns a Disability Income policy with a 30-day Elimination period. Z contracts pneumonia that leaves him unable to work from January 1 until January 15. Z then becomes disabled from an accident on February 1 and the disability lasts until July 1 the same year. Z will become eligible to receive benefits starting on:
March 1.
Which factor does NOT play a role in the underwriting of a health insurance policy?
Marital status.
Which organization is NOT considered "managed care"?
Medical Information Bureau (MIB).
The Waiver of Premium provision in a health insurance contract:
Suspends the insurer's right to receive premiums during a covered period of disability.
Which policy features allows Insured to defer current health charges to the following year's deductible instead of the current year's deductible?
The Carryover provision.
Which section is NOT included in the policy face?
The EXCLUSIONS section.
Which statement BEST defines usual, customary, and reasonable (UCR) charges?
The MAXIMUM AMOUNT CONSIDERED ELIGIBLE FOR REIMBURSEMENT by an insurance company under a health plan.
What does a Guaranteed lnsurability rider provide a Disability Income policyowner?
The ability to periodically increase the amount of coverage without evidence of insurability.
Nonoccupational Coverage:
The coverage provided by a Disability Income policy that does not provide benefits for losses occurring as the result of Insured's employment.
T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provision that limits the time period during which the company may dispute a claim's validity is called:
Time Limit on Certain Defenses.
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.
A disability elimination period is best described as a:
Time deductible.
What is the elimination period of an individual disability policy?
Time period a disabled person must wait before benefits are paid. The elimination period of an individual disability insurance policy refers to the amount of time a disabled person must wait before benefits are paid.
How are pre-admission certifications used?
To prevent nonessential medical costs.
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.
S is a life insurance policyowner and enters into a written agreement to receive immediate cash in exchange for the sale and transfer of her life insurance policy. This agreement is referred to as a(n):
Viatical Settlement.
Family Maximum Deductible provision:
WAIVES THE DEDUCTIBLE for ALL family members after some of them have satisfied individual deductibles within the same year.
What is the primary factor that determines the benefits paid under a disability income policy?
Wages.
The provision in a Group Health policy that allows Insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the:
Waiting period.
What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled?
Waiver of Premium rider.
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.
Are PPO's considered to be a managed health care system?
Yes.