Life and Health Chapter 12

Rank the following renewability provisions in order from least favorable to most favorable in terms of benefit to an insured:

Cancellable, conditionally renewable, guaranteed renewable

All of the following are required uniform provisions in individual health insurance policies EXCEPT:

Change of occupation

In which ONE of the following situations would an insurance company most likely use an impairment rider?

G is looking to obtain a health insurance policy, but is concerned about a current heart condition

What is the purpose of a probationary period in a disability income policy?

It allows the insurance company to avoid illness claims made in the first 10-30 days of the policy

How may the premium in a guaranteed renewable policy be increased?

It may be increased for all similarly situated insureds based on age

What is the insured's responsibility with regard to notifying the insurance company of a loss under a disability policy?

Notice of claim must be filed within 20 days of the loss, or as soon as possible

Which of the following is not an example of a cost containment measure?

Replacement

If an insured changes occupations and the new occupation is in a higher risk class than the former occupation, what does the change of occupation provision allow the insurance company to do in the event a disability claim is presented, but the insured failed to inform the insurer of the change?

The insurer will reduce the benefit proportionally in relation to the actual premium paid based on the higher risk classification

An individual is approved for a health insurance policy effective March 1. On March 4, the insured breaks his arm playing basketball with some friends, is treated at the local emergency room, and submits a bill for $2500 to his insurance company. On March 9, the insured decides to cancel the insurance and requests a refund of the $3000 annual premium he has paid. What will the insurance company do?

The insurer will refund the insured's $3,000 and has no responsibility to pay his claim

According to the Proof of Loss provision, how long does an insured have, under normal circumstances, to furnish the insurer with evidence of a claim?

Within 90 days of the loss

The grace period for an individual health insurance policy being paid on a quarterly basis is: a. 31 days b. 45 days c. 7 days d. 10 days

a. 31 days

If an insurer makes a payment for a claim but the insured is dissatisfied with it, he/she must wait _____ days after proof of loss before he/she might take any legal action. a. 60 b. 90 c. 45 d. 20

a. 60

Which of the following allows reimbursement benefits to be paid directly to medical providers? a. Assignment of benefits b. Schedule of benefits c. Change of insured d. Precertification

a. Assignment of benefits

Which of the following terms and definitions do not match? a. Cancellable -- An effective period for the policy is expressed in its provisions and it cannot be renewed b. Optionally Renewable -- Renewable only at the option of the insurer c. Guaranteed Renewable -- Renewable without proof of insurability, but premiums may increase due to age d. Noncancellable -- Guaranteed renewable to a specified age or date with a premium that will not increase

a. Cancellable -- An effective period for the policy is expressed in its provisions and it cannot be renewed

Optional uniform provisions found in health insurance policies are designed to protect the: a. Insurer b. Producer c. Insured d. Agency

a. Insurer

If the insurer cancels an individual health plan, what happens to the unearned premium? a. It is refunded on a pro rata basis b. It is refunded on a short rate basis c. It is used to offset underwriting costs d. The total is refunded

a. It is refunded on a pro rata basis

All of the following are Optional Provisions, except: a. Legal Actions b. Misstatement of Age c. Change of Occupation d. Illegal Occupation

a. Legal Actions

Which of the following terms and definitions do not match? a. Probationary Period - found in disability insurance policies before benefits are payable after a loss occurs b. Payment of Claims - paid to the policyowner unless otherwise specified or there is an assignment of benefits c. Consideration Clause - states the amount and frequency of the premium d. Entire Contract Clause - includes policy, provisions, a copy of the application, and any riders, waivers, or endorsements

a. Probationary Period - found in disability insurance policies before benefits are payable after a loss occurs

The Unpaid Premiums Optional Uniform Provision allows an insurer to: a. Reduce the amount of a claim payment by the premium due b. Charge the insured a credit charge if premiums are not paid c. Cancel the policy during the grace period d. Charge interest on past due premiums

a. Reduce the amount of a claim payment by the premium due

Which statement concerning individual A&H policy renewal provisions is most correct from the perspective of the insured? a. The more favorable the renewal provision to the insured, the higher the cost b. Renewal provisions only apply to property and casualty contracts and are not included under individual A&H policies c. The more favorable the renewal provision to the insured, the lower the cost d. The renewal provision has no impact on the cost of the policy to the insured

a. The more favorable the renewal provision to the insured, the higher the cost

Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy? a. Waiver of Premium b. Time limit on Certain Defenses c. Proof of Loss d. Payment of Claims

a. Waiver of Premium

Every Health and Disability Income Policy must express the conditions and provisions for _______. a. Refunds of premium at maturity b. Continuation of the contract c. Conditional coverage d. Policy corrections

b. Continuation of the contract

All states have adopted the Uniform Individual Accident and Sickness Policy Provision Law. If an insurer changes any of these provisions, they must make sure it does not: a. Weaken its grounds to void the policy b. Create a meaning that is less favorable to the insured than the original wording c. Violate legal precedent d. Nullify the law of large numbers

b. Create a meaning that is less favorable to the insured than the original wording

Beth has a contract stating she must be disabled for 3 months before benefits will begin to be paid. This 3-month period is known as the: a. Grace Period b. Elimination Period c. Contingency Period d. Probationary Period

b. Elimination Period

One of your clients just reinstated an Accident and Health policy. When is coverage effective for sickness and accident? a. In 10 days for accident and in 48 hours for sickness b. In 10 days for sickness and immediately for accidental injuries c. In 30 days for sickness, immediate coverage for accidents d. Immediately for both accident and sickness

b. In 10 days for sickness and immediately for accidental injuries

Optional Uniform Provisions are included in the contract at the _______ option. a. Insured's b. Insurer's c. Commissioner's d. Beneficiary's

b. Insurer's

Guaranteed Renewable means: a. Renewable only at the option of the insurer b. Renewable with adjustable premiums, by classification only c. Renewable with adjustable premiums determined by frequency of claim d. Renewable with guaranteed premium

b. Renewable with adjustable premiums, by classification only

When an accident and health policy is terminated, how are covered expenses that were incurred while the policy was still in force handled? a. The insurer is no longer liable for paying those expenses b. The insurer must pay for those expenses c. The insurer is not liable for those expenses, but must refund the premium for the period during which they were incurred d. The state guaranty fund pays for those expenses

b. The insurer must pay for those expenses

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

b. Time of Payment of Claims

Susan neglected to make her premium payment and she was injured in an accident. After she submitted the claim, she discovered that the insurer had subtracted $200 (the amount of the overdue premium) from the claim. The insurer may do this under which provision? a. Grace Period b. Unpaid Premiums c. Reinstatement d. Payment of Claims

b. Unpaid Premiums

One of your clients just reinstated his health insurance plan. When is coverage effective for sickness and accident? a. 10 days for accident and 48 hours for sickness b. Immediately for both accident and sickness c. 10 days for sickness, and immediately for accidental injuries d. 30 days for sickness, immediate coverage for accidents

c. 10 days for sickness, and immediately for accidental injuries

Proof of loss is required within _____ days of loss. a. 180 b. 45 c. 90 d. 60

c. 90

Double indemnity is a rider that provides two times the face amount if an insured: a. Becomes terminally ill b. Suffers an on-the-job loss due to a negligent employer c. Dies as a result of an accident within 90 days of the accident d. Becomes disabled due to an illness

c. Dies as a result of an accident within 90 days of the accident

Right to Examine is the same as: a. Waiting Period b. Probationary Period c. Free Look Period d. Elimination Period

c. Free Look Period

What is an impairment rider? a. It pays out an additional benefit if the insured cannot perform 2 of the 5 specified functional activities b. It guarantees the insured's future insurability c. It excludes specific conditions that normally would cause the entire policy to be declined d. It pays out an additional benefit in cases where the cause of loss is a result of an accident

c. It excludes specific conditions that normally would cause the entire policy to be declined

Which provision is an Optional Uniform Provision? a. Physical Examination b. Payment of Claims c. Relation of Earnings to Insurance d. Claim Forms

c. Relation of Earnings to Insurance

The Guaranteed Renewable Provision states that the policy is: a. Renewable with adjustable premiums determined by frequency of claims b. Renewable with no increase in premium c. Renewable with premiums that may be increased for entire classes of insureds d. Renewable only at the option of the insurer

c. Renewable with premiums that may be increased for entire classes of insureds

What is the result of an insured not receiving a claim form within the time period allotted after submitting a notice of claim? a. The claim is automatically denied b. The insurer must add a 10% penalty to any amount eventually paid c. The insured can submit written proof of the loss d. The claim is automatically accepted

c. The insured can submit written proof of the loss

Which statement is inaccurate regarding the Change of Occupation Provision? a. If the insured changes to a more hazardous occupation, benefits will be reduced to the amount which the premiums paid would purchase at the more hazardous occupation b. If the insured changes to a less hazardous occupation, he/she may apply for a rate reduction c. The insured must notify the insurer of a change of occupation, or the policy will be cancelled d. If the insured works at two occupations, rates for the most hazardous occupation will be charged

c. The insured must notify the insurer of a change of occupation, or the policy will be cancelled

Which of the following best describes the consideration on the part of an insurer? a. The offer of the contract b. The acceptance of the contract c. The promise to pay in the event of a covered claim d. The purpose of the contract must be legal

c. The promise to pay in the event of a covered claim

C has duplicate coverage with companies X and Y ($2,000 with X and $3,000 with Y). If C suffers a loss of $1,000, based on the insurance with other insurers provision, how much will company X have to pay out as a claim? a. Zero b. $600 c. $1,000 d. $400

d. $400

An insured should receive necessary claim forms within _____ days after notice of claim. a. 5 b. 20 c. 10 d. 15

d. 15

Under the Legal Actions Mandatory Uniform Provision, an insured must wait at least _____ days after providing proof of loss before he or she can take legal action against the insurer. a. 180 days b. 45 days c. 90 days d. 60 days

d. 60 days

Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as: a. Miscellaneous Provisions b. Extra-Legal Actions Provisions c. Oversight Provisions d. Case Management Provisions

d. Case Management Provisions

Abigail has a preexisting condition noted in her new A & H policy. If she submits a claim for this condition within a specified time stated in the contract, what will the insurer do? a. Pay half the usual benefit b. Pay benefits if the claim is nonoccupational c. Pay benefits in full d. Deny the claim

d. Deny the claim

Based upon Optional Uniform Provisions, an insurer would have the right to deny claim payment in all of the following circumstances, except: a. A claim involving an injury sustained in a bank robbery b. A claim is covered by another insurer c. A broken leg injury suffered as the result of ingesting an illegal drug d. Misstatement of age on the application

d. Misstatement of age on the application

Three years ago, Charles purchased a health policy from the QRS Company; he has purchased two additional contracts from the same insurer since. Each contract contains the Other Insurance With This Insurer Provision. What happens if Charles has a claim? a. The insurer will cancel all contracts because of intent to defraud b. Each contract will pay in direct proportion to the loss c. Benefits are paid in full by all contracts d. Only one policy will pay, the premiums for the other contracts will be returned

d. Only one policy will pay, the premiums for the other contracts will be returned

Which provision is an Optional Uniform Provision? a. Claim Forms b. Payment of Claims c. Physical Examination d. Other Insurance With This Insurer

d. Other Insurance With This Insurer

The Insuring Clause under an individual A&H policy would contain all the following, except: a. What perils are covered b. The length of the policy period c. The name of the insured and insurer d. Premium or rate calculations

d. Premium or rate calculations