Life and Health Test Review, HEALTH INSURANCE BASICS, Chapter 1: General Insurance Quiz, Life and Health Final Exam Review, Group Health Insurance, Questions I got Wrong, Group Health Insurance, Chapter 14 questions, work: ch health insurance basics,...

Under the uniform required provisions, proof of loss under a heath insurance policy normally should be filed within

90 days

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A. Consideration B. Good faith C. Representation D. Adhesion

A. Consideration

What is surplus lines insurance? A. Insurance placed with an unauthorized insurer B. Additional insurance placed on itemized risks C. Any insurance on items worth more than $25,000 D. Insurance in excess of a standard policy's coverage

A. Insurance placed with an unathorized insurer

Illegal use of narcotics would be an example of a A. Moral hazard B. Physical hazard C. Pure hazard D. Morale hazard

A. Moral hazard

What is the term for the entity that an agent represents regarding contractual agreements with third parties? A. Principal B. Client C. Designee D. Insured

A. Principal

Events in which a person has both the chance of winning and losing are classified as A. Speculative risk B. Insurable C. Pure risk D. Retained risk

A. Speculative risk

In terms of parties to a contract, which of the following does NOT describe a competent party? A. The personal must have at least completed secondary education. B. The person must not be under the influence of drugs or alcohol. C. The person must be of legal age. D. The person must be mentally competent to understand the contract.

A. The person must have at least completed secondary education.

When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. Thei is an example of A. Warranty B. Concealment C. Misrepresentation D. Fraud

B. Concealment

Faulty wiring in a home is an example of a A. Risk B. Hazard C. Loss D. Peril

B. Hazard

Which of the following is the basis for a claim against an insurance policy? A. Misrepresentation B. Loss C. Material change D. Hazard

B. Loss

A participating insurance policy may do which of the following? A. Require 80% participation B. Pay dividends to the policyowner C. Provide group coverage D. Pay dividends to the stockholder

B. Pay dividends to the policyowner

Which of the following is NOT the consideration in a policy? A. The promise to pay covered losses B. The application given to a prospective insured C. Something of value exchanged between parties D. The premium amount paid at the time of application

B. The application given to a prospective insured

Peril is most easily defined as A. Something that increases the chance of loss B. The cause of lose insured against C. An unhealthy attitude about safety D. The chance of a loss occurring

B. The cause of loss insured against

In forming an insurance contract, when does acceptance usually occur? A. When an insured submits an application B. When an insurer's underwriter approves coverage C. When an insurer delivers the policy D. When an insurer receives an application

B. When an insurer's underwriter approves coverage

All of the following are examples of hazards EXCEPT A. Faulty wiring in a home B. Broken step or hand railing on the porch C. A fire in the kitchen of a home D. Trash or debris in the basement of a home

C. A fire in the kitchen of a home

What is a material misrepresentation? A. Any misstatement by the producer B. Concealment C. A statement by the applicant that upon discover, would affect the underwriting decision of the insurance company D. Any misstatement made by an applicant for insurance

C. A statement by the applicant that upon discover, would affect the underwriting decision of the insurance company

What term best describes the act of withholding material information that would be crucial to an underwriting decision? A. Leading B. Breach of warranty C. Concealment D. Withholding

C. Concealment

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

Which of the following is a unit of measurement an underwriter uses when determining the premium rates for insurance? A. Hazard B. Risk C. Exposure D. Loss

C. Exposure

All of the following actions by a person could be described as risk avoidance EXCEPT A. Never flying in an airplane B. Taking a flu shot each year C. Investing in the stock market D. Refusing to scuba dive

C. Investing in the stock market

All of the following are examples of risk retention EXCEPT A. Copayments B. Self-insurance C. Premiums D. Deductibles

C. Premiums

The risk of loss may be classified as A. Named risk or un-named risk B. High risk and low risk C. Pure risk and speculative risk D. Certain risk and uncertain risk

C. Pure risk and speculative risk

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? A. Nonforfeiture B. Indemnity C. Reasonable expectations D. Cease and desist

C. Reasonable expectations

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen? A. The insurer will sue the insured for committing fraud B. Because the insured is currently not a drug C. The policy was not affected D. The policy was void

C. The policy was not affected

Which of the following is NOT a goal of risk retention? A. To increase control of claim reserving and claims settlements B. To fund losses that cannot be insured C. To minimize the insured's level of liability in the event of loss D. To reduce expenses and improve cash flow

C. To minimize the insured's level of liability in the event of loss

When an individual purchases insurance, what risk management technique is he or she practicing? A. Sharing B. Retention C. Transfer D. Avoidance

C. Transfer

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A. Indemnity B. Representation C. Warranty D. Concealment

C. Warranty

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agents is authorized to transact on behalf of that insurer. What type of agent authority does this describe? A. Express B. Implied C. Assumed D. Apparent

D. Apparent

Which of the following types of agent authority is also called "perceived authority"? A. Express B. Impied C. Fiduciary D. Apparent

D. Apparent

A state-issued document empowering an insurance company to become an admitted insurer is called A. Certificate of title B. Certificate of deposit C. Certificate of admission D. Certificate of authority

D. Certificate of authority

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A. Aleatory B. Personal C. Unilateral D. Conditional

D. Conditional

Which of the following best describes an insurance company that has been formed under the laws of this state? A. Sovereign B. Alien C. Foreign D. Domestic

D. Domestic

Which of the following are the authorities that an agent can hold? A. Apparent and allowed B. Authorized and admitted C. Primary and secondary D. Express and implied

D. Express and implied

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A. Domestic B. Alien C. Nonadmitted D. Foreign

D. Foreign

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? A. Apparent B. Assumed C. Express D. Implied

D. Implied

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. Waiver B. Utmost Good Faith C. Estoppel D. Material misrepresentation

D. Material misrepresentation

If an insurance company underwriter discovers that an applicant for a policy has been convicted of submitting a fraudulent claim to an insurer in the past, the application may be rejected as a A. Risk of loss B. Physical hazard C. Morale hazard D. Moral hazard

D. Moral hazard

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. Reciprocal B. Nonprofit service organization C. Stock D. Mutual

D. Mutual

What is the major difference between a stock company and a mutual company? A. Amount of death benefit B. Number of producers C. Types of whole life policies D. Ownership

D. Ownership

The causes of loss insured against in an insurance policy are known as A. Losses B. Risks C. Hazards D. Perils

D. Perils

What hazard would you be concerned about if you lived next to an explosives contractor? A. Moral B. Morale C. Dangerous D. Physical

D. Physical

Pertaining to insurance, what is the definition of a fiduciary responsiblity? A. Helping insureds to file claims B. Performing reviews of insured's coverage C. Offering additional coverage to clients D. Promptly forwarding premiums to the insurance company

D. Promptly forwarding premiums to the insurance company

Which of the following information regarding an insured is NOT included in an Investigative Consumer Report, which is requested by the underwriter?

Medical History

Which of the following do the Standard and Preferred risk categories share?

Premiums are not elevated.

The expense for an autopsy covered under the physical exam and autopsy provision is paid by

The insurer

When is the insurability conditional receipt given?

When the premium is paid at the time of application

Are insurance company underwritiers allowed to discriminate?

Yes, but not unfairly.

#97. A couple buying 7-year LTC policies decides to purchase shared care policies. The husband later gets sick and uses 3 years of LTC benefit before dying. How much LTC is left for the wife? a) 11 years b) 14 years c) 4 years d) 7 years

a) 11 years When LTC policies are written as shared care, that means that a couple gets to split the total benefits of the 2 policies. In this case, the couple had 14 years of LTC total under the shared care policy. The husband used 3 of the years, leaving the wife with 11 years of LTC to use.

#131. The two types of assignments are a) Absolute and collateral. b) Absolute and partial. c) Complete and partial. d) Complete and proportionate.

a) Absolute and collateral. Absolute assigns the entire policy. Collateral assigns a part or all of the benefits.

#130. What option allows the insured to periodically increase benefit levels without providing evidence of insurability? a) Guarantee of insurability b) Guarantee renewable c) Annual increase d) Level premium

a) Guarantee of insurability Guarantee of insurability option allows the insured to periodically increase benefit levels without providing evidence of insurability. The amount is usually limited to allowing a 5% compounded annual increase.

#82. What is the purpose of the New York State Partnership for LTC? a) It combines LTC insurance and Medicaid to help people prepare for nursing home care. b) It provides permanent in home nursing care for those who qualify, meeting age and health requirements. c) It provides public health care for children. d) It provides Medicaid for people too young to qualify.

a) It combines LTC insurance and Medicaid to help people prepare for nursing home care. The New York State Partnership for Long-Term Care is program that combines private long-term care insurance and Medicaid to help New Yorkers prepare financially for the possibility of needing nursing home or home care. The program allows New Yorkers to protect their assets while remaining eligible for Medicaid if their long-term care needs exceed the period covered by their private insurance policy.

#119. All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a) Lower b) Higher c) As high d) Half the amount

a) Lower Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

#45. Which of the following is NOT provided by an HMO? a) Reimbursement b) Services c) Financing d) Patient care

a) Reimbursement Traditionally the insurance companies have provided the financing while the doctors and hospitals have provided the care. The HMO concept is unique in that the HMO provides both the financing and the patient care for its members. The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physician or hospital.

#125. Which type of life insurance policy generates immediate cash value? a) Single Premium b) Level Term c) Decreasing Term d) Continuous premium

a) Single Premium Like other types of whole life policies, Single Premium Whole Life (SPWL) endows for the face amount of the policy if the insured lives until the age of 100. The distinguishing feature of a SPWL is the fact that it generates immediate cash value, due to the lump-sum payment made to the insurer.

If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following?

adjust the benefits in accordance with the increased risk.

What document decribes an insured's medical history, including diagnoses and treatments?

attending physician's statement

#102. The inflation protection feature in long-term care policies issued in this state must provide protection for inflation at what percent annually? a) 2% b) 5% c) 6% d) 8%

b) 5% In the state of New York, insurers must offer each policyholder an inflation protection feature that provides, at minimum, an increase of 5% for the annual benefit level.

#6. Which of the following would be entitled to mental health benefits through Timothy's Law? a) A woman covered by an individual policy she purchases from an insurance company b) A businessman covered under a health insurance policy provided by his employer c) A business owner covered by a sole proprietor policy under Healthy New York d) A teen covered by Child Health Plus

b) A businessman covered under a health insurance policy provided by his employer New York residents covered by group health insurance or a school blanket health insurance policy are entitled to benefits through Timothy's Law.

#50. Carol is insured under her employer's group life insurance plan at her place of employment. All of the following statements about her coverage are true EXCEPT a) Should Carol convert her coverage, the premium will be based upon her attained age. b) Carol could choose what type of insurance her conversion policy provided (Term or Permanent). c) Carol would not need to prove insurability for a conversion policy. d) If Carol quits, she may, within 31 days, request that her coverage be converted to an individual policy.

b) Carol could choose what type of insurance her conversion policy provided (Term or Permanent). When group coverage is converted to an individual policy, the insurer will determine the type of coverage, (usually permanent insurance).

#99. When John died, his survivors were eligible for limited benefits under his Social Security account. His insured status was a) Insured. b) Currently insured. c) Partially insured. d) None of the above.

b) Currently insured. To be considered "currently insured" and thus eligible for limited survivor benefits, a worker must have earned six credits during the 13-quarter period ending with the quarter in which the worker died.

#73. Which of the following is monitored by ERISA? a) Severance pay of less than 2 years b) Stock profit-sharing plans c) Cash bonus plans d) Cash profit-sharing plans

b) Stock profit-sharing plans Cash bonus plans, cash profit-sharing plans, and severance pay of less than two years are considered compensation and are not regulated by ERISA.

#54. An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true? a) The cost of coverage paid by the employer is tax deductible by the employees. b) The cost of coverage is a deductible expense by the employer. c) The value of insurance will be deducted from the employees' compensation. d) The cost of coverage paid by the employer is taxed to the employees.

b) The cost of coverage is a deductible expense by the employer. The cost of coverage paid by the employer in excess of $50,000 is taxed to the employee.

#23. Who is subject to the New York State Disability Benefit Law? a) Employers with between 2 and 50 employees b) Employers with one or more employees c) Self-employed persons with no employees d) Employers with 10 or more employees

b) They can be changed only with the written consent of that beneficiary. Once irrevocable beneficiaries are indicated for the policy, their written consent is required to change the beneficiary.

#81. An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage? a) $25.50 b) $100 c) $102 d) $25

c) $102 The employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individual's group premium rate (in this scenario, 102% of $100 total premium is $102). The 2% charge is to cover the employer's administrative costs.

#132. Where would Long-term care services be rendered? a) An acute care unit of a hospital b) A doctor's office c) A nursing home or one's own home d) A surgery center

c) A nursing home or one's own home Long-term care policies provide benefits for medically necessary services which one receives in a nursing home or perhaps in one's own home, but not care received in an acute care unit of a hospital.

#47. What qualifications must an agent hold in order to sell variable life insurance policies? a) National Association of Insurance Commissioners (NAIC) registration b) State licensing to sell life insurance and variable products c) Both state and federal licensing d) Same certification as fixed life policies

c) Both state and federal licensing Agents selling variable life products must be registered with the Financial Industry Regulatory Authority (FINRA) (formerly National Association of Securities (NASD)) and must be licensed within the state to sell life insurance and variable products.

#9. An association could buy group insurance for its members if it meets all of the following requirements EXCEPT a) Holds annual meetings. b) Is contributory. c) Has at least 50 members. d) Has a constitution and by-laws.

c) 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.

#85. An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) a) Medical examination. b) Attending Physician Statement. c) Inspection report. d) Medical Information Bureau report.

c) Inspection report. An inspection report may be ordered about an applicant from an independent investigating firm or credit agency. It is a general report of the applicant's finances, character, work, hobbies, and habits.

#72. Which of the following refers to "own occupation" disability? a) Insured business owner is unable to perform the duties of his/her own business. b) Insured business owner is unable to perform the duties of any related business. c) Insured is unable to perform duties of the occupation for which he/she was educated and trained. d) Insured is unable to perform duties of any occupation.

c) Insured is unable to perform duties of the occupation for which he/she was educated and trained. Under an Own Occupation plan, if the insured cannot perform duties of his/her current job or the job that he/she was educated and trained for, disability benefits will be paid, even if the insured would be capable of earning income at a different occupation.

#5. Which of the following would be a unique benefit life insurance has over other types of insurance? a) It guarantees income when needed. b) Its proceeds are paid to the beneficiary. c) It performs the function of cash accumulation. d) It is a contract between the policyowner and the insurer.

c) It performs the function of cash accumulation Life insurance has a unique advantage over other types of insurance: it performs the function of cash accumulation.

#139. When a replacement is involved, a replacing insurance company is responsible for all of the following EXCEPT a) Include a policy summary on the proposed life insurance in the communication with the existing company. b) Obtain from the producer a list of the applicant's life insurance or annuity contracts to be replaced. c) Provide a copy of the Important Notice Regarding Replacement of Life Insurance to the applicant. d) Send the existing insurance company a written notice of replacement.

c) Provide a copy of the Important Notice Regarding Replacement of Life Insurance to the applicant. Providing a copy of the Important Notice Regarding Replacement is a producer's responsibility.

#71. Which of the following is NOT a registration requirement for a life settlement intermediary? a) List all the states where the intermediary intends to do business b) Submit a set of fingerprints c) Submit proof of being licensed as a life agent for a period of at least one year d) List all the persons with controlling interest in life settlement transactions

c) Submit proof of being licensed as a life agent for a period of at least one year Holding a life license is not required for a person applying for registration as a life settlement intermediary.

#104. Jim is covered by a high deductible health plan. He makes regular contributions to this HSA. How are those contributions treated in regards to taxation? a) The contributions are not deductible b) The contributions are taxed as income c) The contributions are tax-deductible d) The contributions are considered pre-tax

c) The contributions are tax-deductible An individual covered by a high deductible health plan can make a tax-deductible contribution to an HSA and use it to pay for out-of-pocket medical expenses.

#76. An applicant, while under the influence of alcohol, signed an application for life insurance for a $2 million policy. He paid the first year's premium of $25,000. A policy was delivered on Feb. 1 with a 10-day free look period. On March 1, the insured mailed the policy back saying the contract was not enforceable, demanding his premium. Which of the following is true? a) The company must return the premiums and any interest earned on it. b) After the free-look period expires the policy cannot be rescinded. c) The insured has grounds for the policy being rescinded. d) The Department of Insurance would be the proper source to resolve the conflict.

c) The insured has grounds for the policy being rescinded. The insured has grounds for the premiums to be returned since he was under the influence of alcohol when he signed the policy. The parties to a contract must be capable of entering into a contract in the eyes of the law. Generally, this requires that both parties be of legal age (14½ in New York), mentally competent to understand the contract, and not under the influence of drugs or alcohol.

#126. What is necessary in order to be eligible to receive benefits from a long-term care policy? a) The insured must have been receiving disability benefits for 6 months. b) Age is the only requirement; upon reaching age 65, LTC benefits are available. c) The insured must be unable to perform some activities of daily living. d) The insured must meet certain economic standards.

c) The insured must be unable to perform some activities of daily living. Normally to be eligible for benefits from a long-term care policy, the insured must be unable to perform some of their activities of daily living (ADLs). ADLs include bathing, dressing, toileting, transferring, continence, and eating.

What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur?

conditional renewable.

#128. Within how many days of requesting an Investigative Consumer Report must an insurer notify the consumer in writing that the report will take place? a) 5 b) 7 c) 14 d) 3

d) 3 Investigative Consumer Reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested.

#124. A policy which covers medical costs related to a specific condition is called a a) Condition-Specific Policy. b) Specific Condition Policy. c) Limited Coverage Policy. d) Dread Disease Policy.

d) Dread Disease Policy. Dread Disease policies cover medical expenses for a particular medical condition, such as cancer or heart disease.

#137. If an annuitant dies before annuitization occurs, what will the beneficiary receive? a) Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount b) Amount paid into the plan c) Cash value of the plan d) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

d) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount If an annuitant dies before annuitization, the beneficiary will receive either the amount paid into the plan or the cash value of the plan, whichever is greater.

#4. Which of the following riders provides for a waiver of premium when the policyowner and the insured are NOT the same person? a) Waiver of premium b) Waiver of the cost of insurance c) Conditions for payment d) Payor benefit

d) Payor Benefit The payor benefit waives the premium of the owner when the owner becomes disabled and is a person other than the insured.

#135. Which nonforfeiture option provides coverage for the longest period of time? a) Extended term b) Paid-up option c) Accumulated at interest d) Reduced paid-up

d) Reduced paid-up The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.

#90. Todd has been informed that he has a hernia which requires repair. When Todd researches the cost, he learns that his insurance plan will cover 200 points worth of surgical expenses. Each point represents $10, which means that $2000 of his surgery will be covered by his insurance plan. What system is Todd's insurance company using? a) Basic Surgical b) Point-based medical c) Conversion factor d) Relative value

d) Relative value In a relative-value approach, a surgical procedure is assigned an amount of points relative to the maximum coverage allowed for a given surgery.

#51. Which of the following best describes what the "annuity period" is? a) The period of time spanning from the accumulation period to the annuitization period b) The period of time during which money is accumulated in an annuity c) The period of time spanning from the effective date of the contract to the date of its termination d) The period of time during which accumulated money is converted into income payments

d) The period of time during which accumulated money is converted into income payments The "annuity period" is the time during which accumulated money is converted into an income stream.

the provision which states that both the printed contract and a copy of the application for the contract between the policyowner and insurer is called the

entire contract

medical expense covers

entire family

Disability is a replacement of

income

Health insurance is the best example of

indemnification

Notice of claim

insured's duty to provide the insurer with reasonable notice in the event of a loss. Notice is required with 20 days of the loss or as soon as reasonably possible.

Accidental bodily injury

is an unforeseen and unintended injury that results from an accident rather than a sickness.

Which renewal option does not guarantee renewal and allows the insurance company to refuse renewal of a policy at any premium due date?

optionally renewable

A guaranteed renewable health insurance policy allows the

policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class.

purpose of disability income

replace income to pay expenses like rent, food, utilities

Which of the following is an example of a peril covered in an accident and health insurance policy?

sickness

Is not a feature of a guaranteed renewable provision?

the insurer can increase the policy premium on an individual basis.

A policy with a 31 day free look

the policy remains in force without penalty for 31 days even though the premium due has not been paid.

A health insurance policy clause that prevents an insurance company from denying payment of a claim after a specified period of time is known as the

time limit on certain defenses clause.

Disability income covers

wage earners

Uniform Individual Accident and Sickness Policy Provisions Law

was developed by the National Association of Insurance Commissioners. This law established standard provisions that are to be included in all individual health insurance policies. The purpose of these provisions is to define the rights and duties of both in insurer and the policyholder.

In a group health policy, a probationary period is intended for people

who joined the group after the effective date.

How soon following the occurrence of a covered loss, or after the insurer becomes liable for periodic payments for insome benefits, must an insured submit written proof of such loss to the insurance company.

with 90 days or as soon as reasonably possible but not to exceed one year.