Louisiana Life and Health Insurance Exam

What provision can reduce the disability benefit based upon the insured's current income? A. Rehabilitation benefit B. Relation of earnings to insurance C. Waiver of monthly premium D. Pro rata provision

B. Relation of earnings to insurance The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last 24 months.

All of the following benefits are available under Social Security EXCEPT A. Death benefits. B. Welfare benefits. C. Old-age and retirement benefits. D. Disability benefits.

B. Welfare benefits. Social Security is an entitlement program, not a welfare program.

Which of the following is NOT a metal level of coverage offered under the Patient Protection and Affordable Care Act? A. Silver B. Bronze C. Iron D. Gold

C. Iron The metal tiers of coverage required under the PPACA include platinum, gold, silver and bronze.

Which of the following statements is NOT correct concerning the COBRA Act of 1985? A. It applies only to employers with 20 or more employees that maintain group health insurance plans for employees. B. COBRA stands for Consolidated Omnibus Budget Reconciliation Act. C. It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. D. It covers terminated employees and/or their dependents for up to 36 months after a qualifying event.

C. It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. COBRA Act applies to only employers with 20 or more employees.

What is a penalty tax for nonqualified distributions from a health savings account? A. 8% B. 10% C.12% D. 20%

D. 20% An HSA holder who uses the money for a nonhealth expenditure pays tax on it, plus a 20% penalty

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? A. 2 years B. 1 month C. She would not receive any benefits. D. 3 years

A. 2 years Under an Own Occupation plan, if the insured cannot perform his/her current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period. After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.

Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this? A. A construction worker pays a higher premium and receives a poorer classification of disability. B. A stunt person pays a low premium and receives a superior classification of disability. C. An attorney pays a higher premium and receives a poorer classification of disability. D. A secretary pays a higher premium and receives a superior classification of disability.

A. A construction worker pays a higher premium and receives a poorer classification of disability. In disability income policies, the insured's occupation is a critical underwriting factor. The more hazardous the applicant's occupation, the higher the premium the insurance company will charge.

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? A. Adjust the benefit in accordance with the increased risk B. Cancel the policy C. Increase the premium D. Exclude coverage for on-the-job injury

A. Adjust the benefit in accordance with the increased risk A part of the premium rating concerns the hazard of occupation.

A small business owner is the insured under a disability policy that funds a buy-sell agreement. If the owner dies or becomes disabled, the policy would provide which of the following? A. Cash to the owner's business partner to accomplish a buyout B. The rent money for the building C. The business manager's salary D. Disability insurance for the owner

A. Cash to the owner's business partner to accomplish a buyout If an owner dies or becomes disabled, the disability policy under the buy-sell agreement would provide enough cash to accomplish a buyout of the company.

What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur? A. Conditionally renewable B. Optionally renewable C. Noncancellable D. Guaranteed renewable

A. Conditionally renewable The conditionally renewable provision is very similar to the optionally renewable provision. The primary difference is that conditionally renewable policies may be canceled for specific conditions contained in the policy, but optionally renewable policies do not specify a condition or reason for cancellation.

If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days? A. Conversion B. Replacement C. Grace period D. Renewability

A. Conversion Conversion provisions are required by law. It allows terminated employees to convert their group health coverage to individual insurance without evidence of insurability, within a specified amount of time, and for eligible reasons.

As deductible amounts increase, premium amounts change in what way? A. Decrease B. Increase C. Remain the same. Changes in premium amounts do not affect deductible amounts. D. Either increase or decrease.

A. Decrease If deductibles increase, premiums decrease in response. In other words, if the insured assumes more risk by paying a higher deductible, the insurer will lower premium amounts in response.

If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is A. Fully insured. B. Partially insured. C. Correctly insured. D. Permanently insured.

A. Fully insured. A worker is fully insured under Social Security if the worker has accumulated the required number of credits based on his/her age.

In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party? A. Insurer to the insured B. Insured to the insurer C. Insurer to the Department of Insurance D. Insured to the Department of Insurance

A. Insurer to the insured Upon receipt of a notice of claim, the company must supply claims forms to the insured within a specified number of days.

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT A. Loss of the owner's income. B. Rent. C. Utilities. D. Employee payroll.

A. Loss of the owner's income. If business owners want coverage for the loss of their own income due to total disability, they need to purchase a separate individual disability income policy.

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits? A. No benefits B. Full benefits C. Partial benefits D. Full benefits until the blindness lifts

A. No benefits Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.

Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss? A. Notice of Claim B. Loss Notification C. Claims Initiation D. Consideration

A. Notice of Claim The Notice of Claim Provision spells out the insured's duty to provide the insurer with reasonable notice in the event of a loss.

Regarding the taxation of Business Overhead policies, A. Premiums are deductible and benefits are taxed. B. Premiums are not deductible and benefits are taxed. C. Premiums are not deductible, but benefits are deductible. D. Premiums are not deductible, but expenses paid are deductible.

A. Premiums are deductible and benefits are taxed. The premiums paid for BOE insurance are tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received.

A man's physician submits claim information to his insurer before she actually performs a medical procedure on him. She is doing this to see if the procedure is covered under the patient's insurance plan and for how much. This is an example of A. Prospective review. B. Concurrent review. C. Claims-delayed treatment. D. Suspended treatment.

A. Prospective review. Under the prospective review or precertification provision, the physician can submit claim information prior to providing treatment to know in advance if the procedure is covered under the insured's plan and at what rate it will be paid.

When an insurer combines two periods of disability into one, the insured must have suffered a A. Recurrent disability. B. Partial disability. C. Residual disability. D. Presumptive disability.

A. Recurrent disability. Recurrent disability is the period of time (usually within 3-6 months) during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability.

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen? A. The PPO will pay reduced benefits. B. The PPO will not pay any benefits at all. C. The insured will be required to pay a higher deductible. D. The PPO will pay the same benefits as if the insured had seen a PPO physician.

A. The PPO will pay reduced benefits. The group health plan will not pay the full amount charged by the non-PPO doctor.

All of the following are ways in which a Major Medical policy premium is determined EXCEPT A. The average age of the group. B. The amount of the deductible. C. The coinsurance percentage. D. The stop-loss amount.

A. The average age of the group. Major medical policy premiums vary depending on the amount of the deductible, the coinsurance percentage, the stop-loss amount and the maximum amount of the benefit.

Which of the following is NOT a characteristic of a group long-term disability plan? A. The benefit can be up to 50% of one's yearly income. B. The elimination period is the same as in the short-term plan's benefit period. C. The benefit period may be to age 65. D. The benefit can be up to 66 and 2/3% of one's monthly income.

A. The benefit can be up to 50% of one's yearly income. The maximum benefit is based upon monthly income.

On a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform A. Their regular job. B. Any job that they are suited for by prior education. C. Any job that they are suited for by prior training. D. Any job that they are suited for by prior experience.

A. Their regular job. If a disability income policy contains the own occupation definition, then the insured will be considered disabled if they cannot perform that particular job, regardless of other jobs that they may be able to do.

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss? A. Time of Payment of Claims B. Incontestability C. Physical Exam and Autopsy D. Legal Actions

A. Time of Payment of Claims The Time of Payment of Claims provision specifies that claims are to be paid immediately upon written proof of loss.

What is the purpose of the rehabilitation benefit in disability insurance? A. To cover the expenses of retraining the insured to return to work B. To compensate the insured for the lost income C. To refund the insured's premium paid during the disability D. To help the insured recover from a disability

A. To cover the expenses of retraining the insured to return to work The rehabilitation benefit will cover a portion of the cost for the insured to enroll in a retraining program that will help the insured to return to work after a disability.

An insured has a major medical policy with a $500 deductible and 80/20 coinsurance. The insured is hospitalized and sustains a $2,500 bill. What is the maximum amount that the insured will have to pay? A. $500 B. $900 C. $1,000 D. $2,500

B. $900 The insured will pay the $500 deductible, plus 20% of the remainder: $2,500 (total bill) - $500 (deductible) = $2,000; 20% of $2,000 = $400; $500 (deductible) + 20% (coinsurance) = $900 (total amount due by the insured).

In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least A. For life. B. 12 months. C. 24 months. D. Until age 65.

B. 12 months. Social Security disability benefits are paid to claimants whose disability is expected to last at least 12 months or lead to death.

Which of the following disability income policies would have the highest premium? A. 15-day waiting period / 5-year benefit period B. 15-day waiting period / 10-year benefit period C. 30-day waiting period / 10-year benefit period D. 30-day waiting period / 5-year benefit period

B. 15-day waiting period / 10-year benefit period The waiting, or elimination, period is the time from the onset of disability the insured must wait before becoming eligible for benefits. The shorter the waiting period, the higher the premium. After the insured satisfies the waiting period, they will receive benefits from the insurer for a limited benefit period. The longer the benefit period, the higher the premium. A disability income policy that includes the shortest waiting period and the longest benefit period would be most expensive.

An insured pays a monthly premium of $100 for health insurance. What would be the duration of the grace period under the policy? A. 15 days B. 30 days C. 60 days D. 7 days

B. 30 days The grace period is 30 days for all health insurance policies in Louisiana.

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters? A. 4 credits B. 6 credits C. 10 credits D. 40 credits

B. 6 credits To be considered currently (or partially) insured, an individual must have earned 6 credits during the last 13-quarter period.

The minimum number of credits required for partially insured status for Social Security disability benefits is A. 4 credits. B. 6 credits. C. 10 credits. D. 40 credits.

B. 6 credits. To be considered partially insured, an individual must have earned 6 credits during the last 13-quarter period.

All of the following are correct about the required provisions of a health insurance policy EXCEPT A. The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract. B. A reinstated policy provides immediate coverage for an illness. C. Policies become incontestable after being in force for 3 years. D. A grace period of 31 days is found in an annual pay policy.

B. A reinstated policy provides immediate coverage for an illness. Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date.

Which of the following conditions would a disability income policy most likely NOT require in order to qualify for benefits? A. The insured must provide proof of disability B. A specified income status prior to the disability C. The insured must be under a physician's care D. The insured must be confined to the house

B. A specified income status prior to the disability Some Disability Income policies require that the insured must be under the care of a physician and possibly confined to his/her house in order to be eligible for disability benefits. Even though disability income benefits are limited to a percentage of earned income, to qualify for benefits, a person must meet the disability definition.

When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision A. Because the misstatement occurred more than 2 years ago, it has no effect. B. Amounts payable under the policy will reflect the insured's correct age. C. The contract will be deemed void because of the misstatement of age. D. The elimination period will be extended 6 months for each year of age misstatement.

B. Amounts payable under the policy will reflect the insured's correct age. If an insured misstates his or her age upon policy application, the optional misstatement of age provision will change the payable benefit to that which would have been purchased at the insured's actual age.

Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service? A. Cost share B. Copayment C. Deductible D. Premium

B. Copayment A copayment is a specific dollar amount of the cost of care that must be paid by the member. For example, the member may be required to pay $5 or $10 for each office visit.

The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called A. Residual Benefits. B. Cost of Living (COLA). C. Waiver of Premium. D. Double Indemnity.

B. Cost of Living (COLA). The purchasing power of fixed disability benefits may be eroded due to inflation and increases in the cost of living. This rider is used to protect against these trends by increasing the monthly benefits automatically once the insured has been receiving benefits for 12 months, if the cost of living increases.

A Waiver of Premium provision may be included with which kind of health insurance policy? A. Dread Disease B. Disability Income C. Basic medical D. Hospital indemnity

B. Disability Income A Waiver of Premium rider generally is included with guaranteed renewable and noncancellable individual disability income policies. It is a valuable provision because it exempts the insured from paying the policy's premium during periods of total disability.

In disability income insurance, the own occupation definition of disability applies A. As long as an individual is unable to work. B. For the first 2 years of a disability. C. During the waiting period. D. During the elimination period.

B. For the first 2 years of a disability. The own occupation definition of disability usually applies to the first 24 months after a loss.

Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it? A. Probationary Period B. Free Look Period C. Grace Period D. Elimination Period

B. Free Look Period The Free Look provision allows a policyholder 10 days after the policy is delivered in which to decide whether or not he/she wants the policy. If the policyholder decides to return the policy within this period, he/she receives a full refund of all premiums paid.

Which of the following is an eligibility requirement for all Social Security Disability Income benefits? A. Be at least age 50 B. Have attained fully insured status C. Be disabled for at least 1 year D. Have permanent kidney failure

B. Have attained fully insured status Although Social Security offers many benefits, such as retirement, survivors and Medicare, only those who have attained fully insured status are eligible for Disability Income benefits. Contributing to Social Security for 40 quarters (10 years) attains fully insured status.

How is the amount of Social Security disability benefits calculated? A. It is based on age, number of quarters worked in the last 20 years (minimum of 60) and the number of health claims made during that period of time. B. It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. C. It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 30 years. D. It is based on age, number of quarters worked in the last 25 years (minimum of 80) and the number of health claims made during that period of time.

B. It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. The lowest 5 years of income may be deleted from calculation.

Which of the following occupations would have the lowest disability insurance premiums? A. Police officer B. Personal Trainer C. Construction worker D. Stunt pilot

B. Personal Trainer The more hazardous an occupation is, the higher the insurance premiums will be. Therefore, because working as a personal trainer poses the least amount of risk, the premiums for this job would be the lowest.

Any occupation disability typically means that an individual is unable to perform the duties of the occupation for which he/she is suited by all of these EXCEPT A. Experience. B. Preference. C. Education. D. Training.

B. Preference. By definition used by most insurers, any occupation disability typically means that an individual is unable to perform the duties of the occupation for which he/she is suited by education, training, and experience.

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe? A. Residual disability B. Presumptive disability C. Dismemberment disability D. Partial disability

B. Presumptive disability Presumptive disability is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.

While repairing the roof of his house an insured accidentally falls off and breaks his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death & Dismemberment Rider. What is the extent of benefits that he will receive? A. Reciprocal Amount B. Principal Sum C. Capital Sum D. 50% of the Principal

B. Principal Sum If the insured dies, the insurer pays the full amount, also known as the "principal sum", which is also paid if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, usually 50%, which is called the "capital sum".

Which of the following are responsible for making premium payments in an HMO plan? A. Payors B. Subscribers C. Producers D. Insureds

B. Subscribers Subscribers are people in whose name the contract is issued. They would be responsible for making premium payments.

Which of the following would be a qualifying event as it relates to COBRA? A. Eligibility for Medicare B. Termination of employment due to downsizing C. Termination of employment for stealing D. Eligibility for coverage under another group plan

B. Termination of employment due to downsizing Employee qualifying events include the termination of employment for reasons other than for misconduct; dependents' qualifying events include the death of the employee, divorce or legal separation.

The period of time immediately following a disability during which benefits are not payable is A. The residual period. B. The elimination period. C. The probationary period. D. The grace period.

B. The elimination period. The elimination period is a waiting period, expressed in days, not dollars, imposed on the insured from the onset of disability until benefit payments commence.

If a business wants to buy a disability income policy on a key employee, which of the following is considered the applicant? A. The producer B. The employer C. The insurer D. The employee

B. The employer In key person disability insurance purchased by a business, the business is the applicant and the key person is the insured. When the policy is issued, the business is the policyowner and is responsible for paying the premiums.

Which statement accurately describes group disability income insurance? A. Short-term plans provide benefits for up to 1 year. B. The extent of benefits is determined by the insured's income. C. In long-term plans, monthly benefits are limited to 75% of the insured's income. D. There are no participation requirements for employees.

B. The extent of benefits is determined by the insured's income. Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

Question 13 of 15 The expense for an autopsy covered under the physical exam and autopsy provision is paid by A. The estate of the insured. B. The insurer. C. The state's autopsy fund. D. The limits of coverage under the health insurance policy.

B. The insurer Where not forbidden by state law, the insurer, at its own expense, may cause an autopsy to be performed on a deceased insured.

The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over which years? Which years of income may be deleted from calculation? A. Their highest 20; lowest 2 B. Their highest 35; lowest 5 C. Their highest 40; lowest 5 D. Their highest 15; lowest 4

B. Their highest 35; lowest 5 The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. The lowest 5 years of income may be deleted from calculation.

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 A. Insuring clause. B. Time Limit on Certain Defenses clause. C. Misstatement of Age clause. D. Reinstatement clause.

B. Time Limit on Certain Defenses clause. The Time Limit on Certain Defenses provision guarantees that a misstatement made in the application, unless it is fraudulent, cannot be contested after the first 3 years of the policy.

Which of the following is NOT the purpose of HIPAA? A. To limit exclusions for pre-existing conditions B. To provide immediate coverage to new employees who had been previously covered for 18 months C. To guarantee the right to buy individual policies to eligible individuals D. To prohibit discrimination against employees based on their health status

B. To provide immediate coverage to new employees who had been previously covered for 18 months HIPAA does not prohibit employers or providers from establishing waiting periods or pre-existing conditions exclusions, in which case the coverage to new employees would not be immediate.

When does a person qualify to receive disability-related income? A. When an insured is hospitalized for more than one week B. When the insured is unable to perform his/her job duties C. When the disability reaches a designated state of severity D. When an injury is severe and the insured is not a dependent

B. When the insured is unable to perform his/her job duties A person must be unable to perform his/her occupation in order to be eligible for disability income benefits.

Question 12 of 15 Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain A. An estimate of the total amount of medical and hospital expense for the loss. B. A complete physician's statement. C. A statement that is sufficiently clear to identify the insured and the nature of the claim. D. A statement from the insured's employer showing that the insured was unable to work.

C. A statement that is sufficiently clear to identify the insured and the nature of the claim. The Insurance Code requires that each policy must include, "Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".

While a claim is pending, an insurance company may require A. The insured to be examined only once annually. B. An independent examination only once every 45 days. C. An independent examination as often as reasonably required. D. The insured to be examined only within the first 30 days.

C. An independent examination as often as reasonably required. While a claim is pending, an insurance company may require an independent exam as often as reasonably required.

Which of the following statements is true concerning the alteration of optional policy provisions? A. An insurer may change the wording of optional policy provisions that would adversely affect the policyholder but must first receive state permission before the change goes into effect. B. Once any kind of provision is written, it cannot be changed. C. An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder. D. An insurer may change the wording of optional provisions, regardless of its effect on the policyholder.

C. An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder. Optional policy provisions can be changed by an insurer, as long as the changes do not adversely affect the policyholder.

A business wants to make sure that if a key employee becomes disabled, the business will be protected from any resulting loss. Which kind of insurance will protect the business? A. Management Loss B. Business Loss C. Business Disability D. Individual Disability

C. Business Disability A business can purchase Business Disability Insurance in order to protect itself from losses resulting from the disability of key employees.

A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called A. Partial Disability B. Recurrent Disability C. Business Overhead Expense. D. Credit Accident and Health coverage

C. Business Overhead Expense. Business Overhead insurance is often purchased by small employers to pay the ongoing business expenses (such as payroll) in the event the owner of the business becomes disabled. Premiums paid are tax deductible as a business expense, but proceeds paid are taxable as income.

An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This would indicate that his policy was probably written with a 30-day A. Probationary period. B. Disability period. C. Elimination period. D. Black-out period.

C. Elimination period. The elimination period is the time immediately following the start of a disability when benefits are not payable. This is used to reduce the cost of providing coverage and eliminates the filing of many claims.

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? A. Full benefits for 2 years B. No benefits C. Full benefits D. Partial benefits

C. Full benefits Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies.), total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work.

In an optionally renewable policy, the insurer has which of the following options? A. Alter the due date so the policy can be cancelled sooner B. Shorten the notice that the insured receives C. Increase premiums D. Increase the grace period

C. Increase premiums Optionally renewable policies allow the insurer to cancel a policy for any reason whatsoever. Policies can only be cancelled by class on the policy anniversary or premium due date (renewal date). If the insurer elects to renew coverage, it can also increase the policy premium.

In a group health policy, a probationary period is intended for people who A. Have additional coverage through a spouse. B. Want lower premiums. C. Join the group after the effective date. D. Have a pre-existing condition at the time they join the group.

C. Join the group after the effective date. The probationary period is the waiting period new employees must satisfy before becoming eligible for benefits.

Which of the following is considered a presumptive disability under a disability income policy? A. Loss of hearing in one ear B. Loss of one hand or one foot C. Loss of two limbs D. Loss of one eye

C. Loss of two limbs Presumptive disability is a provision that is found in most disability income policies that specifies conditions that will automatically qualify the insured for full disability benefits, such as the loss of two limbs.

A medical insurance plan in which the health care provider is paid a regular fixed amount for providing care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called A. Reimbursement plan. B. Fee-for-service plan. C. Prepaid plan. D. Indemnity plan.

C. Prepaid plan. Under a prepaid plan, the health care providers are paid for services in advance, whether or not any services are provided. The amount paid to the provider is based upon the projected annual cost as determined by the provider.

Which of the following are the main factors taken into account when calculating residual disability benefits? A. Employee's full-time status and length of disability B. Present earnings and standard cost of living C. Present earnings and earnings prior to disability D. Earnings prior to disability and the length of disability

C. Present earnings and earnings prior to disability Residual disability will help pay for loss of earnings by making up the difference between the employee's present earnings and what they were earning prior to disability.

Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen? A. The SIS rider will discontinue paying benefits. B. Both plans will continue to pay fully. C. The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. D. Social Security will discontinue benefits until the SIS rider expires.

C. The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. A Social Insurance Supplement (SIS) rider pays a disability benefit in an amount close to what Social Security would pay. If Social Security benefit payments begin, the SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment.

Which of the following is true regarding METs? A. They provide insurance for larger corporations. B. They provide insurance companies with medical information on applicants. C. They allow several small employers purchase less expensive insurance together. D. They make deals with local hospitals to provide low cost coverage to the needy.

C. They allow several small employers purchase less expensive insurance together. Those small employers who cannot qualify for group health insurance band together for the purpose of buying insurance.

Which of the following would be a typical maximum benefit offered by major medical plans? A. $10 million B. $50,000 C. $500,000 D. $1 million

D. $1 million Major medical plans have high maximum benefits such as $1,000,000 or $2,000,000. Maximum benefits are usually lifetime maximums.

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? A. 5 B. 3 C. 2 D. 1 Review Content Next Question

D. 1 The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.

What is the number of credits required for fully insured status for Social Security disability benefits? A. 4 B. 10 C. 30 D. 40

D. 40 The term "fully insured" refers to someone who has earned 40 quarters of coverage (10 years of work times 4 maximum annual credits).

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized? A. 55 B. 59 1/2 C. 62 D. 65

D. 65 After age 65, a withdrawal from an HSA used for a nonhealth purposes will be without a penalty, although taxed.

An insured wants to buy a disability income policy that pays a maximum monthly benefit of $1,200. To make sure that the disability benefit keeps up with inflation, the insured would need to add A. A guaranteed purchase option rider. B. 5% more to the premium each year. C. An additional monthly benefit rider. D. A cost of living rider.

D. A cost of living rider. The cost of living rider is usually tied to the Consumer Price Index (CPI) or another recognized measure of inflation.

A group blanket health policy is best suited for which of the following? A. A small employer B. A manufacturer C. A large family D. A summer camp

D. A summer camp Group blanket health insurance policies are meant to cover members of a group or association without evidence of insurability. Coverage is usually limited to loss from specific causes.

In disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability? A. Typical B. Statutory C. Own occupation D. Any occupation

D. Any occupation For disability income benefits to be paid, the insured must whatever definition of total disability is stated in the policy, which varies. The "any occupation" definition states that an insured is disabled if they cannot perform any job that they are suited for by prior education, training or experience. The "own occupation" definition states that an insured is disabled if they cannot perform their own job, whatever that may be.

Social Security was created to protect against all of the following EXCEPT A. Sickness in old age. B. Premature death. C. Disability. D. Bad investment choices.

D. Bad investment choices. Social Security is a Federal program enacted in 1935, that is designed to provide protection, for eligible workers and their dependents, against financial loss due to death, disability, superannuation (retirement income), and sickness in old age.

Which of the following statements regarding Business Overhead Expense policies is NOT true? A. Premiums paid for BOE are tax-deductible. B. Any benefits received are taxable to the business. C. Leased equipment expenses are covered by the plan. D. Benefits are usually limited to six months.

D. Benefits are usually limited to six months. Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.

In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is A. More limited in general. B. More limited in duration. C. Broader in duration. D. Broader in general.

D. Broader in general. A policy that uses the accidental bodily injury definition will provide broader coverage than a policy

Which of the following would NOT be used in preventive care? A. Pap smear B. Annual physical exam C. Mammogram D. Chemotherapy

D. Chemotherapy Managed care plans encourage preventive care and living a healthier lifestyle. Annual physical exams, mammograms, and other procedures used to detect medical problems before symptoms appear can result in a considerable cost savings if a problem is detected early and treated quickly.

Question 11 of 15 An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the A. Insuring Clause. B. Pre-existing Conditions Clause. C. Eligibility Clause. D. Consideration Clause.

D. Consideration Clause. The consideration clause specifies that both parties to the contract must give some valuable consideration. The payment of the premium is the consideration given by the applicant. Because the applicant had not paid an initial premium, she is not covered by insurance.

All of the following are true about group disability Income insurance EXCEPT A. Benefits are usually short term. B. The waiting period starts at the onset of the injury or sickness. C. The longer the waiting period, the lower the premium. D. Coverage applies both on and off the job.

D. Coverage applies both on and off the job. Employees who are injured on the job are covered by Workers Compensation insurance. Group Disability Income insurance is designed to cover employees only while they are off the job, so the coverage is considered to be nonoccupational in nature.

Which of the following is NOT true of basic medical expense plans? A. No deductibles B. First-dollar coverage C. Low dollar limits D. Coverage for catastrophic medical expenses

D. Coverage for catastrophic medical expenses Basic medical expense plans were characterized by first-dollar coverage (no deductible) and low dollar limits, which meant they afforded no protection to an individual or family against catastrophic medical expenses that could be financially disastrous.

The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the A. Certificate of insurance. B. Aleatory contract. C. Master policy. D. Entire contract.

D. Entire contract. The policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence other than the contract and the attached application in a test of the contract's validity. This is a mandatory provision in life insurance.

All of the following statements describe a MEWA EXCEPT A. MEWAs can be sponsored by insurance companies. B. MEWA employers retain full responsibility for any unpaid claims. C. MEWAs can be self-insured. D. MEWAs are groups of at least 3 employers.

D. MEWAs are groups of at least 3 employers. MEWAs are groups of at least 2 employers who pool their risks to self-insure. MEWAs can be sponsored by an insurance company, an independent administrator, or another group established to provide group benefits for participants.

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply? A. No coverage will apply, since disability income policies cover sickness only. B. Coverage will apply since the break was accidental. C. Coverage will apply, but will be reduced by 50%. D. No coverage will apply, since the injury could have been foreseen

D. No coverage will apply, since the injury could have been foreseen An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives? A. Full B. 50% C. 25% D. None

D. None General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds? A. Conditionally renewable B. Cancellable C. Guaranteed renewable D. Optionally renewable

D. Optionally renewable The renewability provision in an optionally renewable policy gives the insurer the option to terminate the policy for any reason on the date specified in the contract (usually a renewal date). Furthermore, this provision allows the insurer to increase the premium for any class of optionally renewable insureds.

An insured purchases a health policy in 2000 and submits a claim in 2005. The insurance company discovers at that time that the insured misstated the information about his health condition. What will the insurer most likely do? A. Deny the claim B. Pay a decreased benefit C. Void the policy D. Pay the full benefit

D. Pay the full benefit The Time Limit on Certain Defenses provision stipulates that no statement or misstatement (except fraudulent misstatements) made in the application at the time of issue will be used to void a policy or deny a claim after the policy has been in force for 3 years.

All of the following are true regarding key person disability income insurance EXCEPT A. The employer receives the benefits if the key person is disabled. B. The employer pays the premiums. C. The employee is the insured. D. Premiums are tax deductible as a business expense.

D. Premiums are tax deductible as a business expense. In key person disability insurance, the contract is owned by the business, the premium is paid by the business, and the business is the beneficiary. The key person is the insured, and the business must have the key person's consent to be insured in writing.

If an individual is covered by a policy that includes an Accidental Death & Dismemberment rider, what term describes the maximum benefits he will receive if he loses sight in both eyes as a result of a fire? A. Reciprocal amount B. Capital sum C. Percentage of full amount D. Principal sum

D. Principal sum If the insured dies, the insurer pays the full amount, also known as the "principal sum". Principal sum will most likely be paid out if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, called the "capital sum."

In the event of a loss, business overhead insurance will pay for A. Loss of profits. B. Salary of the business owner. C. Medical bills of the business owner. D. Rent.

D. Rent. Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It does not pay the salary of the business owner or their loss of profits. However, it will provide the funds needed to pay the salary of employees other than the owners and their other ongoing business expenses, such as rent.

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability? A. Recurrent disability B. Partial disability C. Income replacement D. Residual disability

D. Residual disability A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss.

In a disability policy, the elimination (or waiting) period refers to the period between A. The effective date of the policy and the date the first premium is due. B. Coverage under a disability policy and coverage under Social Security. C. During which any specific illness or accident is excluded from coverage. D. The first day of disability and the day the insured starts receiving benefits.

D. The first day of disability and the day the insured starts receiving benefits. The elimination, or waiting, period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start.

An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? A. The group plan will pay. B. The group plan will pay a portion of the employee's expenses. C. The group plan will pay depending on the employee's recovery. D. The group plan will not pay because the employee was injured at work.

D. The group plan will not pay because the employee was injured at work. Because the employee's injuries were work related, the group health policy would not respond. The insured would have to rely on worker's compensation for coverage.

An insured has a Social Insurance Supplement rider in her disability income plan. Following a disability, she begins receiving benefit payments from the insurer. She then begins receiving Social Security benefits that are smaller than the SIS benefit payments. At that point, her insurer ends the SIS benefit payments. Which of the following best describes the situation? A. Miscommunication. The proper authorities should be notified in order to end Social Security payments so that the SIS rider will continue to pay. B. Although a mistake may have occurred, the insured has no recourse. C. This is typical of an SIS rider. D. The insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit.

D. The insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit. A Social Insurance Supplement (SIS) rider pays a disability benefit in an amount close to what Social Security would pay. If Social Security benefit payments begin, the SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. Therefore, completely ending SIS payment is illegal.

An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true? A. The claim most likely will not be paid since the official claims form was not submitted. B. The insurer will be fined for not providing the claims forms. C. The insured must submit proof of loss to the Department of Insurance. D. The insured was in compliance with the policy requirements regarding claims.

D. The insured was in compliance with the policy requirements regarding claims. If claims forms are not furnished to the insured, the claimant is deemed to have complied with the requirements of the policy if he or she submits written proof of the occurrence, nature of the loss, and extent of loss to the insurer.

An applicant is considered to be high-risk, but not so much that the insurer wants to deny coverage. Which of the following is NOT true? A. The insurer can increase the premium. B. The insurer can add exclusions to the policy. C. The insurer can rate-up the policy. D. The insurer will issue a conditional coverage.

D. The insurer will issue a conditional coverage. If an applicant is considered to be too much of a risk, the application can be denied. If, however, the applicant's risks are not high enough to decline, two measures can be taken to protect the insurer: the policy can be rated-up, which means that the premiums will increase, and exclusions can be added, which means that the insurer will not have to cover conditions that make the applicant a high risk to insure.

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees A. To charge a lower premium every year the policy is renewed. B.Not to change the premium rate for any reason. C. To renew the policy indefinitely. D. To renew the policy until the insured has reached age 65.

D. To renew the policy until the insured has reached age 65. The guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. As with the noncancellable policy, coverage is generally not renewable beyond the insured's age 65.