NJ Health Insurance Exam (XCEL Solutions)

A closed network plan offers a a primary physician copay of $25. If a subscriber chooses a primary care physician outside of the network, the subscriber will likely pay

100% of the billed amount

A nonparticipating policy will

not pay dividends

Paul is an employee who caught a disease unique to the trade in which he was exposed to. Paul has a(n)

occupational disease

What makes an insurance policy a unilateral contract?

only the insurer is legally bound

The monthly benefit for an individual disability income policy is usually limited to a percentage of the insured's income in order to avoid

over insurance

Which clause defines total disability as being unable to perform the major duties of the insured's regular occupation?

own occupation clause

What kind of life insurance policy issues by a mutual insurer provides a return of divisible surplus?

participating life insurance policy

Which type of disability would be less than total impairment and equal to permanent impairment?

permanent partial disability

Medicaid is a government-funded program designed to provide health care to

poor people

Medicaid is intended for

poverty stricken people

The Federal Employees Benefit Program consists of two types of health plans for federal civilian employees. The two plans are fee-for-service and

prepaid

A disability elimination period is best described as a

time deductible

What is the elimination period of an individual disability policy?

time period a disabled person must wait before benefits are paid

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

unilateral

Funding for Medicare Part B is partially provided by

user premiums

A medical provider that accepts Medicare Assignment must

accept payment based upon a defined Medicare scheduled as a payment in full

Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this?

$10,000

Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken?

$5,000

What is Medicare Part A?

(hospital insurance) covers inpatient care in hospitals and skilled nursing facilities, and it covers care provided in hospice and some care provided at home

Medicare Part A does not pay for medical benefits provided for treatment in a skilled nursing facility beyond

100 days

How much does Medicare Part B pay for physician fees?

80%

At what age will a person normally enroll with an insurance carrier under a Part C Medicare Advantage Plan?

Age 65

The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as

aleatory

The open enrollment period for Medicare Part B is

January 1 through March 31

Donna and Mary were racing bicycles in a store parking lot while being cheered on by fellow employees. Mary ran into John, another employee, who happened to be taking out the garbage. Both Mary and John are injured. Who would most likely be covered under Workers' Compensation?

John

Small employers who are sponsored by an insurer to provide group benefits to its employees are called

MEWA

The waiting period for a disability insurance policy

excludes payments for a short-term illness or injury

Fraternal Benefit Society has each of the following characteristics EXCEPT incorporated without capital stock exists for profit exists for the benefit of its members

exists for profit

Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds?

Tom

Part A Hospital expense coverage provided under Medicare is automatically made available to each of the following EXCEPT a 50-year old individual who has qualified for SSDI in the last 24 months a 70-year old NOT eligible for social security a 55-year old suffering from kidney failure a 65-year old retiree

a 70-year old NOT eligible for social security

Which of the following best describes a conditional insurance contract?

a contract that requires certain conditions or acts by the insured individual

Which of the following is an example of the insured's consideration?

a paid premium

Which of the following is NOT considered advertising? a rating from a rating service company, such as A.M. Best an illustration a sales presentation direct mailing from an agency

a rating from a rating service company, such as A.M. Best

A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called

a self-funded plan

The waiver of premium does NOT include which provision? all future premiums are waived if the insured recovers from the disability if the insured qualifies, the premium are waived retroactively to the beginning of the disability the waiver of premium generally does not extend past the insured's age 60 or 65 the insured must be disabled for a set period of time before benefits begin

all future premiums are waived if the insured recovers from the disability

What is a MEWA?

an arrangement where a group of employers pool their contribution together to purchase group health and other insurance benefits for their employees

The factor used most often when underwriting a disability income policy is

annual earnings

The deeds and actions of a producer indicate what kind of authority?

apparent

According to life insurance contract law, insurable interest exists

at the time of application

What is implied authority defined as?

authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties

Why are dividends from a mutual insurer not subject to taxation?

because dividends are considered to be a return of premium

Insurable interest does not occur in which of the following relationships? sister and brother parent and children business partners business owner and business client

business owner and business client

Maria is a Preferred Provider Organization (PPO) subscriber and received care from an out-of-network provider. Which of the following is the likely result?

care is covered

All of the following are elements of an insurance policy EXCEPT definitions other insurance claim forms conditions

claim forms

Intentional withholding of material facts that would affect an insurance policy's validity is called a(n)

concealment

In an insurance contract, the element that shows each party is giving something of value is called

consideration

Which type of clause describes the following statement: "We have issued the policy in consideration of the representations in your applications and payment of the first-term premium".

consideration clause

In order for a contract to be valid, it must

contain an offer and acceptance

Which disability policy provision would address any concerns of the value of the benefits decreasing over time?

cost of living benefit

_____ is not an element of a valid contract

countersignature

Medicare provides coverage for each of the following EXCEPT hospital room and board doctor and surgeon services prescription drugs custodial care

custodial care

What is the primary purpose of a rating service company such as A.M. Best?

determine financial strength of an insurance company

A doctor who accepts Medicare Assignment agrees to which of the following?

doctor cannot charge more than medicare's scheduled coverage

Medicare Part B covers

doctor's charges

A professional liability for which producers can be sued for mistakes of putting a policy into effect is called

errors and omissions

When the principle gives the agent authority in writing, it's referred to as

express authority

Which of these is NOT a qualifying event for Medicare? on social security for over 2 years kidney failure age 65 or older falling below the federal poverty level

falling below the federal poverty level

A health care provider claim may be settled using which of the following payment methods?

fee-for-service

Which of these will typically authorize treatment from a specialist? administrator policyowner insurance company gatekeeper

gatekeeper

How is Medicare Part B funded?

general tax revenue and user premiums

An HMO that involves a partnership of physicians and other providers who practice out of a central facility is called a(n)

group HMO

The power given to the individual producer that is not specifically addressed in his/her contract is considered what type of authority?

implied

Which of the following is NOT taken into consideration when determining eligibility for Medicare benefits? chronic kidney disease income age social security disability

income

Medicare Part A covers

inpatient hospital stay

Which of the following is present when an applicant stands to lose value if the insured dies?

insurable interest

Who is responsible for assembling the policy forms for insureds?

insurance carriers

The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT charities political organizations insurance sales calls surveys

insurance sales calls

Ambiguities in an insurance policy are always resolved in favor of the

insured

An accident and health policy that provides reimbursement benefits makes them payable to the

insured

The authority granted to a licensed producer is provided via the

law of agency

Which contract element is insurable interest a component of?

legal purpose

An insurer's ability to make unpredictable payouts to policyowners is called

liquidity

Coming from an insurance point of view, which of the following is the main risk associated with disability?

loss of income

Which of the following is Medicare Part B also known as?

medical insurance

Which of the following is a legal entity created for the sole purpose of providing affordable group health coverage to its participants?

multiple employer welfare arrangement (MEWA)

How does one become eligible for Part D: Prescription Drug coverage?

must have medicare coverage

A type of insurer that is owned by its policyowners is called

mutual

According to the principle of Utmost Good Faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and it's

promises made

The Fair Credit and Reporting Act's main purpose is to

protect consumers with guidelines regarding credit reporting and distribution

What is considered to be the primary reason for buying life insurance?

provide death benefits

What is the purpose of a Disability Income Benefit?

provide money for living expenses

When comparing an HMO to a PPO, the PPO

provides a greater choice of providers

The role of the federal government was expanded when Medicaid was established by allowing the state to

receive matching funds to expand public assistance programs

ABC insurance company transfers part of their risk to XYZ insurance company. This situation is called

reinsurance

A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called the

reinsurer

What are an applicant's statements concerning occupation, hobbies, and personal health history regarded as?

representations

Typically, Long-Term Disability benefits are coordinated with which benefit plan?

social security

An insurer's claim settlement practices are regulated by the

state insurance departments

In an insurance contract, the applicant's "consideration" is the

statements made in the application and the premium

A(n) _____ company is owned by its shareholders

stock

A nonparticipating company is sometimes called a(n)

stock insurer

An individual covered under a Blue Cross Blue Shield plan is called a(n)

subscriber

What is Medicare B also known as?

supplementary medical insurance

When a preferred provider organization (PPO) insured goes out-of-network, which of the following actions occur?

the insurer will pay a reduced amount

Under a contract of adhesion,

the terms must be accepted or rejected in full

Legal purpose is a term used in contract law meaning

there must be legal reasons for entering a contract

What is the primary factor that determines the benefits paid under a disability income policy?

wages

An individual can enroll in a Part C Medicare advantage plan at what time?

when becoming eligible for medicare

A 70-year old insured individual has suffered from kidney failure for the past 24 months. She is covered by her spouse's large-group employer plan. How will Medicare be utilized in this situation?

will be the secondary insurer and pay for claims not fully covered by the group plan

What type of injury would NOT be covered under a health insurance policy? accidental work-related sports-related recreational

work-related