Units 17-19

The entire contract of an individual health insurance policy includes all the following EXCEPT: A) endorsements and waivers. B) endorsements and riders. C) the buyer's guide and any riders. D) the application and waivers.

C) the buyer's guide and any riders.

Which of the following riders allows an insurer to issue a health insurance policy to an individual that covers everything but a certain injury or illness? A) Multiple indemnity. B) Waiver for impairments. C) Preexisting condition. D) Optional exclusion.

B) Waiver for impairments.

The effect of an impairment rider attached to a health insurance policy is to: A) increase the premium rate charged. B) exclude losses resulting from specified conditions. C) decrease the amount of benefits provided. D) lengthen the preexisting condition waiting period.

B) exclude losses resulting from specified conditions.

All of the following are optional provisions in an individual accident and health insurance policy EXCEPT: A) loss-of-time benefit adjustment. B) illegal occupation. C) change of beneficiary. D) change of occupation.

C) change of beneficiary.

Insurers generally pay a maximum benefit of 60% of predisability income for disability income benefits for all the following reasons EXCEPT: A) to assure that the insured does not receive more than his predisability income while disabled. B) to discourage malingering. C) because benefits paid to individual insureds are generally income tax free. D) because benefits are based on net, after-tax earnings.

D) because benefits are based on net, after-tax earnings.

Ned recently injured his back. The insurance company might legitimately deny his claim for disability income benefits for which of the following reasons? A) He is not under a doctor's care. B) His wife's income is adequate to support both of them. C) His income from investments is adequate to replace his income. D) He injured his back while snowboarding on vacation.

A) He is not under a doctor's care.

Which of the following provisions is optional in an individual health insurance policy? A) Unpaid premium provision. B) Change of beneficiary provision. C) Entire contract provision. D) Grace period.

A) Unpaid premium provision. An unpaid premiums provision is optional and states that when a claim is paid, any premium due may be deducted from the payment.

All of the following types of insurers underwrite health insurance EXCEPT: A) annuity companies. B) casualty insurance companies. C) monoline companies. D) life insurance companies.

A) annuity companies.

Jim has just received a lump-sum payment from his individual disability income policy provider. Which of the following is the best explanation for this payment? A) The elimination period has ended. B) His policy includes a return-of-premium provision. C) The definition of disability in his policy has been changed from any occupation to own occupation. D) His Social Security benefit has been terminated.

B) His policy includes a return-of-premium provision.

Under Barbara's individual disability income policy, she has been receiving $700 a month for the last three years. This year, her benefit increased to $728. Which of the following is the most likely reason her benefit amount has gone up? A) The Social Security Administration increased its benefits. B) She has a cost-of-living (COLA) rider on her policy. C) Her policy contains a step-rate benefit that increases every three years. D) The severity of her disability has increased.

B) She has a cost-of-living (COLA) rider on her policy.

An individual accident and health insurance policy must contain all of the following EXCEPT: A) the amount of policy premiums. B) a 21-day grace period. C) a change of beneficiary provision. D) a reinstatement provision.

B) a 21-day grace period.

The probationary period in disability income policies usually lasts: A) no more than one week. B) two weeks to one month. C) two to five months. D) six months to one year.

B) two weeks to one month.

When it is used, the time limit on the certain defenses provision in a health insurance policy provides that the policy cannot be contested and claims cannot be denied after two (or three) years EXCEPT: A) for nonpayment of premiums. B) for mental incompetence of the insured. C) for fraudulent statements in the application. D) for incomplete policy records.

C) for fraudulent statements in the application.

The insurance company has totally revised its individual health insurance policy. Mary likes the coverage she already has and is concerned about the changes. She contacts the producer who sold her the policy, who tells her that: A) rising health care costs have necessitated the changes, and her policy is still the best coverage available. B) she has 6 month to accept the new policy. C) her policy will not be affected by the changes. D) under the entire contract provision of her policy, the company has the right to make changes with 30-days notice.

C) her policy will not be affected by the changes. Under the entire contract provision of her policy, no changes can be made to the policy after it has been issued. Therefore, her policy will be unaffected.

A business disability buy-out insurance plan may include an "elective indemnity." This feature can be used to: A) reimburse other business owners or partners for the insured's loss of services to the business. B) pay a lump-sum death benefit to the insured's family. C) postpone payment of the benefit to the insured. D) enable the business owners to add other owners to the policy.

C) postpone payment of the benefit to the insured. Under the elective indemnity provision, the owners can elect to take either periodic payments or postpone the benefit until it is determined that the disabled owner will not recover sufficiently to return to work, thereby postponing the decision regarding the sale of the disabled owner's share of the business to the other owners.

Individual health insurance policies specify that the insured must furnish proof of loss to the insurer how long after the date of the loss? A) Proof of loss is not required for most health insurance policies. B) 10 days. C) Immediately. D) 90 days.

D) 90 days. Individual health insurance policies must contain a proof of loss provision stating that the insured must furnish proof of loss to the insurer within 90 days of the date of loss.

Under the misstatement of age provision in a health insurance policy, what can an insurer do if it discovers that an insured gave a wrong age at the time of application? A) Assess a penalty. B) Cancel the policy. C) Increase the premium. D) Adjust the benefits.

D) Adjust the benefits.

What disability policy can be used to fund buy-sell agreements between partners or stockholders in a closely held corporation? A) Business overhead expense policy. B) Long-term care disability policy. C) Key-person disability policy. D) Disability buy-out policy.

D) Disability buy-out policy.

The grace period, entire contract, and reinstatement provisions are mandatory uniform provisions.

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All of the following are required provisions for accident and health policies EXCEPT: A) entire contract and changes. B) misstatement of age. C) change of beneficiary. D) proof of loss.

B) misstatement of age.

After a health insurance policy is in force, the initial period that often must pass before a loss due to sickness can be covered is known as: A) the trial term. B) the elimination period. C) the probationary period. D) the preexisting interval.

C) the probationary period. The probationary period helps the insurer to avoid paying benefits for losses due to illness contracted before the policy was issued.

Which of the following statements characterizes a cancelable policy? A) The insurer may cancel the policy only at the end of the term. B) The insurer may cancel the policy at any time. C) The insurer may not cancel the policy because of the insured's retirement. D) The insurer may not cancel the policy because of the insured's age.

B) The insurer may cancel the policy at any time.

Which of the following statements regarding an accidental death and dismemberment rider for a disability insurance policy is NOT correct? A) The sum payable under the dismemberment feature is typically expressed as a muliple of the disability policy's weekly indemnity. B) Once a sum has been paid under the dismemberment feature, the disability income payments stop. C) The life insurance feature of this rider does not pay a death benefit if the death is due to natural causes. D) The dismemberment feature provides insureds with periodic payments to help them during a rehabilitation period.

D) The dismemberment feature provides insureds with periodic payments to help them during a rehabilitation period. **It provides them with a lump sum payment, not periodic payments.

Accident and health policies that provide coverage on an expense-incurred basis for a family member of the insured: A) must cover only those family members covered at the time the policy is issued. B) must require notice to the insurer of the birth of a newborn before coverage is provided. C) may exclude sickness from a newborn's coverage. D) must cover a newborn child from the moment of birth.

D) must cover a newborn child from the moment of birth.

Insured losses are covered immediately after a health policy is reinstated when: A) claim forms are submitted with proof of loss. B) hospitalization is required. C) all back premiums have been paid. D) the losses result from accidental injuries.

D) the losses result from accidental injuries. Insured losses are covered immediately after a health policy is reinstated when the losses result from accidental injuries. Insured losses from sickness will not be covered unless they occur at least ten days after reinstatement. This is to prevent adverse selection against the insurer.

Under the misstatement of age provision in a health insurance policy, if an insurer discovers that an insured gave a wrong age at the time of application, it can adjust the benefits. Benefit amounts payable in such cases will be what the premiums paid would have purchased at the correct age.

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Sidney makes $3,000 a month as a machine shop supervisor. His disability income policy provides for a monthly payment of $2,500 in the event of total disability. If Sidney were to become partially disabled, but continued to work at 60% of his pay, what would the policy pay, assuming it had a residual disability provision? A) $0, since Sidney was not fully disabled. B) $1,200 a month. C) $1,000 a month. D) $2,500 a month.

C) $1,000 a month. A residual disability income policy ties the benefit payments directly to the proportion of actual earnings lost. In this problem, since Sidney is earning 60% of his predisability pay, the residual benefit would be 40% of the full benefit, or $1,000, calculated as .40 x $2,500.

Which of the following is the best reason why a medical plan would require a concurrent review for hospital patients? A) The doctor and the patient consult on discharge times. B) The insurance company and the health care providers make decisions jointly. C) Quality care is assured at the most reasonable expense. D) The patient is discharged in the shortest possible time.

C) Quality care is assured at the most reasonable expense.

Which of the following statements regarding a conditionally renewable policy is NOT correct? A) The insured has the conditional right to renew the policy up to a given date. B) The insurer may refuse to renew the contract as the result of the insured's retirement. C) The insurer may refuse to renew the contract as the result of the insured's deteriorating health. D) The insured has the conditional right to renew the policy up to a given age.

C) The insurer may refuse to renew the contract as the result of the insured's deteriorating health.

A policy that has lapsed may be reinstated. However, 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. Losses due to accidental injury are covered immediately upon reinstatement of the policy.

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All health insurance policies must contain a grace period. The minimum grace period for weekly premium policies is 7 days, for monthly premium policies, 10 days, and for all other types of policies, 31 days.

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Thomas, an insured, submits a claim and proof of loss for medical expenses covered by his major medical policy. According to the time of payment of claims provision, how soon must the company pay the claim? A) Within 90 days. B) Within 150 days. C) Within 30 days. D) Immediately.

D) Immediately.

Which of the following is an optional provision in an individual accident and health insurance policy? A) Time limit on defenses. B) Change of beneficiary. C) Reinstatement. D) Misstatement of age.

D) Misstatement of age.

Which of the following is an optional provision in an individual accident and health insurance policy? A) Misstatement of age. B) Entire contract. C) Reinstatement. D) Time limit on defenses.

A) Misstatement of age. Individual accident and health insurance policies must contain reinstatement, time limit on defenses, and entire contract provisions. A misstatement of age provision is optional. If the insured's age has been misstated, he will receive the benefits that the premium would have purchased at the correct age.

Which of the following statements about the grace period and reinstatement provisions in a health insurance policy is NOT correct? A) Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement. B) Craig's health policy has a grace period of 31 days. He had a premium due June 15, while he was on vacation. He returned home July 7 and mailed his premium the next day. The insurer received it July 10. His policy would have remained in force. C) States may require grace periods of 7, 10, or 31 days, depending on the mode of premium payment or term of insurance. States may also set their own state specific grace periods as long as those periods are at least as favorable as those set in the model provisions act. D) Warren's medical expense policy was reinstated on September 30. He became ill and entered the hospital on October 5. His hospital expense will not be paid by the insurer.

A) Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement. **Only losses due to accidental injury are covered immediately upon reinstatement of the policy.

The entire contract provision of a disability income policy defines the contract to include all the following EXCEPT: A) any riders the insurer may unilaterally add to the policy in the future. B) the riders attached to it when the policy was issued. C) the properly completed and signed application. D) the policy document.

A) any riders the insurer may unilaterally add to the policy in the future.

Individual accident and health insurance policies must contain all of the following provisions EXCEPT: A) change of occupation provision. B) change of beneficiary provision. C) proof of loss provision. D) time limit on certain defenses provision.

A) change of occupation provision.

Under the required claim forms provision of a health insurance policy, an insurer must furnish the claim form to the insured within how many days after receiving a notice of claim? A) 21 days. B) 15 days. C) 30 days. D) 10 days.

B) 15 days. Under the required claim forms provision of a health insurance policy, an insurer must furnish its claim form to the insured within 15 days after receiving notice of a claim. Otherwise, the claimant may submit proof of loss in any form that explains the occurrence, the character, and extent of the loss.

An individual may take legal action to recover on an accident and health insurance policy no sooner than how many days after written proof of loss is provided? A) 50 days. B) 60 days. C) 30 days. D) 20 days.

B) 60 days. Accident and health insurance policies must contain a legal action provision stating that legal actions to recover on a policy can begin no sooner than 60 days or later than 3 years after written proof of loss is furnished.

Question ID: 201567 All of the following statements are required uniform provisions in an individual health insurance policy EXCEPT: A) reinstatement. B) change of occupation. C) grace period. D) entire contract.

B) change of occupation. The change of occupation provision sets forth the changes that may be made to premium rates or benefits payable if the insured changes occupations. This is an optional provision.

Paul is hospitalized with a back injury and, upon checking his disability income policy, learns that he will not be eligible for benefits for at least 60 days. This would indicate that his policy probably has a 60-day: A) disability period. B) elimination period. C) blackout period. D) probationary period.

B) elimination period.

An accident and health insurance policy that provides for monthly payments has a grace period of: A) 7 days. B) 14 days. C) 10 days. D) 31 days.

C) 10 days.

The minimum grace period for weekly premium policies is: A) 30 days. B) 31 days. C) 7 days. D) 10 days.

C) 7 days.

A broad statement that generally appears on the first page of a health insurance policy and specifies conditions under which benefits will be paid is known as the: A) guaranty provision. B) assurance clause. C) insuring clause. D) warranty provision

C) insuring clause. The insuring clause identifies the insurer and insured, specifies benefits and includes the insurer's promise to pay benefits for specific kinds of losses.

Regarding the waiver of premium provision, all of the following statements are correct EXCEPT: A) it is generally available with disability income policies. B) the waiver may apply retroactively to the original date of disability following a waiting period. C) it is frequently included with both individual and group policies. D) such a waiver usually does not apply after the insured reaches age 60 or 65.

C) it is frequently included with both individual and group policies. **A waiver of premium does not apply to group insurance.

What disability policy indemnifies the business for certain expenses incurred when the business owner is disabled? A) Business overhead expense policy. B) Cash value policy. C) Key-person disability policy. D) Disability buy-out policy.

A) Business overhead expense policy.

Harry, the owner of a convenience store, is the insured under a business overhead policy. Were Harry to become disabled, the policy would cover all of the following EXCEPT: A) Harry's salary. B) the store manager's salary. C) utility bills. D) the rent.

A) Harry's salary.

If an impairment rider is attached to a health insurance policy, it will: A) exclude from coverage losses resulting from specified conditions. B) decrease the amount of benefits provided. C) increase the premium rate charged. D) lengthen the policy's waiting period.

A) exclude from coverage losses resulting from specified conditions.

Benefit periods for short-term disability income policies typically vary from: A) six months to two years. B) one to 12 months. C) one to five years. D) three months to three years.

A) six months to two years. Long-term disability policies carry benefit periods of two years and longer.

All individual health insurance policies must include a notice of claim provision requiring that a written notice of claim must be given to the insurer within how long after the occurrence of the loss? A) 5 days. B) 24 hours. C) 20 days. D) 10 days.

C) 20 days. All individual health insurance policies must include a notice of claim provision. According to this provision, written notice of a claim must be given to the insurer within 20 days after a covered loss starts, or as soon as possible thereafter. The insurer must provide a claims form to the insured within 15 days of receiving notice of a claim. Failure to do so means that the insured may meet the time requirement for proof of loss by giving the insurer a written statement verifying the loss.