Accident and Health Insurance - Basics (chapter 11)

In which of the following situations is it illegal for an insurer to disclose privileged information about an insured?

A researcher for marketing purposes - There are certain circumstances in which it is legal for an insurer to disclose privileged information about an insured, including law enforcement, auditing, and legal purposes.

Concerning AIDS and HIV risks, all of the following acts may subject an insurer to liability claims or fines EXCEPT

Declining applicant for a positive HIV test result. - Companies pay for their medical testing and underwriting. At the time of application, information on HIV and AIDS and counseling options must be given to the clients. Applicants can be declined for HIV/AIDS (a true health risk). Disclosing health results to an unauthorized party is a violation.

In which of the following cases would a credit disability policy be issued?

If an individual is in debt to a specific creditor, payments will be made for him/her until the return to work. - A credit disability policy is issued only to those in debt to a specific creditor. In case of disability, payments to the creditor will be made for them until able to return to work by the definition in the policy.

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?

Immediately after receiving written proof of loss - Death proceeds under a life insurance policy are due as soon as the insurer receives written proof of loss.

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

Premiums are not elevated - The "standard" rating indicates that an individual represents a similar level of health and lifestyle quality as other members of the same age cohort. These individuals do not need special policy restrictions or are required to pay higher premiums. Those in the "preferred" category often have to pay smaller premiums than those who are in the "standard" category.

Insurers may change which of the following on a guaranteed renewable health insurance policy?

Rates by class - On a guaranteed renewable health insurance policy, the insurer may increase premiums on a class basis only and not on an individual policy.

Health insurance underwriting is best defined as

Selection, classification, and rating of risks. - The underwriting process is accomplished by reviewing and evaluating information about an applicant and applying what is known of the individual against the insurer's standards and guidelines for insurability and premium rates.

What is the best way to change an application?

Start over with a fresh application. - Most companies require that the app be filled out in ink. The agent might make a mistake when filling out the app or the applicant might answer a question incorrectly and want to change it. There are two ways to correct an application. The first and best is to simply start over with a fresh application. If that is not practical, draw a line through the incorrect answer and insert the correct one. The applicant must initial the correct answer.

Which of the following is true regarding METs?

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 statements regarding conditional receipts is true?

They are temporary insuring agreements. - With a conditional receipt, insurance coverage is effective as of the date of the receipt, so long as the application is approved.

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

medical history - An Investigative Consumer Report is considered to be a part of an insurance application. This report is used in the underwriting process in order to assess non-medical risk factors related to moral standing and avocations. Friends and colleagues are interviewed in order to evaluate the applicant's character, reputation, and habits. The applicant must be informed in writing if the insurer decides to conduct the investigation.

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

Attending Physician's Statement - An Attending Physician's Statement (APS) is the best way for an underwriter to evaluate an insured's medical history. The report includes past diagnoses, treatments, length of recovery time, and prognoses.