A.D. Banker Ch. 8

Edward applies for a disability insurance policy. He pays the initial premium at the time of application and receives a conditional receipt. Three days after the insurance company conducts a medical examination, but before it issues a policy, Edward suffers a stroke. Upon reviewing the results of his medical exam, the company discovers that Edward has been diagnosed with high blood pressure and atherosclerosis. Under the terms of the conditional receipt, the insurance company:

Denies the claim because the insurer would not have issued the policy as applied for as standard or better

This type of policy covers the treatment and care of the insured's teeth.

Dental expense

All of the following describe the responsibilities of an agent or producer, except:

Determine the rate the insurer will charge the applicant/insured

Which of the following would be considered a pre-existing condition?

Diabetes

What type of policy pays weekly or monthly benefits for loss of income due to sickness or injury?

Disability Income

Which of the following products replaces lost income when one is unable to work due to a condition for which therapeutic and rehabilitative care services is often necessary?

Disability Insurance

Field underwriting is very important:

Due to the risk of a moral hazard

All of the following are common complaints filed by clients against Errors and Omissions policies, except:

Failure of the agent to share the commission with the client

A producer gathers information about the applicant for the insurer in order to avoid adverse selection. This is considered to be:

Field underwriting

____________ is the initial step of the total process of insuring a health risk.

Field underwriting

Which of the following types of care is excluded in a Long-Term Care policy?

Hospitalization in the Intensive Care Unit

Information about an applicant's work behavior or character gathered from neighbors or co-workers would be included on an?

Inspection Report

An applicant determined to have below average risk of loss would be:

Issued a preferred policy

All of the following statements regarding an insurance application are correct, except:

It is not included as part of the contract

In the event there is a policy issued and there are questions on the insurance application that went unanswered:

It will be assumed that the insurer waived their right to have answers to those questions

An individual jumps off a roof and breaks his leg. Which of the following statements is correct?

Jumping off the roof was intentional and breaking his leg was an accident

What health insurance product is designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital?

Long-Term Care

Which of the following terms and definitions do not match?

Long-Term Care Expense - Contract that pays weekly or monthly benefits due to injury or sickness if an insured is unable to perform the duties of their job

A policy issued as a preferred risk will be issued with a:

Lower than standard rate

The _________ was created in order to alert insurer home office underwriters of errors, omissions, or misrepresentations made on insurance applications.

MIB

This type of policy covers various expenses that an insured may incur due to a routine accident or sickness.

Medical expense

Accident and Health insurers would use which of the following formulas in determining premium rates?

Morbidity - Interest + Expenses

The chart that shows the chance of a disability at any given age is called a:

Morbidity Table

The mathematical probability table used by insurance companies to determine loss due to sickness or injury is the:

Morbidity Table

All of the following are factors used in the calculation of health insurance premiums, except:

Mortality Table

Which of the following must be given to consumers under the provisions of the Fair Credit Reporting Act (FCRA)?

Notice of Information Practices

It is illegal for most telemarketers or sellers to call a number listed _____________.

On the National Do Not Call Registry

In respect to Accident and Sickness Insurance advertising, all of the following are true, except:

Only a comparison of benefits is required when insurers advertise by comparisons of like products

Angela's health policy was considered a limited insurance policy because it:

Only covered specific losses named in the policy for limited dollar amounts

Which of the following is not an underwriting factor for health insurance:

Place of birth

The __________ is the person applying for insurance coverage and is responsible for completing an application.

Policyowner

What factors are not used in underwriting an individual disability policy?

Political affiliation and religious preference

The prior medical conditions for which the applicant has received, or should have received, medical advice or treatment within a specified period before the effective date of a policy are called:

Pre-Existing Conditions

A medical condition that was treated prior to the effective date of a policy is a:

Pre-existing Condition

If an insured pays a premium that is lower than others that are in the same class, this insured is considered to be rated as?

Preferred

Which of the following are included in Part II of a Health Insurance Application?

Present health and medical background of applicant and family

A specified period that must elapse before new coverage goes into effect for a given condition is known as which of the following?

Probationary period

The specified period that must elapse before new coverage is effective for nonaccidental losses is known as which of the following?

Probationary period

Which of the following has primary responsibility for ensuring that the application is filled out completely?

Producer

Which of the following is required to sign the application for insurance?

Producer and the applicant

Which of the following is NOT true regarding a group insurance plan?

Proof of insurability is required to be eligible

"Company expenses to issue and administer a policy include allof the following, except:"

Refund of unearned premium

Statements made on the application are considered true to the best of the applicant's knowledge and belief are considered to be:

Representations

At the time of policy delivery, the producer has been informed there is a change in the insured's health status. If the premium has not been collected, the producer should:

Return the policy to the insurer for further underwriting

All of the following are modes of premium payment for health insurance, except:

Single pay

If the insurer issues a health insurance policy without an initial premium, the producer must obtain a signed:

Statement of Good Health

Which of the following is NOT a common rating classification?

Subrated

Accidental Injury is a:

Sudden, unexpected and unforeseen event

If a change or correction must be made on the application for insurance, which of the following applies?

The Producer can make the change and have the insured initial the change

Which of the following items does not become part of the insurance contract as defined in the entire contract clause?

The agent's report

A premium is paid at the time of application and a conditional receipt is issued. If the policy is issued as applied for, coverage becomes effective:

The date of the conditional receipt

Consumers must be made aware of all of the following in a replacement sale, except:

The financial ratings from each rating service

Which of the following are included in Part I of a Health Insurance Application?

The gender of the applicant

Which of the following statements regarding health insurance advertising is not correct?

The history of very high or unique claim settlements if often used in agent advertising

When it comes to underwriting a health insurance policy, and HIV or AIDS:

The insurer must approach the topic in a way that avoids unfair discrimination

If an application is submitted with a question left unanswered, which of the following should occur?

The insurer would require an answer before issuing a policy

An applicant for accident and health insurance works for two different employers. Which of the applicant's occupations will be used to underwrite the policy?

The most hazardous of the two

The agent's primary underwriting role is:

To make sure the application provides the proper information

Which Government health plan is available for military personnel?

Tricare

For an accidental means policy to pay a claim, the injury must be an:

Unintentional in both the cause and the result of the injury

Home health care provides benefits for all of the following, except:

Vocational or job rehabilitation

Which is true regarding the advertising of Accident and Sickness Insurance?

When insurers advertise that a group endorses a certain health product, the public must be made aware of any control the insurer may have regarding the group

Accident and Health policies provide coverages for all, except:

Workers' Compensation claims

Which of the following is true regarding coinsurance? It is:

Written as a percentage and has a maximum out of pocket expense for the insured

Which of the following accidents would not be covered under the terms of a policy using 'accidental means' to define a covered loss?

Zachary breaks his ankle when he tries to jump aboard a street trolley that has already started moving

W has a health insurance policy with an 80/20 coinsurance, a $1,000 deductible. If in January W goes into the hospital for an overnight stay, the bill coming to $2,000, what will W pay?

$1,200

Eileen's health insurance had a $500 deductible and 80% / 20% coinsurance. Her first claim of the policy year amounted to $1,000, of which she paid $600. How much was her coinsurance?

$100

Wayne has a health insurance policy with an 80/20 coinsurance, a $1,000 deductible. In January, Wayne goes into the hospital for an overnight stay and the bill totals $2,000. How much will the insurer pay?

$800

W has a health insurance policy with an 80/20 coinsurance provision and a $1,000 deductible that is payable each year. If in January W has an outpatient procedure that cost $900, how much will W have to pay, assuming a new deductible must be met?

$900

Which of the following is not a prohibited form of advertising?

A side-by-side comparison of two policies issued by different insurers

In the event a policy is delivered by an agent to the insured, and the premium payment is to be collected at the time of this delivery, normally what else must the agent obtain to make the delivery complete?

A statement of good health

Timothy owns an individual A&H policy, and in the event of an accident, he is required to prove only that the injury itself is unforeseen and unintended. Tim's policy is based on which of the following definitions of accident?

Accidental Bodily Injury

This is the only accident and health insurance policy that pays out a lump-sum benefit upon the death of the insured in certain situations.

Accidental death

All of the following statements regarding advertising are correct, except:

Advertisements do not include radio scripts

All of the following practices may never be used when advertising health insurance, except:

Advertising a group's product endorsement, if the insurer has any control over the group

Other than the applicant, which signature is required on an application?

Agent

When Harry completed his insurance application, the agent discovered that he was under treatment for a chronic condition. In order to gather the necessary information, Harry's agent ordered a/an:

An attending physician statement

Reimbursement benefits may be paid directly to the medical providers under which condition?

Assignment of benefits

A client requests a Medical Expense Policy several months after you suggested the policy. The underwriter will most likely order which of the following?

Attending Physician's Statement

It is determined that Charles, an agent representing the Timely Payment Insurance Company, has misled the consuming public in an advertisement for one of the company's products. As a result of such action, which of the following is true?

Both Charles and the Timely Payment Insurance Company will be held accountable

When an agent misleads the public in an advertisement, ___________are held accountable.

Both the insurer and agent

Policy replacement is the process of:

Cancelling an existing policy and issuing a new policy

When insurance advertisements include a comparison of similar accident and health insurance products, which of the following is not a major factor in the comparison?

Cash values

All of the following are sources that insurers may look at for information regarding the insurability of a prospective insured, except:

College Degree

The insurer's underwriter may find information about an applicant's moral character, hobbies, work and general reputation from a:

Consumer Investigative Report

Upon receipt of an application, the insurer's underwriter may issue the contract with exclusions or limitations. This means that:

Coverage is issued, but there are limits on the insurer's obligation to pay

If the insurer issues a policy after receiving an application for health insurance in which preexisting conditions were inadvertently omitted, what would be the consequence to the insured's coverage if a preexisting condition caused a claim shortly after being issued?

Coverage would be as stipulated in the policy because the company issued the policy even though the question was left blank

If questions are incomplete on an application and the insurer issues the policy, a claim is:

Covered since the insurer issued the contract based on an incomplete application

The Medical Information Bureau provides information to the insurer regarding the individual risk of an applicant and does not include:

Credit score

If a policy was issued at a higher premium due to a higher risk exposure, all of the following can be used to reflect the higher risk, except:

Declined

When a policy is mailed to an insured by an insurer, it is considered to be:

Delivered