Chapter 2: Accident and Health insurance Basics

What is the best way to change an application?

Start over with a fresh application

A person steps off a street car and trips and breaks his ankle. This type of injury can be described as

Sudden and unforeseen.

Which of the following would an accident-only policy NOT cover?

Surgery to repair a wrist damaged by tendonitis.

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?

The old policy should stay in force until the new policy is issued.

Which of the following is the most common time for errors and omissions to occur on the part of an insurer?

Policy delivery

What is the term used for an applicant's written request to an insurer for the company to issue a contract, based on the information provided?

Application

In a group prescription drug plan, the insured typically pays what amount of the drug cost?

Copayment

Which document is used to assess risk associated with an applicant's lifestyle and character?

Investigative Consumer Report

All of the following are true regarding the Medical Information Bureau (MIB) EXCEPT

MIB reports are based upon information supplied by doctors and hospitals.

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

Medical History

Which of the following dental insurance categories would cover the filling of cavities?

Routine and major restorative care

Which of the following is true regarding health insurance underwriting for a person with HIV?

The person may not be declined for medical coverage solely based on HIV status.

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered

An unfair trade practice.

Who is involved in completing the agent's report?

Only the agent

Which document helps ensure that full and fair disclosure is provided to the recipient of a policy?

Outline of Coverage

Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT

Premiums always stay the same.

Which is NOT true regarding an insured who is considered to be a standard risk?

The insured may have to pay slightly higher premiums.

The most the Insurance Guaranty Association will pay for net cash surrender values is

$100,000.

An insured covered by a dread disease policy is confined to a hospital for 2 years as the result of a covered loss. In this situation, what is the minimum amount that the policy must pay?

$50,000

Where would Long-term care services be rendered?

A nursing home or one's own home

If an applicant for a health insurance policy is found to be a substandard risk, the insurance company is most likely to

Charge an extra premium.

All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT

Death benefits are paid only if death occurs within 24 hours of an accident.

What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?

Diagnostic and preventive care

Health insurance underwriting is best defined as

Selection, classification, and rating of risks.

Which of the following is an example of a peril covered in an accident and health insurance policy?

Sickness

Hospital indemnity/hospital confinement indemnity policy will provide payment based on

The number of days confined in a hospital.

On a health insurance application, a signature is required from all of the following individuals EXCEPT

The spouse of the policyowner.

What is the purpose of the Insurance Guaranty Association?

To protect policyowners against insurer insolvency

When is the insurability conditional receipt given?

When the premium is paid at the time of application

Which of the following losses will be covered by a group medical expense policy?

A pre-existing condition

Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. Her policy would be classified as what type of policy?

Dread Disease Policy

What phase begins after a new policy is delivered?

Free-look period

Which of the following statements regarding conditional receipts is true?

They are temporary insuring agreements.

In underwriting a substandard risk, which of the following is INCORRECT?

A discounted premium would be charged.

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

A researcher for marketing purposes

When the policy premium wasn't submitted with the application, what should the agent obtain from the insured upon policy delivery?

A statement of good health

In a replacement situation, all of the following must be considered EXCEPT

Assets.

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?

At the time of application

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

Attending Physician's Statement

Why is it essential for an insurer to document all correspondence with an insured?

Errors and omissions

Under a typical health insurance policy, claims that result from injuries while the insured was intoxicated or under the influence of drugs are generally

Excluded

A producer is acting in what capacity when he or she is trying to obtain creditable information about an applicant for health insurance?

Field underwriter

Health coverage becomes effective when the

First premium has been paid and the application has been approved.

Which of the following expenses is NOT covered by a health insurance policy?

Funeral

A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT

Income

Which of the following factors about the insured determines the amount of disability benefit that the insured will receive?

Income

Who must pay for the cost of a medical examination required in the process of underwriting?

Insurer

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?

Principal Sum

Which of the following components of dental insurance does NOT require the payment of a deductible?

Routine and preventive maintenance

If an insurer becomes insolvent, which of the following would pay benefits to policyholders?

The Guaranty Association

An insurer hires a representative to advertise its company at a local convention. The representative lies about the details of some of the policies, in an attempt to secure more business for the company. Who is responsible for the representative's claims?

The insurer

An insurance company wants to obtain the insurance history of an applicant. Which source releases coded information to insurers regarding information included on previous insurance applications?

Medical Information Bureau

A hospital indemnity policy will pay

A benefit for each day the insured is in a hospital.

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

Indemnity

An applicant for health insurance has not had a medical claim in 5 years. He exercises daily and does not smoke or drink. What classification do you assume the applicant would receive from his insurer?

Preferred