Chapter 3 - Health and Accident Insurance

Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?

Business owner becoming disabled

P loses an arm in a farm accident and is paid $10,000 from his Accidental Death and Dismemberment policy. This benefit is known as the

Capital Sum (The amount payable for the accidental loss of eyesight or for an accidental dismemberment. Usually a % of the principal sum and varies according to the severity of the injury.)

Which of the following characteristics is associated with a large group disability income policy?

No medical underwriting

J has a Disability Income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?

Nonoccupational coverage

J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming his hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?

$25,000

B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary?

$300,000

Which of these statements concerning an individual Disability Income policy is TRUE?

Normally includes an elimination period

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

Request of the change will be refused (An irrevocable designation may not be changed without the written consent of the beneficiary.)

Which statement is TRUE regarding a group accident and health policy issued to an employer?

The employer receives the policy and each employee is issued a certificate of coverage

True or false: Certificates are NOT issued in blanket policies.

True

The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the

Waiting period

The benefits under a Disability Buy-Out policy are

payable to the company or another shareholder

Which of the following is the MOST important factor when deciding how much Disability income coverage an applicant should purchase?

Applicant's monthly income

The difference between group insurance and blanket health policies is...

Blanket health policies do not issue certificates

G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is

Business Overhead Expense

XYZ Company pays the entire premium for its group health plan. The MINIMUM percentage of eligible employees that must be covered is...

100%

P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?

A recurrent disability

Under which of the following circumstances will the benefits under COBRA continuation coverage end?

All group health plans are terminated by the employer

Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is:

Business Overhead Expense (It's purpose is to cover certain overhead expenses that continue when the business owner is disabled.)

When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans?

Contributory

K has an Accidental Death and Dismemberment (AD&D) insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?

Daughter (The insured and primary beneficiary died within a short period of time, so the death benefits will be paid to the contingent beneficiary.)

Which contract permits the remaining partners to buy-out the interest of a disabled business partner?

Disability Buy-Sell (allows the remaining partners to buy out the interest of the disabled business partner)

B is a teacher who was injured in a car accident and cannot work. She is now receiving monthly benefits as a result of this accident. Which type of policy does B have?

Disability Income

M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?

Earned, but unpaid benefits

The federal income tax treatment of employer-provided group Medical Expense insurance can be accurately described as...

Employee's premiums paid by the employer are tax-deductible to the employer as business expenditure (the cost of the premium is tax-deductible)

With Disability Income insurance, an insurance company may limit the monthly benefit amount a prospective policy holder may obtain because of the insured's...

Gross income at the time of purchase

A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered PRIMARY?

Her group health plan

A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change permanent. Which type of designation would fulfill this need?

Irrevocable

A policyowner's rights are limited under which beneficiary designation?

Irrevocable

Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means injury"?

Less restrictive

An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following?

Loss of eyesight due to an accidental injury

P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to:

P only (Benefits will be paid to P because P survived the accident and is the primary beneficiary.)

On an Accidental Death and Dismemberment (AD&D) insurance policy, who is qualified to change the beneficiary designation?

Policyowner (The policyowner has the right to change the beneficiary designation, unless consent may be needed by the current beneficiary if designated as irrevocable.)

How does group insurance differ from individual insurance?

Premiums are lower (because each individual is not underwritten and insurance is purchased in bulk)

T is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. Under the Model Group Coordination of Benefits provision, when T submits a claim, his employer's plan is considered...

Primary carrier

R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?

Residual disability

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?

Revocable (With a revocable beneficiary designation, the policyowner may change the beneficiary at any time without notifying or getting permission from the beneficiary.)

P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE?

She DOES need to provide evidence of insurability.

P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?

Sign an enrollment card

An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT

Spouse's occupation

Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party?

Subrogation (Subrogation is the right of an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss

Disability policies do NOT normally pay for disabilities arising from which of the following?

War