Florida 240 Practice exam questions and answers
L has a major medical policy with a $500 deductible and 80/20 coinsurance. Lis hospitalized and sustains a $2.500 loss. What is the maximum amount that L will have to pay?
$900 L would first pay the $500 deductible; out of the remaining $2,000, the insurer will pay 80% ($1,600) and the insured will pay 20% ($400).
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?
10 days. The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.
The Florida Health Insurance Coverage Continuation Act requires insurers that sell health plans to small employers to offer in those plans a right to elect to continue coverage, without providing evidence of insurability, to employees who lose their coverage and are unable to replace it. The premium rate for this coverage may NOT exceed:
115% of the regular group rate. The coverage may be extended for a period of up to 18 months at a rate not to exceed 115% of the regular group rate.
In order to maintain an insurance license, an agent will need to satisfy Florida's continuing education requirement of :
24 hours of continuing education in every 2-year period.
In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits?
60 days Under COBRA, terminated employees must exercise extension of benefits within 60 days of separation from employment.
While a claim is pending, an insurance company may require: A. An independent examination only once every 45 days. B An independent examination as often as reasonably required. C. The insured to be examined only within the first 30 days. D. The insured to be examined only once annually.
B An independent examination as often as reasonably required.
Aninsurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
Conditional A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies which put the burden of condition on either the insurer or the policyowner.
All of the following are true about group disability Income insurance EXCEPT a) The longer the waiting period, the lower the premium. b) Coverage applies both on and off the job. c) Benefits are usually short term. d) The waiting period starts at the onset of the injury or sickness.
Coverage applies both on and off the job.
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
False advertising False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading.
An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?
Full benefits Presumptive Disability plans offer full benefits for specified conditions.
How are HMO territories typically divided?
Geographic areas
A long-term care shopper's guide must be presented at what point?
Prior to the time of application A long-term care insurance shopper's guide must be provided in the format developed by the National Association of Insurance Commissioners (NAIC). The shopper's guide must be presented to the applicant prior to completing the application.
If a person accumulates more continuing education hours than is necessary to fulfill the requirements for a 2-year period, what will occur?
The extra hours may be continued into the next period, Excess classroom hours accumulated during any 2-year period may be carried forward to the next 2-year period.
When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. how would this claim be handled?
The insurer is considered to be notified since the notification to agent equals notification to the insurer. Notice to the agent equals notice to the insurer. The agent is the insurer's representative.
An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen?
The policy will not be affected. In insurance, fraud is the intentional misrepresentation of material information that is crucial when deciding whether or not to write a contract for an applicant. If an insurer finds that an applicant has committed fraud, it can void the contract, provided that the discovery occurs within the first two years of the effective policy date. In this particular instance the applicant did not commit intentional fraud.
An insured submits a proof of loss form within 10 days of a loss. The insurer, however, does not acknowledge the form for 3 months. Which of the following violations has the insurer committed?
Unfair claims settlement Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements are completed and submitted by insureds is an example of unfair claims settlement.
A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as
Usual, customary and reasonable
In individual health insurance coverage, the insurer must cover a newborn from the moment of birth, and if additional premium payment is required, how many days should be allowed for payment?
Within 30 days of birth The insured must notify the insurer of a newly born dependent, and if additional payment is required, pay within 30 days.
Which of the following is NOT provided by an HMO? a) Reimbursement b) Services c) Financing d) Patient care
a) Reimbursement The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physician or hospital.
All of the following statements about Medicare supplement insurance policies are correct EXCEPT a) They cover the cost of extended nursing home care. b) They cover Medicare deductibles and copayments. c) They supplement Medicare benefits. d) They are issued by private insurers.
a) They cover the cost of extended nursing home care.
Which of the following would be required to be licensed as an insurance producer? a) A salaried full-time employee who furnishes information for group insurance b) An insurance company director who performs executive, administrative and managerial duties c) A salaried employee who advertises and solicits insurance d) A person whose activities are limited to producing insurance advertisements
c) A salaried employee who advertises and solicits insurance A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.
All of the following are required provisions in all individual health insurance policies delivered in this state EXCEPT a) Grace period. b) Reinstatement. c) Misstatement of age. d) Entire contract.
c) Misstatement of age. Misstatement of age is an optional health insurance policy provision, meaning that it may be included in a policy at the option of the insurer.
Long-term care coverage may be available as any of the following options EXCEPT: a) Endorsement to a life policy. b) Endorsement to a health policy. c) Group long-term care d) Individual long-term care.
b) Endorsement to a health policy. LTC policies may be purchased on an individual or group basis, or as an endorsement to a life insurance policy.
Which of the following does NOT have to be disclosed in a long-term care (LTC) policy? a) Any riders or endorsements b) The aggregate amount of premiums due c) The meaning of the terms "reasonable" and "customary" 'd) Any limitations or conditions of eligibility for LTC benefits
b) The aggregate amount of premiums due.
If an insurance company offers Medicare supplement policies, it must offer which of the following plans? a) В-N b) A-D c) A d) A & B
c) A An insurance company must make available to each applicant a policy form offering the basic core benefits (Plan A) if it will offer any Medicare Supplement policies. An insurance company does not have to issue all or any of the plans B through N.
All small employer group health plans, in order to comply with the requirements of the Florida Employee Health Care Access Act, must be issued on what basis?
Guaranteed issue A small group plan must be issued on a guaranteed-issue basis, which means an insurance policy must be offered to an employer, employee, or dependent of the employee, regardless of health status, pre-existing conditions or claims history.
When may an insurer require an insured to provide genetic information?
Never. Insurers are prohibited from requesting a person or relative of a person to supply genetic information.
In long-term care insurance, what type of care is provided with intermediate care?
Occasional nursing or rehabilitative care
What provision would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner?
Payment of Claims
Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?
Residual disability A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss.
Which of the following is NOT required to be stated in the outline of coverage provided with a long-term care policy? a) The right to return the policy for a refund b) Basic information about the insurance company c) Basic information about supplementary policies d) The policy number
c) Basic information about supplementary policies outline of coverage must follow standard format included in insurance regulations. Must include information about the insurance company, the policy number, important features of the policy, and explain the right to return the policy for a refund.
After a person's employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true? a) The employee can convert from group to individual insurance within 31 days of termination. b) The premium of the individual health insurance policy can be higher than the original policy. c) By law, the new, individual policy must provide the same benefits as the group insurance policy. d) Continuation of group coverage need not include dental, vision, or prescription drug benefits.
c) By law, the new, individual policy must provide the same benefits as the group insurance policy.
Which of the following will NOT be considered unfair discrimination by insurers? a) Cancelling individual coverage based on the insured's marital status b) Assigning different risk classifications to applicants based on gender identity c) Discriminating in benefits and coverages based on the insured's habits and lifestyle d) Charging applicants with similar health histories different premiums based on their ethnicity
c) Discriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.
Which of the following is NOT among the goals of a Medicare supplement application? a) Determining whether or not the policy will replace another accident and health policy b) Advising applicants regarding the availability of counseling services c) Presuming the applicant is eligible for Medicaid, based on the nature of the policy d) Determining whether or not an applicant has an existing Medicare supplement policy
c) Presuming the applicant is eligible for Medicaid, based on the nature of the policy Medicare supplement policies must ask the applicant if they are eligible for Medicaid.
An insured has endured multiple surgeries and hospitalizations for an illness during the last few months. Her insurer no longer bills her for medical expenses. Which of the following allows for that? a) Waiver of premium b) Maximum loss c) Stop-loss limit d) Grace period
c) Stop-loss limit
Which of the following statements regarding Business Overhead Expense policies is NOT true? a) Premiums paid for BOE are tax-deductible. b) Any benefits received are taxable to the business. c) Leased equipment expenses are covered by the plan. d) Benefits are usually limited to six months,
d) Benefits are usually limited to six months
Which of the following entities has the authority to make changes to an insurance policy? a) Department of Insurance b) Broker c) Producer d) Insurer's executive officer
d) Insurer's executive officer Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change.
A participating insurance policy may do which of the following? a) Provide group coverage b) Pay dividends to the stockholder c) Require 80% participation d) Pay dividends to the policyowner
d) Pay dividends to the policyowner.
If an agent is in the military, which of the following is true? a) The agent cannot sell a policy to someone outside of the military base. b) The agent cannot sell any policies during times of war or conflict. c) The agent cannot sell policies while on active duty. d) The agent cannot sell a policy to another active military person who is of a lower rank.
d) The agent cannot sell a policy to another active military person who is of a lower rank.
Which of the following is NOT a feature of a guaranteed renewable provision? a) The insured has a unilateral right to renew the policy for the life of the contract. b) Coverage is not renewable beyond the insured's age 65. c) The insured's benefits cannot be reduced d) The insurer can increase the policy premium on an individual basis.
d) The insurer can increase the policy premium on an individual basis. Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.