Health Insurance
How does HIPAA protect the right of a small employer to buy group health insurance?
Insurers must permit groups of fewer than ten people to buy health insurance.
Which statement accurately describes the MIB (Medical Information Bureau)?
It collects medical information about insurance applicants and gives that information to member insurance companies.
Which describes the basic concept of the health savings account (HSA)?
It combines a high-deductible, high out-of-pocket cost insurance plan with a tax-favored savings account.
If an applicant for medical insurance lives in a state that prohibits 'medical underwriting,' how will the insurer determine the premium to charge him or her?
It will use a single community rate.
Debbie, Lisa, Greta, and Jessica apply for individual health insurance policies. At the end of the underwriting process, the insurer classified them as follows: Debbie as substandard, Lisa as standard, and Jessica as preferred. Greta's application was declined. Which of the following statements is correct?
Jessica's policy will be issued with the lowest premium rate.
Which is not an example of a hazard?
John takes medication to control high blood pressure.
Which of the following presents a situation of pure risk?
Knowing that his family depends on his income, Franklin wants to insure his life.
Which situation relies upon an optional provision under the insured's health insurance policy?
Lindsey's policy states that the insurer is not liable for any loss in which she is intoxicated.
Which entity does not rate the solvency of insurance companies?
Lloyd's of London
All the following statements about the taxation of qualified long-term care (LTC) insurance policies are correct EXCEPT:
Long-term care premium deductibility limits are flat up to age 61, and then increase through age 70.
Which is a database of confidential underwriting information obtained by insurers for the purpose of underwriting disability income policies?
MIB (Medical Information Bureau)
Agent Smith knows that his best friend, Agent Thomas, is embezzling money from clients. However, Agent Smith does not notify the Commissioner in order to protect his friend. What is the result?
Agent Smith's license will be revoked.
With respect to covering a family in a single medical expense insurance plan, which of the following statements is correct?
Both group and individual policies can cover the insured and family.
Sandy is covered by an individual health insurance policy, and Jackie is covered by a group plan. Both became pregnant within six months of their policies' effective dates. Under the Affordable Care Act, which statement is correct?
Both policies must cover the costs of the pregnancies.
Which of the following statements about utmost good faith in insurance contracts is correct?
Both the insured and insurer must act in utmost good faith.
Larry, Brian, Susan, and Jennifer just started working for AllPro Insurance Company in North Carolina. Based on their job descriptions below, which of them is NOT acting as a producer?
Brian, who is a vice president in AllPro's human resources department and does not receive commissions
What is a significant drawback to being an HMO member?
Care provided to HMO members outside the HMO's network of providers is not covered.
A dental plan that separates covered treatments into three categories will typically include fillings and tooth extractions in:
Category 2
In addition to regulating defined benefit pension plans, which entity protects participants enrolled in group health plans?
ERISA
Ellen, Bob, Miguel, and Amy all turned 40 years old this year and all are in good health. Which person will pay the highest premium for a disability insurance policy?
Ellen, a heavy equipment operator
Emily solicits policies and accepts premiums from the public but is not licensed as an agent. She then turns over the applications and premiums to her husband, who is licensed. Which statement is correct?
Emily has committed a Class 1 misdemeanor.
Which statement about flexible spending accounts (FSAs) is NOT correct?
Employees can use the FSA funds to pay qualified medical costs as well as costs their employer's health plan covers.
Which explains the portability provisions of HIPAA?
Employees continue to qualify for health insurance after they lose their job or change their insurer.
What is NOT characteristic of an employer's prepaid dental plan?
Employees do not pay a deductible.
Who determines the length of the waiting period that must pass before a person is eligible for coverage under an employer's group health plan?
Employer and insurer
With respect to the Patient Protection and Affordable Care Act (ACA), which of the following statements correctly explains how a medical expense insurance policy may treat an applicant's pre-existing medical conditions?
Pre-existing condition exclusions are prohibited on all policies issued today, but may remain in place for policies that were issued before March 23, 2010 .
Which statement about pre-existing condition provisions is NOT correct?
Pre-existing conditions are treated the same by individual and group plans.
The Pregnancy Discrimination Act makes discrimination on the basis of pregnancy, childbirth, or related medical conditions unlawful sexual discrimination, meaning that:
Pregnant women will be treated the same at work as non-pregnant women, and all will be offered the same fringe benefit programs.
Which of the following statements correctly describes the tax treatment of disability buy-out insurance?
Premiums are not tax-deductible and benefit payments are tax-free.
Which of the following statements correctly describes the tax treatment business overhead expense (BOE) insurance?
Premiums are tax-deductible and benefit payments are taxable.
Fran applied for an individual health insurance policy on July 1 and was issued a binding receipt. If she injured her back on July 4 before the policy was issued, what will happen?
Fran's medical claims for her injury will be covered by the policy.
Which will not be a significant factor when the underwriter is reviews an application for individual health insurance?
Frank's slow completion of the application
Ginger operates an accounting business as a sole proprietor. She pays $1,600 each month in premiums for a medical insurance policy covering herself and her family. Which of the following statements correctly describes the tax treatment of this policy?
Ginger can deduct 100 percent of the premiums paid for her health insurance policy, and benefit payments are tax free.
Harry is enrolled in an HMO. David has a traditional major medical plan. Which statement about their policies is correct?
Harry pays a small co-payment for each doctor's visit. David pays a deductible and coinsurance.
Warren is insured by a disability income policy and paid $2,500 each year in premiums until he is disabled. He now receives a $1,200 monthly disability benefit. Which statement is correct?
He cannot deduct the premium he paid but can exclude the benefits from taxable income.
Benefits paid under Ken's qualified long-term care policy up to a daily limit are not taxed. What must happen for Ken to receive these amounts tax free?
He must be diagnosed as chronically ill.
Jason has a group point-of-service (POS) plan and wants to use an out-of-network provider. Which statement is correct?
He must pay a higher co-payment and deductible.
Glen files a notice of claim with his health insurance provider. Of what, specifically, is he notifying his insurer?
He will be making a claim against the policy and that the insurer should send Glen the required claim forms.
Mark has satisfied the requirements to reinstate his lapsed health insurance policy, but after 45 days has still not heard from his insurer about his reinstatement request. Which of the following will happen?
Mark's policy is automatically reinstated.
Adam bought an individual disability income policy with a social insurance supplement (SIS) rider. If he becomes disabled and is eligible for Social Security disability benefits, what will happen?
He will receive benefits under the SIS rider while he is waiting for his Social Security disability benefits to begin.
Which of the following statements best describes the providers of health insurance?
Health insurance is available in the private sector and through local, state, and federal governments.
Dee is insured under her employer-sponsored health plan. Which is a characteristic of this plan?
Her cost for coverage is less than what she would pay for an individual policy.
Under the Age Discrimination in Employment Act, a company can reduce benefits based on age when:
The cost of providing reduced benefits to older workers is the same as the cost of providing full benefits to younger workers.
Steve is the beneficiary of his mother's accidental death and dismemberment policy. At her death, he receives the policy's death benefit in a lump sum. Which statement is correct?
The death benefit is not taxable income.
Which of the following would cover daily hospital room and board and miscellaneous expenses, such as drugs, X-rays, lab fees, dressings, and use of the operating room and supplies?
basic hospital expense (indemnity) policies
Which of the following medical expense plans provides coverage for a specific form of medical care, reimbursing insureds for the medical expenses they incur?
basic medical expense (indemnity) plans
An insurance policy that reimburses medical expenses directly to the insured is a:
basic medical or indemnity plan
Which of the following basic medical expense plans provides coverage for routine doctor visits?
basic physician expense policy
Which of the following policies were initially developed to pay for doctors' visits only while the insured was hospitalized but now covers all routine doctor office visits?
basic physician expense policy
Which of the following covers surgeons' fees and costs associated with surgery, which can include fees for an assistant surgeon, anesthesiologist, or even the operating room if it is not covered as a miscellaneous hospital item?
basic surgical expense (indemnity) policy
During the application process, ABC Insurers receives personal and confidential information about Tom, who is applying for a life insurance policy. In which of the following circumstances must ABC Insurers obtain Tom's written authorization before disclosing this information?
before disclosing information to third parties for telemarketing and sales purposes
Which is not a necessary element of a legally enforceable contract?
beneficiary
Sandy's insurance company has assigned a price or dollar amount to a surgical procedure that she will undergo. The insurer will pay Sandy a percentage of this assigned price. Coverage is based on the:
benefits schedule
Regardless of unique differences, every state's workers' compensation program offers all of the following, EXCEPT:
benefits that are payable even if an injured worker sues for additional compensation
Delta Vacation Cruises wants to purchase group health coverage for its passengers. Which type of insurance should Delta purchase?
blanket policy
Group long-term disability plans generally provide coverage for which of the following disabilities?
both non-occupational and occupational disabilities
Which of these entities regulates group health insurance?
both the state and federal governments
Dave owns a small business. He wants disability coverage that would pay routine business expenses if he is unable to work. What kind of insurance would suit this need?
business overhead expense insurance
Which kind of insurance covers a business owner for overhead expenses resulting from the owner's disability?
business overhead expense insurance
Workers' compensation plans offer all of the following benefits to covered workers EXCEPT:
business overhead expenses
HIPAA imposes requirements on the way health insurers conduct business in the small employer market. How is the small employer market typically defined?
businesses employing 2 to 50 employees
Max is an unmarried senior citizen without children. He wants to buy a major medical expense policy but is concerned that no one will care for him if he cannot perform routine daily functions such as eating and bathing. Besides buying a long-term care insurance policy, how can Max best address his concern?
buy a long-term care rider under his health insurance policy
A guaranteed insurability rider lets a disability income insurance policyowner:
buy additional amounts of coverage on specified dates, without having to provide evidence of insurability
An insured fears that his medical expense insurance policy will not provide enough coverage if he sustains a catastrophic illness. What is his best course of action?
buy an extended stay rider
Salvador takes an application for life insurance with the first premium. When the policy is ready for delivery, he personally delivers it to his insured. The next day, the insured decides she cannot afford it and rejects the policy. What should Salvador do?
cancel the policy and refund the premium because the policy is still in the free-look period
In a conditionally renewable health insurance policy, the insurer can:
cancel the policy if the insured does not meet certain conditions not associated with the insured's health, and increase premiums
A health insurance policy that includes a cancellation provision allows the insurer to:
cancel the policy with as little as 10 days' notice, but only for nonpayment of premium
Tom is a career agent of ABC Insurance Company. He sells insurance products only for ABC. Tom is a:
captive agent
An insurable risk is not:
catastrophic
Which indicates that an insured is a participant in a group health insurance plan?
certificate of coverage
What must an insurer give to its group policyholders for delivery to each insured person, as proof that the person is insured?
certificates of coverage
Written rules for how claims and appeals are handled must be fair and timely in accordance with ERISA's requirements for:
claims procedures and appeals
Which of the following provisions, found in all major medical insurance policies, states that the insured must pay a certain percentage of the covered costs after the deductible is satisfied?
co-insurance provision
What can an employee expect to pay under an employer's prepaid dental plan?
co-payment for each service received
Mallory has a major medical policy that requires her to pay a deductible and then 20 percent of the first $10,000 of medical expenses she incurs. What is this percentage called?
coinsurance
A major medical policy states that after the $500 deductible, the insured will pay 20 percent of the next $10,000 of medical expenses. The 20 percent represents the:
coinsurance payment
As a field underwriter, what does an agent do for the insurance company?
collect information from an applicant
To qualify for an insurance agent's license, a person must have all of the following EXCEPT:
college degree
All of the following exclusions are normally found in health insurance policies, EXCEPT:
commercial airline travel
Which of the following types of group health plans base premiums on characteristics of similar groups in the region where the group exists?
community-rated plans
A typical errors and omissions (E&O) policy covers all the following , EXCEPT:
completing and signing an application for an applicant without that person's knowledge
Beatrice is a member of the Supreme Lodge fraternal benefit society. What must Beatrice do before she can sell insurance on its behalf?
comply with the same general licensing requirements that apply to resident agents
Which medical plan covers doctor visits while the insured is in the hospital and physical therapy treatments following release from the hospital?
comprehensive major medical insurance
Which type of health plan covers a variety of conditions or medical services?
comprehensive plan
An insurance company keeps a policy in force only if the policyowner pays the premium because the policy is what kind of a contract?
conditional
Carol applies for a $250,000 life insurance policy. Her agent gives her a document that provides limited coverage during the underwriting period. What is this document?
conditional receipt
Health insurance policy exclusions are:
conditions that are not covered and for which benefits are not payable
An Oregon resident buys a health insurance policy from a company domiciled in New York. The policy says that if any provision is in conflict with Oregon laws, the laws of Oregon will prevail. Which provision states this?
conformity with state statutes
The cost-of-living adjustment (COLA) rider adjusts an insured's disability income benefit payments according to changes in the:
consumer price index
A company offers a group health plan for its employees and pays 90 percent of the premium. The employees pay the balance. What type of group health plan does this employer offer?
contributory
In HMOs, primary care providers (PCPs) are called "gatekeepers" because they:
control member access to specialists
What right permits an insured to change from group health coverage under an employer's policy to an individual policy without having to prove insurability?
conversion
Which of the following best defines the role of a primary care physician (PCP) in a managed care plan?
coordinate the plan member's health care treatment and access to medical specialists in the network
Which of the following health insurance principles underlie the 'other insurance with this insurer' and the 'other insurance with other insurer(s)' provision of a disability income insurance policy?
coordination of benefits
Brooke is covered by her company's group health plan. One of the plan's provisions specifies that if she is eligible for benefits under another policy, her group plan will be the primary plan. What is this provision called?
coordination of benefits provision
Frank is insured by his employer's group health plan, as well as by his wife's health plan. Which provision prevents him from receiving duplicate benefits from both plans?
coordination of benefits provision
Michael's supplementary major medical policy has a $750 deductible that is payable after the basic medical plan pays its benefits but before the major medical plan pays any benefits. This describes what type of deductible?
corridor deductible
All of the following statements about the recurrent disability provision of a disability income policy are correct EXCEPT:
The disability income benefits paid are typically lower for a recurrent disability.
Which statement about the elimination period in a disability income policy is CORRECT?
The disability must last through the elimination period before the insured can receive benefits.
Anthony is eligible for Medicaid and also eligible for coverage under his new employer's group health benefit plan. Which statement is correct?
The employee benefit plan may not take into account the fact that Anthony is receiving Medicaid benefits when paying benefits.
Sky Corporation pays 80 percent of the premium for its group medical plan each year while the employees pay the remaining 20 percent. Which statement is correct about the deductibility of the premium payments from taxable income?
The employees can deduct the amount of premiums they pay that exceed 10 percent of adjusted gross income.
Comprehensive major medical plans provide a broad range of coverage. They most likely cover all of the following, EXCEPT:
cosmetic surgery, experimental procedures or treatment, and alcohol and drug abuse treatment
Dental insurance does NOT cover:
cosmetic treatment
Dental insurance typically does NOT cover what kind of treatment?
cosmetic treatment
Insurers have responded to the rising costs of health care with what control measures?
cost containment
Under the Age Discrimination in Employment Act, an employer can reduce benefits based on age only when the:
cost of reduced benefits for older workers equals the cost of full benefits for younger workers
An agent who recommends the replacement of an insurance policy with another is not required to discuss which of these with the prospect?
cost of similar policies from competing insurers
Which of the following riders adjusts the benefit payments under a disability income policy based on changes in the Consumer Price Index (CPI)?
cost-of-living adjustment (COLA) rider
Which is not an element of all legal contracts?
counteroffer
Wiley bought an extended stay rider to supplement his health insurance coverage. What can he expect from this rider?
coverage for longer hospital stays
Which of the following is NOT characteristic of a major medical plan?
coverage of cosmetic surgery
Which type of insurance helps an insured pay off a loan if he or she becomes disabled?
credit accident and health insurance
Larry's major medical policy requires him to pay the first $1,000 of expenses before the policy pays any benefits. This amount is the:
deductible
The elimination period in a disability income insurance policy functions like which of the following in a medical expense policy?
deductible
When meeting with a prospect to discuss life insurance, Agent Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Agent Tyler committed?
defamation
The purpose of the insuring clause is to:
describe the type and scope of coverage
Insurers use usual, customary, and reasonable (UCR) fees to:
determine the appropriate amount payable for a given service
When Social Security disability benefits begin, the disability benefits from a social insurance supplement (SIS) rider will:
diminish or end
Which of the following types of business health insurance would serve the needs of two business owners who want to fund their buy-sell plan in the event one of them becomes totally disabled?
disability buy-out insurance
With what type of health insurance policies are guaranteed insurability riders typically associated?
disability income and long-term care insurance policies only
Because of the risk assumed by the insurer, noncancelable provisions are only included in which type of policy?
disability income insurance policies issued to insureds in white-collar (such as clerical) and professional occupations
Guaranteed insurability riders are typically found in:
disability income policies
Which type of health insurance benefit is paid weekly or monthly due to injury or sickness and is based on the insured's wages?
disability insurance
Elimination periods usually arise in the context of what type of policies?
disability insurance and long-term care insurance policies
Which group would present the lowest underwriting risk for a health insurance company?
dog trainers
Which of the following terms categorize insurers by their location or domicile?
domestic, foreign, and alien
Manny lost both legs in a motorcycle accident. His health insurance policy paid double the normal benefits due to the accident. Which type of rider does Manny's policy contain?
double indemnity rider
Although HMOs provide additional benefits not covered by traditional medical expense plans, they do NOT cover:
dread diseases
The period following the start of a disability during which no benefits are paid is the:
elimination period
What period follows the onset of disability, during which no benefits are payable?
elimination period
Which provision in a health insurance policy imposes a waiting period on every claim before benefits begin?
elimination period
Who buys the health insurance policy that covers a group?
employer or sponsor of the group
The federal government's main reason for creating tax-favored health savings arrangements such as health savings accounts (HSAs) and flexible spending accounts (FSAs) is to:
encourage individuals and employers to save for their health care expenses
Which is NOT a method that managed care plans use to control costs?
encouraging hospitalization
Which of the following health insurance policy provisions is required to be in all health insurance policies?
entire contract
Which provision in a health insurance policy prevents agreements outside of the policy from changing the terms of the contract?
entire contract provision
Protection from damages resulting from a lawsuit brought by an insurance customer against an insurance producer for breach of fiduciary duties would be covered under what kind of policy?
errors and omissions insurance
When underwriting an individual health insurance policy, the insurer will NOT consider the applicant's:
estimated future earnings
An insurer sends a premium statement to a former policyowner. However, the policy has lapsed for non-payment of premiums. Believing that the policy is still in effect, the policyowner pays the premium, which the insurer accepts. The insured then suffers a loss and makes a claim on the policy. What legal doctrine prevents the insurer from denying the claim?
estoppel
Jerry's life insurance policy instructs him to pay the premium to the insurer's home office. However, he has sent his payments to his agent for many years, and the agent has forwarded them to the insurer. What legal principal will prevent the insurer from now requiring that Jerry send the premiums to the home office?
estoppel
The states' "any willing provider" laws limit the ability of health insurers to:
exclude hospitals and doctors from their networks
Sky Corporation applies for a group health insurance plan. During the underwriting process, the insurer examines Sky's past claims experience and the composition of its group. Which rating method is the insurer using?
experience rating
To make legal delivery of a health policy with an exclusion rider, a producer must:
explain the rider to the client and have the client accept the rider in writing.
Stacey is a captive agent for Best Rates Insurance Company. Her agency contract gives her permission to print and use business cards with the company's logo and submit applications for its policies. Which type of authority does Stacey have to take these actions?
express
Suppose an agent's contract with the insurer gives the agent permission to sell and solicit business for the insurer. What kind of authority does the contract grant to the agent?
express
The Commissioner of Insurance cannot suspend or revoke an agent's license for which of the following reasons?
failing to meet projected sales goals
Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in North Carolina?
failing to promptly settle a claim for which liability is uncertain
When underwriting an individual disability income policy, the insurer will NOT consider which as a source of income and insurance protection?
family income and inheritances available to the applicant
At what level of government is group health insurance regulated?
federal and state
Jonah has a traditional medical expense insurance policy. He pays each health-care provider for services rendered, and the insurer reimburses him for the costs incurred. What type of policy is this?
fee-for-service
Which type of payment arrangement do indemnity insurance policies typically use?
fee-for-service
A medical expense insurance policy that reimburses insureds for the medical services they pay for is called a:
fee-for-service plan
Adam is an independent agent and solicits policies for several insurers. What kind of relationship does he have with each insurer?
fiduciary
Which describes the type of relationship based on trust that exists between the insurer and its appointed agent?
fiduciary
Rob presents an individual health insurance policy to a prospective insured and collects data to help his insurance company decide whether to accept the risk. What role is Rob performing?
field underwriting
Which is NOT a method that managed care systems use to control costs?
financial incentives to providers for limiting care
Which is characteristic of basic hospital, surgical, and physician policies?
first-dollar coverage
A franchise accident and health insurance policy is an individual health insurance policy that only may be issued to at least how many employees of a corporation, partnership, individual employer, or governmental entity?
five
A person must be totally disabled to qualify for Social Security disability benefits. In addition, a person must satisfy a waiting period of how long before benefits are paid?
five months
Which method of determining the benefit amount is most common in individual disability income policies?
flat amount
Which method of determining the amount of benefits payable every month is most common in individual disability income policies?
flat approach
Carla incurs $7,000 in covered medical expenses. She must pay $500 of those expenses, and the policy will base how much benefit it pays on the remaining $6,500. What kind of deductible does Carla have?
flat deductible
Each year, Marco defers part of his pre-tax compensation into an account to pay health-care expenses not reimbursed by his employer's group plan. At the end of the year, he has $300 in his account, and he has until March 15 to use these funds. Which type of health savings arrangement does he have?
flexible spending account
Which finances health-care costs without being tied to a high-deductible insurance plan?
flexible spending accounts (FSAs)
A policyowner intentionally misstates material information on an insurance application to get coverage for a lower premium. This kind of deception is:
fraud
Which of clause or provision permits the insured to return a newly-issued policy to the insurer for a full refund of the premium payment?
free-look provision
Newborn children are automatically covered under an insured's health insurance policy for how long?
from birth to 30 days
Allison would like to buy a disability income policy. She wants to ensure that she will be able to buy additional coverage under the policy sometime in the future without having to provide evidence of insurability. Which rider should Allison choose?
future increase option rider
Access to an HMO's network of doctors and hospitals is controlled by a primary care physician who is sometimes called a:
gatekeeper
Connie is a member of an HMO and wants to see a specialist. The HMO requires her to see her primary care physician for a referral to a specialist. This primary care physician is the:
gatekeeper
Marvin is enrolled in an HMO. His primary care physician provides his health care or refers Marvin to a specialist. In what capacity is his physician acting?
gatekeeper
The HMO point-of-service (POS) option allows members to get:
get treatment outside the HMO network
An insurance company sends a proposed insurance policy to an applicant with instructions to accept the policy in writing by December 15 or it will be withdrawn. What must the applicant do to accept the policy?
give written notice on or before December 15
Todd lost his job and his group health coverage. He applies for an individual health policy. The insurer must sell him a policy if he meets all of the following requirements EXCEPT:
group coverage ended due to plan termination
How are self-funded group health insurance plans funded?
The employer funds and pays for member claims and benefits.
An employer's health insurance policy provides $1,000 of coverage for every month an employee cannot work. What kind of policy provides this protection?
group disability income policy
The Health Insurance Portability and Accountability Act applies to which type of health plans?
group health plans that cover two or more people
Which group plan does the Health Insurance Portability and Accountability Act (HIPAA) regulate?
group insurance plans that cover two or more people
Gene is injured while on vacation. His employer's group disability plan pays benefits for over two years but reduces the amount paid by the benefits he receives under an individual disability policy. What kind of group coverage does Gene have?
group long-term disability plan
All of the following are a form of government-based health insurance program EXCEPT:
group medical expense insurance
Jim is a skilled laborer with a stable job. In recent years he has experienced health complications resulting from a chronic illness. He would most easily qualify for what type of disability income policy?
group plan
How do most people get coverage for health care in the United States?
group plans
Which of the following allows insureds to increase a policy's level of benefits or scope of coverage in the future without having to prove insurability?
guaranteed insurability rider
HIPAA guarantees that insurers that sell individual health insurance plans must offer them to eligible people who have lost group coverage, regardless of their health, under a requirement known as:
guaranteed issue
A health insurance policy states that the insurer can increase premium rates by class of insureds and can only cancel the policy if the insured fails to pay the premium. What type of policy is this?
guaranteed renewable
ERISA protects enrollees in an employer-sponsored health care plan in each of these ways EXCEPT:
guaranteeing immediate processing of claims
Medical savings accounts (MSAs) have been replaced by:
health savings accounts (HSAs)
The federal government's contribution to the control of health care costs includes:
health savings accounts (HSAs)
Which of the following types of healthcare reimbursement programs is currently available, used with high-deductible health insurance plans, and features tax deductible contributions that accumulate on a tax-free basis?
health savings accounts (HSAs)
A supplemental major medical plan supplements a basic plan. A comprehensive major medical plan replaces a basic and a supplemental plan. Benefits under a comprehensive major medical plan are typically:
high
A health savings account (HSA) usually requires the insured to make which kind of payment combination?
high deductible, low premium
Jake has a consumer-driven health plan. What will the plan include to pay for expenses beyond the deductible?
high-deductible health plan
Which type of health insurance policy must the sponsor of a group health plan establish before it can offer a health savings account to its employees?
high-deductible health plan
A health insurance policy must pay benefits for services provided by all of the following EXCEPT:
homeopathic practitioners
Roy's health insurance policy pays him a fixed sum for each day he is hospitalized. What type of insurance policy does he have?
hospital indemnity policy
Greg's basic hospital plan pays for hospital room and board for up to 30 days with a maximum benefit of $3,000. If he also had a supplementary major medical policy, what would the supplementary plan cover?
hospital room and board beginning on the 31st day and costs above $3,000
Which type of limited policy will provide health insurance benefits when the insured or his dependents are hospitalized?
hospitalization policy
The waiver of premium provision provides that premiums will be waived by the insurance company under what circumstances?
if the insured becomes disabled
Per HIPAA, an insurance company can cancel an insured's medical insurance coverage in which of the following circumstances?
if the insured committed fraud, does not pay the policy's premiums, leaves the group (in the case of group insurance) or the insurer no longer sells the type of policy covering the insured
Health insurance insures against all of the following common perils, EXCEPT:
illness-related death
Suzanne was employed by Alpha Company. Its group health plan has a three-month waiting period for health insurance coverage. After six months with Alpha, she takes a new job with Delta Corporation. Delta's group plan also imposes a three-month waiting period for health coverage. How soon will Suzanne be covered?
immediately
An insurance company can exclude coverage for a specific medical condition by including which type of rider in a health insurance policy?
impairment
An agent acting on behalf of an insurance company even though these acts are not specified in the agent's contract with the company but are necessary to carry out the company's express authority, exercises what kind of authority?
implied
Most disability income insurance policies define partial disability as the:
inability to perform some of one's usual job duties
How do most disability income policies define partial disability?
inability to perform some usual work duties
An insured is injured on a construction job and cannot continue his line of work. He takes a teaching position at a vocational college, earning $2,000 a month less than his previous salary. Which policy would address his need to restore his level of income to a pre-disability level?
income replacement policy
Which provision is required in a health insurance policy?
incontestability
Jan's health insurance plan pays benefits based on the actual amount of the loss, so she is repaid for some or all of the medical expenses she incurs. What type of health insurance plan does she have?
indemnity plan
Health insurance plans are divided into which two distinct classes?
indemnity plans and managed care plans
Methods that the federal government uses to encourage employer-provided health care coverage do NOT include:
individual retirement accounts (IRAs)
Enrollees in a group health plan must be given a summary plan description in accordance with ERISA's requirements for:
information disclosure
An employer's plan has a two-month waiting period. It also has 'grandfather' status under the Affordable Care Act and a pre-existing condition exclusion period. How many months after the waiting period ends will benefits begin?
insufficient information
Which party makes the only enforceable promise in an insurance contract?
insurance company
An employer establishes flexible spending accounts for its employees. Which expenses will the accounts NOT cover?
insurance policy premiums
If the parties disagree over the meaning of an insurance contract's terms, courts will usually interpret these terms in favor of the:
insured
How is a person who is covered by a medical expense insurance plan commonly described?
insured or subscriber
Which two parties form a contract for life insurance?
insurer and policyowner
Which of the following provisions states the insurer's promise to pay a specified amount of benefit if a certain event occurs?
insuring clause
A primary appeal of a health savings account (HSA) is that it:
is a tax-favored account for which deposits are not taxed
Eduardo buys an individual long-term care insurance policy and pays $1,500 in premiums this year. He can deduct from taxable income a portion of the premiums he paid only if he:
itemizes his deductions
Which of the following protects businesses against loss if the owner or other key employee becomes disabled?
key person disability income insurance
Which of the following provides businesses a source of ongoing income if an essential executive or important employee becomes disabled and unable to work?
key person disability insurance
A group short-term disability income plan (STD) typically has a maximum benefit period of:
less than 2 years
The concept of adverse selection refers to:
likelihood of consumers who are in poor health to seek insurance
When determining whether a prospect is an insurable risk for an individual disability income policy, the producer need NOT inquire about the:
location of the prospect's business
Which is NOT a type of basic medical expense plan?
long-term care insurance
Which of the following types of health insurance covers the cost of sustained care provided in a nursing home, at home, or through extended health care agencies or facilities?
long-term care insurance
Which rider is NOT commonly found in a disability income policy?
long-term care rider
An applicant for a $500,000 whole life insurance policy pays the initial premium when submitting the application. By doing this, the applicant has:
made an offer to the insurer
Which type of medical expense coverage pays the benefit directly to the insured?
major medical
To overcome the coverage limitations of basic medical expense insurance, the health insurance industry developed which of the following?
major medical insurance
Belinda's health insurance policy offers a $1 million lifetime benefit limit and covers hospital, surgical, and physician expenses. Each year, she pays a $500 deductible before benefits begin and 20 percent of all covered costs. What type of policy is Belinda covered by?
major medical policy
Denise wants a health insurance policy that will cover medical bills in the event of a major illness. Which policy is suitable for this?
major medical policy
Which of the following is not required to be covered under a group health insurance policy issued in North Carolina?
mammograms every year beginning at age 30
In addition to traditional indemnity policies, group health insurance plans and coverages are available through:
managed care options
HIPAA's regulation of insurers doing business in the small employer market does NOT require them to:
market and sell plans as guaranteed renewable when the employer relocates outside the insurer's service area.
With respect to family medical expense insurance policies, new dependents can be added to the policy through:
marriage, birth or adoption only
Which document addresses the agreement between the sponsor of a group health insurance plan and the insurer?
master policy
For a misrepresentation to affect the validity of an insurance policy, it must be:
material
Which expenses do Blue Cross Blue Shield plans cover?
medical and surgical care
Which type of health coverage pays benefits for the cost of medical care, providing coverage that ranges from limited to broad for all kinds of medical care?
medical expense
Which of the following health insurance plans insures against and covers the cost of care and services given for illness, sickness, accidents, and injuries?
medical expense policies
What was the forerunner to the health savings account (HSA)
medical savings account (MSA)
A person who is insured under a managed care plan is considered a:
member
Although the employer sets the standards for employees' eligibility for group health insurance, the insurer may set the:
minimum participation standards
Which is NOT among the 12 provisions that are required in health insurance policies?
misstatement of age
All of the following health insurance policy provisions are required to be in all health insurance policies, EXCEPT:
misstatement of age or sex
Which factor must insurers consider when setting the premium for health insurance policies?
morbidity rates
The amount of the benefit paid under an indemnity policy can never be:
more than the loss or the policy's face amount, whichever is less
Which group brings together a number of small, unrelated employers to provide health insurance or employee welfare benefits?
multiple employer trusts
A conditionally renewable health insurance policy is one in which the insurer:
must renew the policy if the insured meets certain conditions necessary for renewal, though premiums may be increased
One of the ways in which a PPO controls its members' medical costs is by:
negotiating fees with contracted physicians
Which of the following groups would typically NOT be eligible for group accident and health insurance?
neighborhood group
In-network HMO coverage requires what kind of deductible?
no annual deductible
Group short-term disability income plans generally cover:
non-occupational disabilities only
Chloe has a health reimbursement account. She pays $1,000 for unreimbursed prescription drugs, $2,000 in premiums for a long-term care policy, $500 for eye glasses, and $100 for non-prescribed vitamins and herbal remedies. She cannot use her health reimbursement account (HRA) to pay for which expense?
non-prescribed vitamins and herbal remedies
All of the following are standard health insurance renewability provisions EXCEPT:
nonrenewable
While reviewing a life insurance policy issued by her home office, Angela notices that the premium is much higher than she quoted her client. The policy also has features that the client did not request. What should Angela do?
not present the policy to the insured until the home office reviews the policy and recalculates the premium
ABC Insurers orders a consumer report on an applicant for an individual health insurance policy. Which of the following must the applicant receive, according to the Fair Credit Reporting Act?
notice that an investigation and report have been requested
Statewide Insurers wants to obtain an investigative consumer report about an applicant because of questions it has regarding the individual's credit history. What must Statewide do before it can obtain a report?
notify the applicant that he has the right to be interviewed in connection with the report
When classifying insurance risks, insurance underwriters most often use the:
numerical rating system
Which type of care are HMOs NOT required to provide?
nursing home care
Which is NOT among basic medical expense insurance?
nursing home insurance
With respect to the insurance contract, the insurance company and the applicant are, respectively, the:
offeree and offeror
Because they are aleatory contracts, insurance policies:
often award disproportionately large benefits due to chance events
When does a waiver of premium rider release the insured from paying the policy's premium?
only when the insured is totally disabled
Marcie is insured under her employer's health plan and wants to get additional benefits. When she asks about the additional coverage, she is told that she must wait until January to access these benefits. What is Marcie waiting for?
open enrollment period
Disability income insurance benefits that an employee receives from a policy for which the employer pays the premium are taxed to the employee as:
ordinary income
Which health care professional is NOT a common primary care provider (PCP)?
orthopedic surgeons
Susanna is a cancer patient who has health insurance coverage. What is the most she will pay for her care and treatment?
out-of-pocket maximum
What does the entire contract provision state?
The entire contract consists of the policy, attached riders, and endorsements.
Brian is a certified public accountant and wants to buy a disability income insurance policy to provide income for his family in case he becomes disabled. Which definition of total disability will the insurer likely use in the policy?
own occupation
Which of the following persons would not qualify for a temporary producer's license in North Carolina?
part-time producer of a licensed agency
Which is NOT subject to HIPAA privacy regulations?
patient's family members
The purpose of the social insurance supplement (SIS) rider on a disability income (DI) policy is to:
pay additional monthly benefits until Social Security disability benefits begin
On her insurance application, Jenny states her age is 38 although she is 42. With the misstatement of age provision, her policy will:
pay benefits at a level her premium would buy at her correct age
When health care services incur a coinsurance payment, the insured must:
pay costs that exceed the limitation on coverage for the service
What must the insurer do if a health insurance claim involves a loss of life and the insured did not specify a beneficiary?
pay the claim to the insured's estate
Sam loses his job and group health coverage. To convert his group coverage to an individual policy, he must:
pay the first premium within 31 days
After the insurer receives proof of loss of a claim under a health insurance policy, which provision specifies to whom payment will be made?
payment of claims
Employer group health plans are prohibited from offering Medicare-covered employees or spouses coverage under a Medicare supplement plan that:
pays for services covered by Medicare.
An insured's major medical expense policy has a deductible under which the insured must pay separate deductibles for each illness and each accident. What type of deductible is this?
per cause deductible
Which characteristic about an insurance policy prevents the policyowner from transferring it to a third party without the insurer's consent?
personal
Which would NOT be included in the agent's report to assist the underwriter in determining whether to accept an insurance application?
personal opinions about the applicant's family
An employee is injured on the job and receives benefits under the employer's group long-term disability plan. Which source of income will NOT reduce these benefits?
personal savings
Kendra is covered by a group long-term disability plan. She is injured on the job and receives benefits under that plan. Which source of income will NOT affect her benefits?
personal savings
A person who smokes heavily and drinks alcohol to excess exhibits what kind of an insurance risk?
physical hazard
While completing an application for a health insurance policy, Dan discloses his partial blindness. The insurer will treat this blindness as a:
physical hazard
Which are examples of the kinds of health-care providers that contract with a PPO?
physicians, hospitals, and clinics
What do medical expense policies rely upon to determine the delivery of medical services and care?
plan or policy
HMOs commonly use which payment with health care providers?
pre-payment
What is the consideration that the insured gives in exchange for the insurer's promise to cover losses under an insurance policy?
premium payment
A prospective insured gives an agent a completed life insurance application with the first premium payment. What must the agent now give the applicant?
premium receipt
Andrew has a dental policy with his group medical plan. The dental plan pays a monthly fixed amount to the dental care provider. What type of plan is this?
prepaid plan
Sal loses his sight in a chemical accident in his garage. His group disability insurance plan pays a monthly benefit but does not require proof of ongoing disability to continue benefit payments. Which policy provision exempts him from supplying this proof?
presumptive disability
In trying to minimize health care costs, a managed care provider emphasizes:
prevention
In addition to covering care for illness or injury, HMOs emphasize what kind of care?
preventive care
To control health care costs, HMOs stress the importance of what kind of health care among their members?
preventive care
Which of the following techniques is not used during the utilization review process?
preventive care review
When an insurance company appoints an agent to represent it, who are the parties to the agency relationship?
principal and agent
All of the following sources are often used in underwriting health insurance policies, EXCEPT:
private investigator's observations
John's new individual health insurance policy requires 30 days to pass between the policy's effective date and the time when coverage begins. What is this 30-day period called?
probationary period
Which is not a means of regulating the insurance business?
producer peer review
Insurance agents are often called:
producers
Which of the following is not a power granted to the North Carolina Commissioner of Insurance?
prosecuting individuals for violating insurance laws
Bob applied for a health insurance policy but did not submit the premium with his application. If the insurer issues the policy as applied for, the producer must then take all of the following actions, EXCEPT:
provide a binding receipt
An employee who suffers a short-term job-related injury may look to his or her employer to do which of the following?
provide coverage through workers' compensation insurance
Carla was a construction worker when she bought her health insurance policy, but eight months later became a full-time homemaker and part-time insurance agent. Assuming that her policy contains a change of occupation provision, what is the likely result of Carla's having a less hazardous occupation?
The insurer must reduce the premium rate.
Under a disability income insurance policy's 'other insurance with other insurer' provision, what must be done with any premiums paid by the policyowner for benefits that are not paid because they exceed the excess coverage limit?
The insurer must return them to the policyowner.
If a health insurance policy involves a death benefit, what will the insurer do if it receives proof the insured has died?
The insurer will pay the claim to the insured's beneficiary.
When collecting personal financial or health information, an insurance company is required to do all of the following EXCEPT
provide individuals with copies of documents disclosed to other parties.
Bryson's health insurance policy covers his wife and children. His wife is undergoing infertility treatments. He undergoes some cosmetic procedures performed. What is true about the policy's coverage?
The policy will not cover either of the procedures.
Mr. Smith, a shoe store owner, is insured under a business overhead expense policy that pays a maximum monthly benefit of $2,500. If Mr. Smith becomes disabled and has actual monthly expenses of $3,000, which of the following is correct?
The policy will pay $2,500 as a monthly benefit.
Camilla is a surgeon and injured her hand. Because she can no longer perform her normal work-related duties, she files a claim under her disability income policy. What will happen if the policy contains an own occupation definition of total disability?
The policy will pay benefits because she cannot perform her normal work duties.
Tim applies for a life insurance policy. His agent gives him a receipt conditioned on Tim's passing a physical exam to meet underwriting standards. Tim passes the physical exam but dies before the policy is issued. Which of the following is correct?
The policy will pay the death benefit.
A health insurance policy's waiver of premium provision provides which of the following benefits?
The policy's premium will be waived if the insured is totally disabled.
Which is not correct about the agency contract between the insurance company and the agent it appoints to represent it?
The principal has express authority; the agent does not.
Which statement about HMOs is NOT correct?
The provider network is limited to a town or city.
A disability income insurance policy with a noncancellable renewability provision typically cannot be cancelled until the insured:
reaches age 65
An agent assures an insurance applicant that she will be insured for a certain amount. If the coverage is denied and the applicant relied on the agent's assurance to her detriment, the insurer could be liable to the applicant on the basis of:
reasonable expectations
To boost her sales at the end of the year, Agent Trudy started offering potential clients a $250 cash gift card in exchange for purchasing a life insurance policy. Which ethical sales practice has Agent Trudy violated?
rebating
Which entity spreads the cost of losses among its members by having each member pay a pro-rata share of these losses?
reciprocal insurer
Tori's accident and health insurance policy includes a change of occupation provision. When she applied for the policy, she was an accountant. Now she is a construction worker. What will the insurer do to accommodate the increased risk?
reduce benefits
A health insurance policy's elimination period of is designed to:
reduce or avoid small claims
Under the 'relation of earnings to insurance' provision in a disability income insurance policy, what will the insurer do if it discovers a disabled insured is also collecting Social Security disability benefits such that the combined total of benefits exceeds to insured's pre-disability income?
reduce policy benefits proportionally and return premiums paid for that excess coverage
A health insurance policy that bases benefit payments on the actual value of the loss is called a(n):
reimbursement contract
Which is NOT an optional provision in health insurance policies?
reinstatement
Which optional provision in a health insurance policy states how the insurer will limit benefits so that they do not exceed the insured's income?
relation of earnings to insurance
When Vincent began working for his employer, he earned $5,000 each month. His disability income coverage would pay a benefit of 60 percent of his salary, or $3,000 each month. He now works part time for 20 hours per week, and he earns half of his original salary. Which policy provision is likely to affect his disability benefit?
relation of earnings to insurance provision
Which of the following provisions defines the insurer's rights to cancel or continue coverage?
renewability provision
Which provision gives the insurer the right to cancel coverage?
renewability provision
A company pays the annual premium on a key employee disability income policy. When the key executive becomes disabled, the policy pays him an $8,000 monthly benefit. What is the executive required to do?
report the benefit as income
A client's answers on an application for insurance are considered to be:
representations
Which of the following is used to change coverage in a health insurance policy?
rider
Which is NOT among a health insurance policyholder's rights?
right to change the duration of coverage during the policy term
Under which of the following provisions may a policyowner return the policy to the insurer and receive a full refund of the premium?
right to examine (free look)
Robin falls while snow skiing and breaks a leg. She decides to never again attempt this activity. What method is she using to manage this risk of falling?
risk avoidance
Medical savings accounts (MSAs) were specifically created for:
self-employed people and employees of small employers
A third-party administrator (TPA) is associated with what type of health care plan?
self-insured
The federal Risk Retention Act of 1986 applies to which businesses?
self-insuring businesses
Which of the following transactions requires an insurance producer to have more than one insurance license?
selling variable life insurance
HMOs operate within geographic areas that are called:
service areas
A group disability income plan with a maximum benefit period of less than two years is considered what type of plan?
short-term disability plan
A pre-existing condition is a health condition that existed before an insurance policy was issued. Its definition normally includes all of the following EXCEPT:
sickness or physical condition of which the insured was unaware
Which type of health policy offers coverage for treatment of a specified disease or condition, such as heart disease or cancer?
specified
Which type of medical expense coverage may be limited to a particular form of care?
specified
Major medical policies do NOT have which of these characteristic?
specified coverage
What kind of policy only covers cancer, stroke, heart attack, and Parkinson's disease?
specified disease policy
A health insurance policy's insuring clause does all the following EXCEPT:
state the premium ranges for covered risks
Which entity does NOT determine the size of a group health insurance plan?
state's attorney general
Brian incurs $50,000 of covered medical expenses. After paying the deductible, he owes $9,800 under the policy's coinsurance provision. However, the amount of out-of-pocket expenses he is responsible for is limited to $5,000. Which policy provision provided this protection?
stop-loss feature
Master Manufacturers self-insures its health benefits but wants to protect itself from unexpectedly large claims. What type of policy should Master buy?
stop-loss policy
Which of the following features of major medical policies protects the insured by limiting the out-of-pocket dollar amount the insured must pay?
stop-loss provision
Jim applied for a health insurance policy, which was issued with a waiver excluding any loss associated with cardiac illness. From a risk perspective, how has Jim been classified?
substandard
Which of the following correctly describes a comparison between a supplemental major medical policy and a comprehensive major medical policy?
supplemental policies generally have a higher deductible than comprehensive policies
Over time, basic physician expense coverage has been expanded to provide coverage for all of the following, EXCEPT:
surgeon fees
A cancellable, nonrenewable health insurance policy that provides coverage for a specified short-term period only is called a:
term health insurance policy
What does the insurer guarantee in health insurance policies that are guaranteed renewable?
that during the guaranteed renewable period, it will not cancel the policy and will increase premiums only on all policies of the same class
Changes to a disability income insurance policy's benefits under the cost-of-living adjustment (COLA) rider are typically based on:
the Consumer Price Index
Under an income replacement disability insurance policy, the monthly benefit is equal to:
the actual amount of lost income
As part of the field underwriting process for health insurance, producers must provide the following types of information to applicants EXCEPT:
the applicant's MIB report
When deciding whether to issue a policy, the health insurance underwriter will weigh all of the following factors EXCEPT:
the applicant's neighborhood
With respect to individual disability income insurance, which of the following underwriting factors most reflects the risk the applicant's job represents to the insurer?
the applicant's occupational class
Information that is commonly asked on a health insurance application include all of the following EXCEPT:
the applicant's opinion regarding the risk of disability or illness occurring
All the following are factors an underwriter may consider when underwriting an individual disability income policy application EXCEPT:
the applicant's religion
According to the laws of agency, an insurance agent appointed by an insurance company acts on behalf of:
the appointing insurer
To which of the following are benefits paid under a key person disability income policy?
the business that purchased the policy
Which of the following health insurance policy provisions states that the insurer must provide claim forms to the insured within a certain number of days of receiving a notice of claim?
the claim forms provision
If a group health insurance plan is experience-rated, which of the following factors will the insurer NOT examine when issuing the policy?
the community or region in which the group operates
An agent's apparent authority is defined by:
the customer's perceptions
Petra is self-employed and pays premiums each year for medical, dental, long-term care, and disability income insurance. She can fully deduct the premiums paid for all of the following policies EXCEPT:
the disability income policy
Standard Coal Company has 325 employees and applies for a group health insurance plan. When underwriting the plan, the insurer will examine the risk characteristics of
the group as a whole
According to a health insurance policy's entire contract provision, which of the following would not be considered part of the contract?
the insurance company's sales agreement with its agents
A guaranteed insurability rider guarantees an individual disability income policyowner's right to buy additional coverage even if:
the insured cannot provide satisfactory evidence of insurability
In which of the following instances is a disability income insurance policy's 'other insurance with other insurers' provision likely to come into play?
the insured has coverage from a state's workers' compensation program
In modern disability income insurance policies with a noncancelable renewability provision, the policy is noncancelable until:
the insured's Social Security full retirement age
Medical expense insurance is categorized as either fee-for-service or pre-paid, which differentiates them by:
the manner of payment for health-care services
Which does a basic physician expense policy specify?
the maximum benefit per visit, and a maximum number of visits per injury or illness
Which of the following optional provisions addresses the situation in which an insured provides the wrong age on the application for insurance?
the misstatement of age provision
Which of the following provisions requires the insured to notify the insurer within a certain number of days after he or she has a covered loss?
the notice of claim provision
Which is a required provision in a health insurance policy?
the order in which a policy will pay benefits if coverage exists from other sources
Which of the following optional provisions limits the total coverage that the insurer will permit a disability income insurance policyowner to have with that insurer?
the other insurance in this insurer provision
If a business owner is disabled, business overhead expense insurance will NOT pay the:
the owner's salary
Which of the following provisions details how claims are paid?
the payment of claims provision
With respect to penalties and fines for noncompliance with the coverage requirements of the Patient Protection and Affordable Care Act, all of the following statements are correct EXCEPT:
the penalty for noncoverage is the same for adults and children
Individual and group health insurance policies both can include a probationary period. When used in an individual health insurance policy, what is a probationary period?
the period that must pass between the policy's effective date and the time when benefits are payable
Each application for health insurance requires the signature of which party?
the proposed insured, the producer, and all adults to be covered by the policy
Which of the following optional health insurance policy provisions applies specifically to disability income insurance policies?
the relation of earnings to insurance provision
Ben is covered by his employer's group health insurance plan and is also eligible for Medicare benefits. In Ben's case, what is Medicare considered?
the secondary payor
Under both the benefit schedule and the usual and customary payment approach, what is the amount a policy pays based on?
the stipulated amount or the actual amount charged for the care or service, whichever is lower
The other insurance in this insurer provision in a health insurance policy limits:
the total coverage the insurer provides to a particular insured
Which of the following optional health insurance policy provisions addresses premiums that the insured owes at the time of a claim?
the unpaid premium provision
The fee schedules that were once used to determine appropriate costs of medical care and services have been replaced by:
the usual, customary, and reasonable fee standard
John owns a life insurance policy. The policy insures Mary, his wife. This is possible through what kind of policy ownership?
third-party
Into how many classes do many dental plans group their covered treatment and benefits?
three
Which example illustrates the concept of adverse selection?
Tom, a heavy smoker, seeks employment so he can group health insurance.
Tori has a health insurance policy from ABC Insurers. ABC denies a claim because Tori failed to notify it in a timely manner of the loss. Tori argues that the policy's instructions on filing claims are confusing. A court that reviews the policy's instructions will probably resolve any ambiguities in favor of:
Tori
What is the purpose of a disability reducing term insurance policy?
to cover any outstanding loans a business might have if the business owner becomes disabled
Why does an insurance company issue a conditional receipt to a new policyowner?
to cover the proposed insured before the policy is issued
Why would a business self-insure instead of buying an insurance policy?
to insure against frequent low-severity losses
Which of the following is not a duty that an agent owes to an insurance applicant?
to offer a rebate on the premium
Sebastian, who works part-time for the company during the fall and winter
to request referrals from a client
Best Insurance Company issues health insurance policies that reimburse insureds for expenses instead of offering medical services through a provider network. What type of plan does Best Insurance sell?
traditional indemnity
Any provider coverage without regard to a network of providers is typical of what type of plan?
traditional indemnity policy
Allison has a medical plan that allows her to choose any provider she wishes. She most likely is insured under which of the following?
traditional medical expense plan
An insured's medical expense plan requires him to get medical care from certain providers if the cost of the care is to be covered. What type of insurance does the insured NOT have?
traditional medical expense plan
Which of the following types of health insurance is the traditional form of health-care coverage based on a written policy contract?
traditional medical expense policies
What is the basic purpose of health insurance?
What is the basic purpose of health insurance?
Which of the following statements about the delivery of newly issued health insurance policies to the customer is correct?
When delivering the policy, the producer should review the policy to ensure that its terms and conditions match those the client applied for.
Which can qualify for group health insurance in the small employer market?
two or more persons
Harold has a short-term disability income policy. If he is disabled, benefits will typically be payable for no more than:
two years
Benefit periods for short-term disability income policies are typically limited to:
two years or less
Benefit periods for short-term disability income policies are usually limited to:
two years or less
A guaranteed insurability rider guarantees the right to buy additional coverage:
under any circumstances
Fran has an agency contract with ABC Insurance Company to represent the company. The contract gives her express authority to perform certain duties. Which is correct with respect to Fran's actions?
When she acts within her authority, she binds the company by her actions.
Acme Insurance and Apogee Insurance agree to offer different premium rates for persons of equal risk within a particular class. They also agree to limit benefits paid to insureds within this class if the insureds live in certain counties of North Carolina. What are Acme and Apogee engaging in?
unfair and prohibited business practices
Which of the following is a characteristic not usually found outside the context of insurance contracts?
unilateral
Which is NOT a common health insurance rider?
unlimited coverage
Basic hospital, surgical, and physician policies offer insureds all of the following benefits, EXCEPT:
unlimited coverage and no ceiling on the amounts that the insurer will pay
Which of the following is a measure to determine the need for and the suitability of health-care services for health plan members or subscribers?
utilization review
A health insurance policy that bases the claim payment on an amount specified in the contract is called a:
valued contract
A health plan that provides specific coverage is NOT likely to cover:
visits to doctors' offices
When Cooper was completing his application for an individual health insurance policy, he intentionally omitted information concerning his history of skin cancer. What will the insurer do when it discovers this omission one year later?
void the policy or exclude losses related to skin cancer
Jane asks her insurance agent to stop notifying her when her policy is due for renewal, and to notify her attorney instead. What has Jane done by giving up this right to get this notice?
waived a right
All of the following are examples of an agent's responsibilities toward an applicant EXCEPT:
waiving payment of the policy's first premium
Statements that are guaranteed to be true are known as:
warranties
In which case is the amount payable for a covered service based on the amount that is typical for the area in which the service is performed?
when coverage is paid on a usual and customary or usual, customary, and reasonable (UCR) basis
When does a waiver of premium rider excuse the insured from paying the policy's premium?
when the insured is totally disabled
If a Health Savings Account (HSA) account holder takes money out of the fund but does not use it to cover medical costs, the withdrawal:
will be subject to ordinary income taxes and a possible 20 percent penalty tax
A health insurer provides a 10-day grace period in all of its policies. However, one state in which the insurer sells policies requires a 30 day grace period. The Conformity with State Statute provision means that the insurer:
will change the grace period in that state to 30 days, but maintain a 10-day grace period in all other states
Sandra has a Section 125 cafeteria plan. To pay for her benefits, the employer will:
withhold part of her pre-tax salary
All of the following are common types of government health insurance plans EXCEPT:
workers' compensation plans
Which group would present the greatest risk to an underwriter of a group health insurance policy?
yachtsmen
Will's employer pays the premiums for his group disability income insurance policy. Which statement is correct about the tax treatment of the premiums and benefits?
Will cannot deduct the premiums that the company pays on his behalf.
Stephan buys an individual major medical plan this year. Will his thyroid condition be covered under the plan?
Yes, because limitations and exclusions on pre-existing conditions in individual health plans are generally prohibited.
A pregnant woman marries and is covered by her spouse's employer's group health plan. Will the plan cover the child?
Yes, from the moment of birth.
May one person qualify as a group and be eligible for group health insurance coverage?
Yes, in some states a business group of one can qualify as a small group.
For tax purposes, the term "self-employed person" includes all of the following, EXCEPT:
a C corporation's officers
Total disability will be presumed under a presumption of disability provision if an insured suffers any of the following physical losses, EXCEPT:
a broken leg
With respect to the Patient Protection and Affordable Care Act, the terms platinum level, gold level, silver level, and bronze level refer to which of the following?
a classification of health insurance plans that differentiates them by the percentage of medical expense costs paid by the plan
Charles consulted a physician outside his HMO's network. When making a claim for benefits, he learned that none of his costs are covered because he is enrolled in:
a closed panel HMO
An HMO that does not provide services or coverage outside its network is:
a closed-panel plan
Which employer is exempt from the requirements of COBRA?
a company that employs 19 people
the Consumer Price Index
a company that employs 19 people
Bethany loses her job and group health coverage but is soon employed again. When she enrolls in her employer's group health plan, the protections she gets from federal law do NOT include:
a continuation of coverage under the same insurer
Which would NOT be relevant information for the purpose of underwriting a health insurance policy?
a copy of the applicant's high school diploma
A disability income insurance policy's elimination period begins on the date that:
a disabling injury occurs
Blanket disability policies can be issued to all of the following EXCEPT:
a family, covering family members
Carla incurs $7,000 in covered medical expenses. She pays $500 of those expenses, and the policy bases its benefit payment on the remaining $6,500. What kind of deductible does Carla have?
a flat deductible
An expense that the IRS considers a deductible medical expense is eligible for reimbursement from:
a flexible spending account
Which of the following allows insureds to increase a policy's level of benefits in the future without having to prove insurability?
a guaranteed insurability rider
On what do basic hospital policies typically base payment for covered expenses?
a maximum per-day benefit for a certain number of days, e.g., a basic hospital policy may provide a hospital benefit of $200 per day for up to 30 days
From an income tax deduction perspective, what are the premiums that a policyowner pays for individually owned medical expense insurance considered?
a medical expense
A small business owner wants to join other small employers so they can shop for affordable group health coverage for their employees. He can do this through:
a multiple employer trust (MET)
An agent who sells insurance for an insurance company that does not have a certificate of authority to operate in the state represents:
a non-admitted insurer
Laura was injured in an accident. She incurred $1,000 in medical bills. Even though she was not disabled or lost any income, her disability income policy paid for these expenses because it has:
a nondisabling injury provision
Jay's medical expense policy uses a benefits schedule. After he incurs a covered medical expense, what amount will the insurer pay?
a percentage of or the entire unit value assigned to the medical procedure
Which of the following entities would not be considered a health insurer in North Carolina?
a reciprocal insurer
After Todd was injured, he received occupational therapy to help him return to work. His disability income policy covered the treatment because it has:
a rehabilitation provision
Which is NOT typically a cause of rising health-care costs?
a shortage of hospital beds
Which of the following integrates with a basic medical expense policy to cover costs exceeding the basic policy's coverage?
a supplementary major medical policy
Which of the following is the basis today for determining basic surgical expense policy benefits?
a usual, customary, and reasonable (UCR) method
John buys a $1 million life insurance policy. He dies two years later and the insurer pays the $1 million benefit. Even though the premiums never came close to the benefit amount, the insurer pays the full benefit because the insurance policy is type of contract?
a valued contract
Ken has a history of severe back pain. He applies for disability income coverage. Concerned about early and significant disability claims, what may the insurer add to address that special risk?
an impairment rider
A person who is covered by an individual medical expense insurance plan is:
an insured
An HMO that provides services or coverage outside its network is:
an open-panel plan
Most major medical policies have which of the following types of deductibles?
annual deductibles
Which rider adds a death benefit to a disability income policy?
annually renewable term rider
Disability income insurance policies sold to those in blue-collar occupations typically use which definition of total disability?
any occupation
Medical expense insurance may or may not define who the insured can use to provide the medical care. What is this distinction called?
any provider vs. limited choice of providers
ABC Insurance Company fires Renee, a producer. She continues to interview prospects, make sales presentations with company materials, and collect premiums. When dealing with Renee, the prospects believe that she has what kind of authority from ABC?
apparent
For a life insurance contract to be enforceable, which of the following must be legally competent to enter into the agreement?
applicant and insurer
Which of the following is generally regarded as the primary source of underwriting information for an applicant for health insurance?
application
Mandy loses her job. She was covered by her employer's group health plan and wants to convert the coverage to an individual policy. What must she do?
apply for a conversion policy and pay the premium
Which of the following correctly identifies the way(s) in which major medical expense insurance policies are generally available?
as a supplement to a basic plan or as a comprehensive stand-alone plan
How often may an insurer require an insured to submit to a physical examination during a pending claim?
as often as reasonably necessary
A health-care provider submits the bill for medical services directly to the insurer, and the insurer sends payment to the provider. What is this arrangement called?
assigning benefits
In general, newborn children are covered under a parent's medical expense insurance policy beginning:
at birth
Group long-term disability (LTD) coverage typically has a maximum benefit period of:
at least 2 years
When may a disability income insurance policyowner exercise the future increase option rider?
at specified dates in the future, without the need to provide evidence of insurability
Which action by an agent would legally bind the insurance company that the agent represents?
authorized acts
Which is an optional provision that insurers may omit from their health insurance policies?
automatic payment of premiums from bank account
Which group health plan gives employers the most flexibility in designing and arranging the plan's benefits?
experience-rated plans
A major medical policy with an 80/20 coinsurance clause pays 80 percent of medical expenses until the stop/loss or maximum out-of-pocket limit is reached. Then the policy pays costs based on the:
usual and customary charge
If an insurer decides to cancel a health insurance policy because the policyowner did not pay a premium, how much notice must it give the policyowner before doing so?
10 days
The Family and Medical Leave Act (FMLA) protects the employment status of certain employees on unpaid leave for up to how long?
12 weeks per year
On July 1, an employer makes the maximum annual contribution to its employees' health savings accounts. Two weeks later, Franklin quits his job. Which is correct about the contribution in his has?
Franklin will retain the funds.
A cancelable health insurance policy allows the insurer to do what?
cancel the policy at any time by providing written notice
An HMO that does not offer services beyond its provider network is what type of HMO?
closed panel HMO
Joshua's major medical policy requires him to pay $50 every time he goes to see his doctor. What is this payment called?
co-payment
An insured has a basic hospital plan with a supplementary major medical plan. She is hospitalized and incurs $10,000 in expenses, which are covered by her two plans. Her basic policy covers 100 percent of the first $3,000 of her costs. The supplementary plan has a $500 deductible. The basis for her supplementary plan benefit payments is $6,500. Which type of deductible does the basic hospital plan have?
corridor deductible
The medical expense deduction applies to qualified medical expenses as the IRS defines them. Which of the following is NOT a qualified medical expense?
cosmetic surgery
Daniel is hospitalized with a neck injury. When he checks his disability income policy, he learns that he will not be eligible for benefits for 60 days, which means that his policy has a 60-day:
elimination period
Which of the following health insurance policy provisions imposes a waiting period after the onset of illness or accident before benefits begin?
elimination period
An insurance company with a home office in Wisconsin that does business in Illinois is a domestic company in Wisconsin. What kind of company is it in Illinois?
foreign
An employer plan with a maximum benefit period of 18 months would most likely be which type of insurance?
group short-term disability plan
While meeting with her insurance customer, Ben, Ann sees that he is chain smoking. Yet he notes on his application that he is a nonsmoker. What should Ann do at this point in the application process?
insist that Ben be truthful and avoid misrepresentation
Experience rating for group health insurance is usually applied to which of the following?
large groups
An insurance policy provides financial protection against:
losses caused by perils
The Health Insurance Portability and Accountability Act (HIPAA) permits insurers to terminate group health coverage for which reason?
nonpayment of premiums
If a claim is filed because the insured died and the insurer has doubts about the cause, what can the insurer do?
order an autopsy to determine the cause of death
From an insured's point of view, which definition of total disability is more advantageous?
own occupation
The statements that an applicant makes on an application for insurance are treated as:
representations
Quest Publishing has six employees and applies for a group health plan. What may the insurer do when underwriting the policy?
require the employees to provide evidence of insurability
Which of the following optional provisions either allows the insurer to reduce benefits or requires the insurer to reduce the premium rate under certain conditions?
the change of occupation provision
Which of the following provisions defines the period during which the insured can take legal action against the insurer because it denied a claim?
the legal actions provision
Which of the following health insurance policy provisions requires the insurer to pay claims immediately after receiving proper proof of loss?
the time payment of claims provision
Jim owes $10,000 to Acme Corporation, and he pays $500 each month on the loan. If he decides to take out a credit accident and health insurance policy to cover the payments if he dies or becomes disabled, the policy may not exceed what amount?
the total amount of Jim's debt
What is the purpose of the legal actions provision in a health insurance policy?
to specify the period in which the insured can take legal action against the insurer
Your client's basic health insurance policy will pay a $10,000 benefit if he were to die in an accident. At the client's death, the policy instead pays a $30,000 benefit. Which type of rider did the policy include?
triple indemnity rider
Which is not necessary to create a legal contract?
warranty
How late in the year can flexible spending account (FSA) participants apply their contributions for any one year?
March 15 of the following year
Marcy buys an individual health insurance policy on May 1. Five days later, she decides to return the policy to the insurer. What is the result?
Marcy can return the policy for a full refund of premium.
All of the following statements regarding Blue Cross and Blue Shield (BC/BS) plans are correct EXCEPT:
Members submit claim forms to seek reimbursement of covered medical expenses.
Which statement about open enrollment periods is NOT correct?
Members who have pre-existing conditions do not have to wait for an open enrollment period.
Which statement is correct about the coordination of benefits provision in group health insurance policies?
No insurer is required to reimburse benefits or coverages beyond those specified in the contract.
In addition to charges for a hospital room, hospital expense policies cover miscellaneous hospital charges up to an amount that is generally defined as:
a multiple of the daily room and board rate (such as 20 times the daily benefit for hospital room and board), or as a maximum dollar amount.
During the underwriting period, an insurance company can provide the applicant with limited, temporary coverage through either a conditional receipt or:
a temporary insurance receipt
The most comprehensive coverage of health-related risks can be obtained by buying:
a variety of insurance policies
Best Insurance Company is incorporated in Canada and just applied for a license to transact insurance in North Carolina. Which type of insurer is Best Insurance Company considered in North Carolina?
alien
A health plan that offers the insured a limited choice of health care providers is:
an HMO or PPO plan
Ava incurs these unreimbursed medical expenses this year: $12,000 in health insurance premiums, $2,000 in long-term care premiums, $500 in doctors' fees, and $1,000 in disability income insurance premiums. She can take an income tax deduction to the extent these expenses exceed 10 percent of her adjusted gross income for all of the expenses EXCEPT:
$1,000 in disability income insurance premiums
Jerry was injured in an accident and was hospitalized for 50 days at $250 per day. His basic hospital expense indemnity policy pays a benefit of $250 per day for up to 45 days. How much of the hospital expenses will Jerry pay?
$1,250
Melina paid $7,000 for medical care this year. If her adjusted gross income is $50,000 this year, how much of these expenses can she deduct from her income taxes, if any?
$1,400
Under Nick's basic surgical expense policy's fee schedule, an appendectomy has a unit value of 70. To determine the maximum payable under the policy, a conversion factor of $20 is multiplied by the unit value. So, if Nick needs to have his appendix removed, what is the maximum amount payable under his policy?
$1,400
June has a comprehensive major medical policy with a $500 per year deductible and an 80/20 coinsurance provision. She has surgery for cancer and incurs $60,000 in covered medical expenses. How much will June pay in total for the surgery?
$12,400
The annual benefit limit under a single-insured dental plan typically ranges from:
$2,000 to $3,000
Although stop-loss amounts vary by insurer and by policy, what is the usual range?
$2,000 to $5,000 a year
Abby is an actress but can no longer perform onstage after being injured in a car accident. She now works as an acting coach and earns $40,000 a year, $20,000 less than she did while acting. What benefit will her income replacement disability policy will pay?
$20,000
Jan's adjusted gross income this year is $70,000. She incurs $10,000 in unreimbursed medical expenses, which includes $6,000 in medical insurance premiums. How much will Jan be able to deduct this year?
$3,000
Dana is covered by her employer's group long-term disability income insurance. The employer pays 80 percent of the premium and Dana pays the remainder. She is disabled and receives a weekly benefit payment of $1,000 for four weeks. How much of each benefit payment is taxable income to Dana?
$800
An employer pays $500 in premiums annually for each employee enrolled in its group medical plan. How much of the contribution is taxable income to the employee?
$0
Andrea earned $3,000 each month before she was injured in an accident. Now she works part-time and earns $1,000 a month. Her disability income policy pays a $2,000 monthly benefit for total disability. The policy uses a flat rate to determine benefits for partial disability. How much will Andrea receive?
$1,000
Dental plans group their covered treatment and benefits into three classes or categories, and cover all expenses for which category?
1 only: diagnostic and preventive care
Policyowners who buy a health insurance policy issued in North Carolina are entitled to review the policy without obligation for at least how many days after it is delivered?
10
Roberto let his individual health insurance policy lapse two months ago. He pays the premium to reinstate the policy. How many days must Roberto wait before any illnesses will be covered?
10
When a health insurer cancels a policy for failure to pay premiums, the cancelation provision requires the insurer to give the policyowner how many days' advance notice?
10
Most states require that a group (at least a single-employer group) have a minimum of how many members to be eligible for group health insurance?
10 members
A health insurance policy that has monthly premiums usually has a grace period of how many days?
10 or 31 days
The NAIC's model law sets forth certain optional provisions that insurers can but are not required to add to a health insurance policy. How many optional provisions are on the list?
11
An insurer must notify its current customers of its privacy policies or practices at least once every how often?
12 months
In health insurance plans with 'grandfather' status under the Affordable Care Act, what is the longest time that they can exclude a preexisting condition from coverage?
12 months
A health insurance policy with 'grandfather' status under the Affordable Care Act can typically exclude coverage for pre-existing conditions for how long after the policy's effective date?
12 to 24 months
Which of the following statements about the conversion provision in group health insurance policies is correct?
A person will not have the right to convert a policy if it was terminated due to nonpayment of premium.
Which of the following best describes the difference between a probationary period and an elimination period?
A probationary period is the time a person must wait before coverage begins, while an elimination period defines the period after a disability or illness during which benefits are not payable.
What is the difference between a representation and a warranty in an insurance contract?
A representation is believed to be true, while a warranty is guaranteed to be true.
Which statement is correct about representations and warranties in insurance contracts?
A warranty is guaranteed to be true.
Bob applies for an individual health insurance policy. Terri enrolls in her group health insurance plan. Which case requires the insurer to account for adverse selection?
Bob's application
Anthony becomes an agent for Acme Insurance Company. Acme has not filed the notice of appointment with the Commissioner. It must do so within how many days?
15
Bob had been working at Sunset Airlines for ten years when he was laid off on June 1. How long can Bob continue his health insurance coverage under Sunset's group plan?
18 months
Margaret loses her job and applies for continued group coverage through COBRA. What is the maximum amount of time she can continue coverage under her former employer's group health insurance plan?
18 months
A group long-term disability income plan (LTD) typically has a minimum benefit period of:
2 years
A claimant on a health insurance policy must give written notice of the claim to the insurer within how many days following a loss?
20
Bethany was injured in a car accident. Within how many days must she typically notify her health insurance company about the claim?
20
Unless they operate in a state that has additional requirements, employers with fewer than how many employees are exempt from COBRA requirements?
20
Under a health insurance policy's notice of claim provision, how many days does the insured have to notify the insurer after having a covered loss?
20 days
Depending on the type of coverage and the age and state of residence of the policyowner, a health insurance policy's free look period can be as long as:
20 to 30 days
How are medical savings accounts similar to health savings accounts?
Both combine a high-deductible health insurance plan with a tax-advantaged savings account.
Terry is licensed in North Carolina as a life and health insurance agent. To maintain his license, how many hours of continuing education must he complete every two years?
24
After it issues an insurance policy, how long does the insurance company have to void the policy due to fraud in the application?
24 months
Thomas' brother is injured while on active military duty. As an eligible employee under the Family and Medical Leave Act, how much time can Thomas take off from work to care for his brother?
26 weeks
Into how many categories do dental plans typically group their covered treatment and benefits?
3
If a group health insurance policy terminates, an employee can elect to continue coverage provided he or she has been insured under the plan for how long before it terminates?
3 months
Eric fails to pay the annual premium on his major medical insurance policy. The grace period provision allows him to pay the premium within how many days after the due date?
31
Liam's group health insurance policy terminated on February 1. Within how many days must he apply for a conversion policy and pay the first premium?
31
Charlie was covered under his wife's employer-sponsored health insurance plan before their divorce. Charlie applies for continued coverage through COBRA. How long can he continue coverage?
36 months
The Patient Protection and Affordable Care Act (PPACA) , also called the Affordable Care Act (ACA), recognizes how many 'metal levels' of coverage?
4
The cancelation provision in a health insurance policy permits the insurer to cancel the policy after it gives the insured at least how much notice?
45 days
A flat benefit amount in a disability income policy is usually what percent of the full disability benefit?
50 percent
The flat benefit amount for partial disability is usually what percent of the full disability benefit?
50 percent
In general, contributory plans require what minimum percentage of eligible employees to participate?
75 percent
If an insurer plans to discontinue a group health insurance plan, it must notify the employer of its intent to do so at least how many days in advance?
90 days
Under a health insurance policy's proof of loss provision, how many days does the insured have to provide the insurer with written proof of loss?
90 days
Which of the following best describes the IRS rule that applies to deductible medical expenses for persons under age 65?
A person can deduct unreimbursed medical expenses exceeding 10 percent of his or her adjusted gross income (AGI).
For insurance purposes, which statement applies to a group?
A group consists of members who have a common purpose other than to obtain insurance.
Which statement about the coverage of chemical dependency under a group health insurance policy is CORRECT?
A group policyholder must have the option to purchase coverage for chemical dependency treatment.
Jake borrowed $300,000 from ABC Capital Company. He buys a credit disability insurance policy equal to the amount of the loan. Soon afterward, he suffers an injury that prevents him from working. He is unable to pay back the loan. To whom will the policy pay the benefit?
ABC Capital Company
Jake borrowed $300,000 from ABC Capital Company and bought a credit disability insurance policy. Soon afterward, he is injured and unable to work or pay back the loan. Who will receive the policy's benefit payment?
ABC Capital Company only
ABC Insurance Company is domiciled in Delaware and does business in Ohio. Which of the following is correct about ABC?
ABC is a domestic insurer in Delaware and a foreign insurer in Ohio.
Bob applies for an individual disability income policy. He cannot substantiate his income to the underwriter's satisfaction of the underwriter. What might this suggest to the underwriter?
Bob may be unable to afford the premium.
Liz earns a gross salary of $3000 per month and is covered under her employer's group disability income policy. She becomes totally disabled and receives a monthly benefit payment of $1,800 per month. The benefit does not match her original salary because:
Aa DI policy will not replace full gross income, since doing so promotes malingering.
Which statement about residual benefit payments for partial disability is NOT correct?
Almost all insurers require that the insured sustain a loss of at least 35 percent of income as a result of the partial disability before paying any benefits.
Alpha Corporation pays the premiums for its group medical, dental, disability, and long-term care insurance plans. Which statement is correct about the income tax consequences?
Alpha can take an income tax deduction for all of the premiums it pays for all of the policies.
Which statement about Blue Cross and Blue Shield contracts with insureds and providers is correct?
Blue Cross and Blue Shield plans were the first of the pre-paid health plans that enrolled members or subscribers.
Which statement about HMOs is NOT correct?
An HMO's network of providers is limited to a town or city.
Which of the following describes an agent's fiduciary responsibilities?
An agent must act in the best interests of insureds, applicants, and appointing insurers.
An individual can set up a health savings account (HSA) and buy a high-cost insurance policy. What is another way to set up an HSA?
An employer can set up an HSA plan for the benefit of its employees.
Which began the use of risk pools and community ratings, by which an insured group is quoted an identical rate and each member is charged the same premium in advance for medical care?
Blue Cross/Blue Shield plans
Sandra, a shop owner, owns a business overhead expense (BOE) insurance policy. Which of the following statements correctly describes the tax treatment of this policy?
BOE benefits are taxable as income to Sandra, and premiums are tax deductible.
Which of the following statements regarding key person disability income insurance is correct?
Benefit payments are income tax-free.
Which statement about maximum benefit periods in disability income policies is NOT correct?
Benefit periods in short-term disability income policies are limited to five years.
Brick Motors Co. offers a group disability income plan and pays all of the premiums. Which of the following statements is correct if an employee suffers a disabling injury?
Benefits paid to the employee are taxable income to the employee.
Which of the following correctly describes the income tax treatment of qualified long-term care insurance premiums and benefits?
Benefits paid under the policy are not taxable, within limits. Premiums are deductible within limits if they exceed 10 percent of a person's adjusted gross income
When a person starts receiving Social Security disability benefits, what happens to disability benefits paid by a social insurance supplement (SIS) rider?
Benefits provided by the SIS rider end or are reduced.
A group disability income policy has a 90-day elimination period. How does this affect benefit payments?
Benefits will begin 90 days after the disability occurs.
Charles is the senior vice president of Beta Corporation and is insured under a key employee disability income policy. He is injured while on a business trip and becomes permanently disabled. Which party will receive the disability income proceeds under the policy?
Beta Corporation
Which plans were the first to use risk pools and group or community ratings?
Blue Cross Blue Shield plans
Which protects an individual who is no longer covered by an employer's health insurance plan?
COBRA
Morgan loses her job and continues group health coverage through COBRA. Six months later, she begins a new job and is covered by her employer's group health plan. How does this effect coverage under COBRA?
COBRA benefits will end.
Which of the following statements regarding COBRA and group medical insurance plans is correct?
COBRA coverage ends if the participant is eligible for another group plan.
All of the following statements about health insurance reinstatement provisions are correct, EXCEPT:
Claims resulting from sickness are covered immediately upon policy reinstatement
Nick submitted a claim to his insurer just before his health insurance policy was canceled. Under the policy's cancellation provision, what must the insurer do?
Company A must still pay any outstanding claim Nick submitted before the policy was canceled.
Under a disability income insurance policy's 'insurance with other insurer' provision, what can Insurer A do if it finds that a disabled policyowner has similar coverage with Insurer B and had not notified Insurer A of this fact?
Company A will pay a reduced benefit so that the insured's total benefits do not exceed pre-disability income.
The cost of living adjustment (COLA) rider adjusts the disability income benefit payments according to changes in the:
Consumer Price Index
Kim lives in a large city with a high cost of living. Grace lives on a farm with a lower cost of living. Both have medical expense plans that pay claims on a usual, customary, and reasonable (UCR) basis. However, Grace would pay an unfair share of her medical costs if the insurer based payments on the costs in Kim's urban area. How does the insurer resolve this?
Costs for medical treatment in large urban areas are typically higher than costs for the same treatment in rural areas, and a usual and customary payment approach allows for these differences.
Which of the following statements correctly describes the relationship between a disability income (DI) insurance policy's benefit amount and the insured's income?
DI policy benefits may never exceed the insured's income.
Hannah forgot to pay the premium for her individual health insurance policy this month. Her policy contains an unpaid premium provision. What can the insurer do if a claim arises?
Deduct the amount of the unpaid premium from the total benefit it owes Hannah.
Delta Insurers sells health insurance policies to small employers. Kappa Company, a small employer, applies for a policy with Delta. Which statement is NOT correct?
Delta must use experience rating when setting the premium.
Joan bought a health insurance policy from Delta Insurers. Which statement describes the consideration that a party gave under the contract?
Delta promises to pay benefits when a stated future event occurs.
Which entity does NOT mandate the minimum size of groups eligible for group health insurance?
Department of Labor
Which statement is correct about the types of insurance sales systems?
Direct response companies sell insurance to consumers without the use of a licensed producer.
With respect to the taxation of group and individual disability income (DI) insurance, which of the following statements is correct?
Employer-paid premiums for group DI insurance are deductible by the employer.
How do employers contribute to a medical savings account (MSA)?
Employers can contribute to MSAs under the same principles that apply to health savings accounts.
Which law allows Joe to take several weeks off from work to help his wife recuperate from surgery without fearing the loss of his job?
Family and Medical Leave Act
Life and health insurance companies regulate themselves through each of the following entities or organizations EXCEPT:
Financial Industry Regulatory Authority
Which provision is NOT optional in a health insurance policy?
Grace period
A significant difference between individual and group disability income policies is that:
Group DI policies are not portable, while individual policies are portable.
All of the following statements about health savings accounts (HSAs) are correct, EXCEPT:
Group HSAs must be entirely employee-funded.
With respect to health insurance renewability provisions, which of the following statements is true?
Guaranteed renewable coverage is generally less expensive than noncancellable coverage.
Gwen is 37 years old but on her health insurance application she states that she is 30 years old. Which of the following is a likely consequence of this?
Gwen (or her beneficiary) is still entitled to benefits. However, the benefits payable will be those that Gwen's premium would have bought at her actual age.
Which regulates the privacy and security of information about a person's health?
HIPAA
Which of the following must HMO members use to receive covered care?
HMO's network of health care providers
Which statement is NOT true about HMOs?
HMOs always use a closed panel network of providers.
Andy is covered by a group disability plan. What will happen if he leaves his company to work for a competitor?
His coverage under his former employer's group disability plan ends and cannot be converted to an individual policy.
Mark is covered by his employer's group health care plan. He is also covered by his wife's group health care plan. How will benefits be paid if he incurs $300 in medical expenses?
His employer's plan will pay benefits first.
Which of the following statements regarding the coordination of benefits (COB) provision found in health insurance plans is correct?
If a child is covered under two group plans (one from each parent), the primary plan is the one covering the parent whose birthday falls first in a calendar year.
Which statement does NOT describe the conditions, limitations, and restrictions imposed upon the care received through an HMO?
If a member is outside the HMO's service area, the member must contact the HMO within one hour of receiving treatment.
Which describes the tax treatment of funds in a health savings account (HSA)?
If the account holder withdraws money from the fund but does not use it to pay qualified medical expenses, the withdrawal may be taxed.
The payment of claims provision in a health insurance policy states that:
If the insured dies, health insurance claims are paid to the beneficiary.
Sara has a disability income policy. If she meets the policy's definition of disability, in which of the following cases will coverage apply?
In a freak accident, she is struck by lightning and is paralyzed.
Which of the following statements about the MIB Group, Inc. (MIB) is correct?
Information submitted to it by one insurer is available for review by other insurers.
Which statement about health savings accounts (HSAs) is correct?
Instead of paying higher premiums for health insurance, the HSA owner and family can use the HSA to pay for qualified health-care expenses.
Which statement is NOT correct about the use and investment of health insurance premiums?
Insurers cannot invest health insurance premiums.
Which of the following statements about the Fair Credit Reporting Act is CORRECT?
Insurers must notify their applicants any time that a consumer or investigative report has been requested.
What is the purpose of paying deductibles and coinsurance for the HMO point-of-service (POS) option?
It discourages members from going outside the network to receive health care.
What impact did the Patient Protection and Affordable Care Act (PPACA, or ACA) have on the pre-existing conditions restriction found in most health insurance policies?
It ended the use of pre-existing condition exclusions in medical expense insurance only
Which correctly describes a health savings account (HSA)?
It finances the costs of health-care services. It is a tax-exempt account that eligible people can set up in their names. People can make tax-deductible contributions to these accounts. The contributions grow tax free. When withdrawn to pay for qualified medical expenses, the distributions are tax free.
Which of the following most accurately describes a point-of-service (POS) plan?
It is a managed care plan combines characteristics of an HMO and a PPO.
Zelda, a producer selling health insurance, assures a prospective applicant that the insurance company she represents is backed by the protections of the North Carolina Life and Health Insurance Guaranty Association. Which of the following statements is correct regarding this kind of assurance?
It is prohibited at all times.
Before delivering a health insurance policy to a client, the agent alters the insuring clause in a way that he believes will benefit the insurance company. Which of the following statements is correct regarding this alteration?
It is prohibited by the entire contract provision.
Which statement about the elimination period in a disability income insurance policy is correct?
It is the period of time immediately following the onset of a disability during which no benefits are payable.
Which statement about the waiver of premium rider in a disability income (DI) policy is correct?
It is usually a standard provision.
How does a health insurance policy's illegal occupation provision protect the insurer?
It lets the insurer deny liability when the insured's claim arises from an illegal activity in which he or she participated.
What is the function of the Age Discrimination in Employment Act (ADEA)?
It makes it illegal to discriminate against those age 40 or older in employment practices.
Which statement is correct about benefit payments under a Blue Cross Blue Shield plan?
It pays the provider directly, with no claim form.
Why would a basic medical expense policy not be a good form of coverage for a person who visits his doctor very often?
It primarily covers hospital-related expenses.
What is the purpose of the Age Discrimination in Employment Act (ADEA)?
It prohibits discrimination against workers who are at least 40 years old.
Which statement about the Age Discrimination in Employment Act is correct with respect to Medicare, Medicare supplement policies, and group plans?
It prohibits employers from denying coverage to older workers under a group health plan.
Charlie was an ironworker, but a recent injury caused him to take another position in an administrative role. How does the change of occupation provision in a health insurance policy protect Charlie?
It requires the insurer to reduce the premium rate.
What is the purpose of the time of payment of claims provision?
It stipulates that the insurer will pay a claim as soon as possible after receiving proof of loss.
Emil, an agent licensed in North Carolina, moves to a new home on April 30. He is required to notify the North Carolina Department of Insurance by what date?
May 10
Margo, who is 52 years old and in good health, is uninsured. She may get health insurance coverage through all of the following EXCEPT:
Medical Information Bureau
Which is NOT a means by which the federal government currently encourages employers to provide health care coverage for their employees?
Medical Savings Accounts
Which of the following statements regarding the Patient Protection and Affordable Care Act (PPACA) is correct?
Medical expense insurance is available on a guaranteed issue basis to all persons regardless of pre-existing conditions.
Which of the following types of health insurance offers private insurance coverage that fills in the gaps of Medicare coverage?
Medicare supplement policies
Which of the following is not considered a health benefit plan?
Medicare supplement policy
Which statement about individual disability income (DI) insurance is correct?
Most DI policies cover only nonoccupational disabilities.
Why do many employers change plans or insurers when trying to minimize group health insurance costs or maximize benefits?
Most group health plans are written to provide benefits for a single year.
Which of the following statements about a disability income insurance policy's waiver of premium rider is correct?
Most modern policies include a waiver of premium provision in the policy itself.
With respect to the tax treatment of a disability buyout insurance policy, which of the following statements is correct?
Policy premiums are not tax deductible to the business, and benefit payments are tax-free.
Which is an optional provision in a health insurance policy?
Nell's policy provides that if there are unpaid premiums owed at the time of a claim, the insurer can deduct that amount from the total benefit owed.
A policyowner repeatedly declines the opportunity to increase her disability income policy benefits through its benefit increase rider. She suffers a loss that would have been covered under the rider. May she sue the insurance company to increase the policy benefit?
No, because the policyowner waived her right to exercise the rider benefit when the opportunity to do so was available to her.
Are group medical expense insurance benefits paid to employees taxable income to the employer who pays the premium?
No, benefits paid to an employee are not taxable income to the employer.
Sue names Bill as the irrevocable beneficiary of her policy. Can Sue use the change of beneficiary provision to name another beneficiary within three years of the issue date?
No. She cannot make the change because an irrevocable beneficiary designation cannot be changed.
Which statement is correct about insurance regulation?
State governments primarily regulate the insurance industry, and the federal government regulates some aspects of it.
Which of federal laws does NOT affect group health insurance plans
OASDI
Which of federal laws does NOT affect group health insurance plans?
OASDI
Larry has health insurance coverage with Company A and Company B. He has not notified either insurer of the duplicate coverage. If Larry has a claim, what recourse do these insurers have under the Other Insurance with Other Insurer provision?
One of the insurers can prorate the amount of benefit it will pay for an expense-covered loss if the other insurer is covering losses from the same event, which keeps Larry from receiving benefits in excess of his loss.
While HMOs represent one approach to the delivery and cost control of health services under managed care, what kind of managed care is distinct from HMOs? PSOs
PPOs
All of the following statements regarding health care flexible spending accounts (FSAs) are correct, EXCEPT:
Participants may make claims against their accounts for up to six months after the end of their benefit year.
Paul has a group health savings account (HSA) through his employer. If Paul changes jobs, what happens to his HSA?
Paul's HSA goes with Paul; it does not remain with the employer.
Which statement about the any occupation definition of total disability and the own occupation definition is correct?
Policies with an own occupation definition of total disability are more expensive.
As a part-time employee of the Acme Supply Co., is Tom eligible for group health insurance coverage from Acme?
Probably not
Which of the following statements about preferred provider organizations (PPOs) is correct?
Providers who become part of a PPO are required to accept the PPO's fee as full payment for services.
Ed, Myrna, Jane, and Ravi were each covered by different group health insurance policies that just terminated. Which person will be eligible to convert to an individual health insurance policy?
Ravi, who had been working at ABC Corporation for six years when the plan terminated because the insurer stopped offering plans in the state
Under a basic medical expense policy, how does the insurer reimburse covered medical expenses?
Reimbursement will be paid up to 100 percent of covered expenses, or up to a specified maximum amount.
Which statement about return of premium riders is NOT correct?
Return of premium riders are available in all states.
Which statement about return of premium riders is correct?
Return of premium riders are not available in all states.
Sally is covered by a PPO. Stanley is covered by a traditional indemnity plan. Which statement is correct?
Sally and Stanley pay deductibles and coinsurance amounts under their plans.
Which is generally considered eligible for group health insurance as a small employer?
Sam, the owner of a dry cleaning business that employs 12 family members
Josephson Corporation will be offering a group health insurance policy this year to its employees. Which employee will not be eligible for coverage?
Sebastian, who works part-time for the company during the fall and winter
Which does not rate the financial strength of insurance companies?
Securities and Exchange Commission
Fallon is self-employed and has an medical savings account (MSA). Which is correct about the account?
She must maintain a high-deductible health insurance plan.
Becky works as an agent for Delta Insurance Company, which is located in North Carolina. What must Becky do in order to sell life insurance on behalf of Delta to U.S. military personnel who are stationed in Germany?
She must obtain a restricted license.
Jaycee's employer pays the $1,500 annual premium for her disability insurance policy. She becomes disabled and receives a monthly benefit. Which statement is correct?
She must pay income tax on the benefits
Abby lives in Maryland, where she is licensed as an insurance agent. She wants to apply for a nonresident license in North Carolina. Which of the following conditions must she satisfy?
She must show her license to be in good standing in Maryland.
With respect to the health insurance policy claims, which of the following statements is correct?
Some medical plans require preauthorization from the insurer before the insurer will cover the costs of a medical procedure.
Which of the following describes why the with the surgical fee schedule approach creates problems?
Surgical fee schedules are fixed, so as surgical fees increase, the insured must pay more for surgery.
Harry is enrolled in a PPO and is currently seeing a health-care provider who does not participate in the plan. Which of the following statements is true?
The PPO may limit coverage if Harry receives health-care services from a nonparticipating provider.
What is the principal difference between medical savings accounts (MSAs) and health savings accounts (HSAs)?
The amount of the maximum deductible and the maximum annual out-of-pocket cost.
If an applicant for health insurance includes the first premium with the application , which of the following statements is correct?
The applicant has made an offer to the insurer.
Under a health insurance contract's consideration clause, which of the following best describes the applicant's consideration?
The applicant's consideration is the application and the first premium he or she pays
Which statement about disability reducing term insurance policies is NOT correct?
The benefit payment under such policies increases over the policy's term.
Sarah misstated her age on her health insurance application. The insurer discovers this after receiving notice of Sarah's claim. What result will come from her misstatement?
The benefit payment will be adjusted for her age.
Abby receives $15,000 of benefits this year from her employer's managed care plan. Which statement is correct about the taxation of these benefits?
The benefits are not taxable income.
INC Corp. owns and pays the premiums on disability buy-out insurance policies covering the lives of its three owners. When one owner became permanently disabled, INC received the policy's proceeds and bought out the disabled owner's interest. What are the tax consequences?
The benefits are tax-free
Henry is on active military duty and suffers a disabling injury while on a combat mission. How will his disability income policy treat the claim?
The claim will be denied.
Alex is injured while traveling for vacation. He receives emergency medical care from several doctors who are not in his HMO's network. What will happen when he submits a claim to his HMO?
The claim will be paid if he contacts the HMO within a certain time after receiving treatment.
Mark knowingly exceeds his actual authority when dealing with a client. His actions cause a loss to the insurance company he represents. Which statement is correct?
The company may be liable for Mark's actions.
In which case does ABC Insurance Company most accurately reflect its group underwriting standards in its premium rates?
The company prices a policy based on its own morbidity experience.
Sandra and David orally agree that she will pay him $25,000 to set fire to her ex-husband's house. Which statement is correct?
The contract is unenforceable because its purpose is illegal.
Why do courts interpret ambiguities in an insurance contract in favor of the policyowner?
The contract's terms are drafted by the insurer and not negotiated with the policyowner.
If the insured suffers a disabling injury five days after buying a disability income policy with a 15-day probationary period, which of the following statements is correct?
The policy will cover the loss.
Lynn participates in a flexible spending account established by her employer. Which statement is NOT correct?
The funds in the account roll over from year to year.
A health insurance policy's grace period does which of the following?
The grace period provision allows the policyholder more time beyond the due date to pay the premium.
When employees leave an employer and are no longer insured by the employer's group coverage, how does their departure affect the group?
The group continues coverage as before
Which of the following statements regarding the underwriting of group disability income insurance is correct?
The group is underwritten as a whole.
Under a health insurance contract's consideration clause, which of the following best describes the insurance company's consideration when issuing a health insurance policy?
The insurance company's consideration is the promise to pay a benefit if a stated future event occurs.
Under the legal actions provision, when can an insured take legal action against an insurer?
The insured cannot take legal action against the insurer until at least 60 days after the insured provides proof of loss to the insurer.
Which statement is correct about the use of an HMO point-of-service plan?
The insured may get health care services outside the network, but the cost will be higher.
Which statement is correct about residual benefit payments?
The insured must lose at least 20 percent of pre-disability income before benefits begin.
Which is NOT correct about the physical examination and autopsy provision in a health insurance policy?
The insured pays for the required exam.
How will a PPO treat coverage of nonemergency medical treatment from an out-of-network physician?
The insured will pay a higher amount for the medical care
ABC Company terminates its group health plan. The insurer offers ABC the option to buy other group health coverage. If ABC buys another plan, what happens to any deductible or co-insurance payments the participants made?
The insurer applies them to the new plan.
Under a health insurance policy's unpaid premium provision, what may the insurer do with respect to unpaid premiums that the insured owes when a claim is made?
The insurer can deduct this amount from the benefit it pays the insured.
In noncancelable health insurance policies, which of the following is guaranteed?
The insurer cannot cancel the policy or increase the premium.
Warren filed a claim on his health insurance policy that he bought four years ago. In investigating the claim, however, the insurer discovered that Warren had misstated information about preexisting conditions on the original application. What can the insurer do?
The insurer cannot contest the policy and must pay the claim.
After Sandra submitted the initial premium with her application for an individual health insurance policy, the producer gave her a conditional receipt. The next week, Sandra suffered a serious injury in a car accident. If Sandra was found to be uninsurable as of the date of application, what is the insurer's responsibility?
The insurer is not liable for coverage but must refund the premium.
Lisa has an individual health insurance policy and is injured while attempting to rob a bank. The policy has an illegal occupation provision, which means that:
The insurer is not liable for the loss.
Which statement about apparent authority is correct?
The insurer is responsible for an agent's conduct while acting with apparent authority.
Eric's managed care plan states that he and his family must receive care from an approved network provider. If they receive care from an unapproved provider, what will happen?
The insurer may not cover the costs at all or may only partially cover them.
Which is NOT a small employer marketing requirement under the Health Insurance Portability and Accountability Act?
The insurer must guarantee renewable coverage for businesses with up to 100 employees.
An insured has a health plan with 'grandfather' status under the Affordable Care Act. Two and a half years after being treated for cancer, the cancer returns, and the insured is treated again. What is correct about the insurer's coverage for the latest treatment?
The insurer must pay the claim because the pre-existing condition exclusion period has ended.
An insured files a claim under his health insurance policy. What happens next under the claim forms provision?
The insurer must provide claim forms 15 days after receiving notice of the claim.
Which of the following is an exception to the rule that a health insurer may deny a claim arising from the use of narcotics under a health insurance policy's intoxicants and narcotics provision?
The loss was sustained because the insured was under the influence of a narcotic administered on the advice of a physician.
Creative Computers Inc. replaced its group health plan ten days after terminating its prior coverage. Which of the following statements about covering employees under the new plan is correct?
The new policy must cover individuals who were insured under the prior plan.
How does the owner of a flexible spending account (FSA) access its funds to pay for a covered medical expense?
The owner submits a claim and proof of payment to the FSA administrator, and is then reimbursed from the FSA.
With respect to partial disability benefits in a disability income insurance policy, which of the following statements about partial disability benefits is NOT correct?
The partial disability benefit is also called a residual disability benefit.
With respect to group health insurance plan sponsors and participants, which of the following is correct?
The plan sponsor owns the plan and pays its premiums, and the individual group members are the insureds.
With respect to group health insurance, which of the following statements is correct?
The plan sponsor receives a group insurance contract and each plan participant receives an certificate of insurance.
Which is NOT a disadvantage of a basic medical expense policy?
The policy has a high deductible.
Jason bought a disability income policy with a cost of living adjustment (COLA) rider. What happens if he becomes disabled during a time of inflation?
The policy will automatically increase his disability benefit payments to help keep pace with inflation.
What guarantee does COBRA provide an individual who voluntarily leaves a job or who is terminated for reasons other than gross misconduct?
The right to continue the former employer's group insurance coverage at the individual's own expense for up to 18 months.
If a terminated employee chooses to continue his or her group health insurance coverage under COBRA, which of the following statements is true?
The terminated employee can continue coverage by paying 100 percent of the full premium plus an additional 2 percent.
Which is correct about underwriting group health insurance policies?
The underwriter will consider the group as a whole.
Which statement about health savings accounts is correct?
They are available on an individual or group basis.
Which statement describes health maintenance organizations and preferred provider plans?
They are pre-paid health-care plans.
How do independent agents differ from captive agents?
They can sell policies for several insurers.
Which statement is correct about HMO plans that offer a POS option?
They offer more health care provider options.
Which is NOT a characteristic of Blue Cross Blue Shield plans?
They only provide individual health insurance.
Which statement is NOT correct about HMOs and PPOs
They operate as indemnity plans.
All of the following statements regarding basic hospital, surgical, and physician policies are generally correct EXCEPT:
They restrict the insured's right to choose a health care provider.
Why does an insurer require that a minimum percentage of eligible members participate in a group health insurance plan?
This requirement protects the insurer against adverse selection and keeps the cost of coverage in line with the cost of administering the plan.
All of the following statements about group eligibility for group health insurance are correct, EXCEPT:
To be eligible for group health insurance, the group must qualify based on the intent and purpose of its members.
What does underwriting a health insurance policy mean?
Underwriting means assessing risk based upon a person's health and medical history.
All of the following statements about point-of-service (POS) managed care plan are correct, EXCEPT:
Unlike a PPO, a POS plan does not charge members a deductible if they go outside the network for medical care.
How long can a pre-existing condition be excluded from coverage under a group health insurance plan, if the plan has "grandfather" status under the Affordable Care Act?
Up to 12 months
A schedule of benefits in a group health insurance plan does NOT:
allow individual selection
In an agency relationship between the agent and the insurance company, which of the following is not a type of authority granted to the agent?
absolute authority
Dr. Sanjay participates in a PPO. When PPO enrollees come to his office for care, Dr. Sanjay must:
accept the PPO's negotiated fee as full payment for services
An individual health insurance policy cannot exclude coverage for losses caused by:
accident
Which of the following types of health insurance provides a benefit if the insured dies or is severely injured because of an accident?
accidental death and dismemberment (AD&D) policies
Which of the following types of health insurance pays a lump-sum benefit if the insured suffers the loss of an arm or leg in an accident?
accidental death and dismemberment insurance
A fiduciary must be named to administer a health plan in a financially responsible manner and in the best interests of its enrollees in accordance with ERISA's requirements for:
accountability
When taking an insurance application, what should an agent try to accomplish?
accuracy, thoroughness, and clarity
Which would NOT be promoted as a service offered by an HMO?
acute onset diabetic care
Because the insurance company and the insurance applicant do not negotiate the terms of an insurance policy, the policy is what kind of contract?
adhesion
An innocent misstatement of age or sex on an insurance application would most likely result in:
adjustment of policy benefits
In addition to offering basic, major, and comprehensive medical plans as well as HMO plans, Blue Cross and Blue Shield organizations:
administer Medicare programs for the federal government in many states
Bill believes he has a cause of action against his health insurer for its refusal to pay benefits on a claim. He filed written proof of loss on April 1. Not having received a response by May 1, he decides to take legal action. What will his attorney probably do?
advise him to wait
An errors and omissions insurance policy protects the:
agent or producer
Peggy ended her employment with ABC Company. After she exhausts her benefits under COBRA, HIPAA will guarantee that:
all insurance companies that sell individual health insurance plans must offer them to eligible people who have lost their group coverage, regardless of their health
While completing an application for a life insurance policy, Ken withholds information about his health history to avoid paying a higher premium. He has been in excellent health for the past five years. Has he committed fraud?
Yes, because he made a misstatement with the intent to deceive the insurance company.
How long can the look-back period be for pre-existing conditions before the insured enrolled in a group health plan that has 'grandfather' status under the Affordable Care Act?
6 months
John's child must have his teeth straightened. His group dental policy covers 60 percent of orthodontic care, 100 percent of endodontic care, and 75 percent of periodontal care. What percentage of costs will the insurer pay for the child's care?
60 percent
Which statement is correct about the taxation of a flexible spending account in a group health plan?
Contributions are made on a pre-tax basis.
Which of the following statements about health savings accounts (HSAs) is correct?
Contributions to an HSA grow on a tax-deferred basis.
Which of the following statements regarding business overhead expense (BOE) insurance is correct?
BOE insurance benefits are income taxable to the business owner.
Bruce cannot get covered health-care services outside of his HMO's provider network. What must he do if he wants to get these services outside the network without having to pay the full rate for them?
Buy a point-of-service (POS) option.
For taxation purposes, the term "self-employed person" includes all of the following EXCEPT:
C corporation stockholders
With respect to the type of plan underlying a group medical insurance policy, which of the following statements is correct?
Group medical plans may be based on either an indemnity plan model or a managed care plan model regardless of the plan sponsor's business type.
What is one difference between individual disability income policies and group disability income policies?
Group plans are underwritten as a whole while individual policies consider the insurability of the applicant.
Which federal law prevents a health insurer from refusing to insure a member of a small group?
HIPAA
Which statement about the Health Insurance Portability and Accountability Act (HIPAA) is NOT correct?
HIPAA protects those who are no longer covered by an employer's health insurance plan or its benefits.
How does health insurance differ from life insurance?
Health insurance coordinates benefits with similar policies covering the insured, while life insurance does not.
Which statement about the conversion privilege in a group health plan is NOT correct?
Individuals can covert group coverage to another group plan with the same or different insurer.
Why does an individual health insurance policy include a probationary period?
It helps the insurer avoid adverse selection.
Nora has a point-of-service PPO plan and receives a second opinion from an out-of-network specialist. How will her plan cover the cost of this consultation?
It will be covered at a lower percentage than if Nora had consulted an in-network provider.
Beverly owns a small manufacturing business. Her sister, Rose, is her assistant. Beverly could not run the business without Rose. Beverly wants key employee disability insurance because:
It will pay cash benefits to the employer if a key employee is disabled.
Which of the following statements correctly describes the comparison of health insurance to life insurance?
Only health insurance protects against risks a person may face many times during his or her life.
A female employee who is undergoing post-natal medical treatment is protected from unfair treatment in the workplace under the:
Pregnancy Discrimination Act
Shannon loses her job and applies for coverage under COBRA. Who pays for this continuation of coverage?
Shannon
Jackie has a health savings account and has contributed to the account for two years. She cancels her high-deductible health plan coverage this year. Which statement is correct?
She can no longer contribute to her HSA.
Maxine has a basic hospital expense policy that pays a benefit of $250 per day for up to 30 days. If she is hospitalized for more than 30 days, which of the following statements is correct?
She will be responsible for all hospital costs beyond the first 30 days.
Which HIPAA condition is based on the length of an insurance applicant's previous coverage?
The applicant must be covered by an employer-sponsored health plan for 18 months.
Sophia owns a small publishing company and is covered by a business overhead expense policy. After suffering a disabling injury, the policy pays a $10,000 monthly benefit. How must the benefits be treated for tax purposes?
The benefits are fully taxable in the year received.
Which of the following statements is true if an employer pays all of the premiums for a group disability income plan?
The employer can deduct the premiums paid as a business expense and benefits are taxable to the employee.
What happens if an insured stops paying premiums for an insurance policy?
The insurance company is released from its promise to pay benefits and the contract expires.
Abby, age 66, just purchased an individual health insurance policy. On what basis can the insurer exclude coverage for diabetes, a condition that Abby was diagnosed with one year ago?
The insurer may limit coverage only if Abby's pre-existing condition was specifically defined in the policy.
Carl makes a claim two weeks into the 31-day grace period allowed by his health insurance plan. Assuming the claim is valid, what must the insurer do?
The insurer must pay the entire amount of Carl's claim but can deduct the amount of premium due from the claim amount.
Under a disability income insurance policy's social insurance supplement rider, what happens to the policy's benefit payments if the disabled insured qualifies for Social Security disability benefits?
The policy rider's benefit payments are decreased or terminated.
Anne lives in State A and buys a health insurance policy issued by an insurer domiciled in State B. How does the conformity with state statutes provision resolve provisions in the policy that conflict with the laws of State A?
The policy will automatically be amended to meet the minimum legal requirements of State A.
With respect to the duties of a producer in the sale of a health insurance policy, which of the following statements is correct?
The producer must determine the suitability of the recommended product for the applicant's needs and circumstances.
Which statement about the right to continue group health insurance under COBRA is NOT correct?
The younger spouse of a participant who becomes eligible for Medicare benefits is not eligible for continued group coverage.
All of the following statements about future increase option riders in individual disability income policies are correct, EXCEPT:
They allow the insured to buy additional coverage under the policy at no additional charge.
Which is most likely to be covered under an individual health insurance policy?
X-ray and MRI
Tina is covered by a group short-term disability plan. Earl is covered by a group long-term disability plan. Their employers pay the premiums. Both are disabled. What benefits can each expect?
Tina will get benefits for up to two years, while Earl may receive benefits for more than two years.
