Insurance 2-40, 200 question exam simulator

Which of the following employer tasks does a professional employer organization normally handle?

Administration tasks

In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments:

After an insured has become totally disabled as defined in the policy

All of the following entries are classified under the four principal areas of Florida insurance law EXCEPT

An agent's commission

T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable?

Benefits are taxable to T

Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product?

Buyer's Guide

When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?

Change of occupation provision

With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period?

Gives the policyowner additional time to pay past due premiums

A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?

Guaranteed Insurability Option rider

Which of these statements concerning an individual disability income policy is TRUE?

Normally includes an Elimination period

M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?

The correct answer is "$1,600". In this situation, $2,200 - $200 deductible x 80% = $1,600.

An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?

The correct answer is "$3,000". In this situation, the insured is responsible for $1,000 deductible + 20% of the remaining bill = $3,000.

Which of the following phrases refers to the fees charged by a healthcare professional?

Usual, customary, and reasonable expenses

Which of the following activities will NOT result in the suspension of an agents license?

Working for a foreign insurer

A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will

continue coverage but exclude the heart condition

The Florida Employee Health Care Access Act was established to make

group health insurance available to employers with up to 50 employees

Insurers/agents must, in Florida, offer and issue all small employer health plans on _____ basis:

guaranteed issue

Under an Individual Disability policy in Florida, what is the minimum schedule of time in which claims must be made to an insured?

monthly

With a medical discount plan, how often would a person generally pay a fee to get discounts on specific services?

monthly

Which type of insurance company allows their policyowners to elect a governing body?

mutual

Which of these is NOT considered to be an element of an insurance contract?

negotiating

Under which circumstance may a licensed agent in Florida represent an unauthorized entity?

never

What type of renewability guarantees premium rates and renewability?

noncancellable

The Notice of Claims provision requires a policyowner to

notify an insurer of a claim within a specified time

The benefits under a Disability Buy-Out policy are

payable to the company or another shareholder

Consumer reports requested by an underwriter during the application process of a health insurance policy can be used to determine:

probability of making timely premium payments

A major medical policy typically

provides benefits for reasonable and necessary medical expenses, subject to policy limits

Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?

reimbursement

Which of the following statements is correct regarding an employer/employee group health plan?

the employer receives a master policy and the employees receive certificates

A disability elimination period is best described as a

time deductible

An agent's license can be suspended or revoked by

writing primarily controlled business

An insured must notify an insurer of a medical claim within how many days after an accident?

20

Employers with less than __ employees are affected by Florida's Health Insurance Coverage Continuation Act (Mini COBRA).

20 (Correct.) Florida's Mini COBRA regulation entitles individuals to continuation of coverage for groups with less than 20 full-time employees.

Insurers may request a hearing within ___ if their policy is rejected

20 days

How long is a typical free-look period for long term care insurance policies

30 day

An applicant who pays the initial premium at the time of application is typically given a(n)

Conditional receipt

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0

N is covered under an individual Disability policy with a 30-day Elimination period and a monthly benefit of $500. N is totally disabled for 3 1/2 months. N's total benefit received on this claim is

$1,250

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

100%

According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid?

31 days

In Florida, a health policy that is paid on a quarterly basis requires a grace period of

31 days

S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations?

36 months

A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if a certain period of time elapses without being appointed. How long is this period of time?

48 months

P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?

Claim will be denied

Which of the following organizations would make reimbursement payments to the insured individual for covered medical expenditures?

Commercial insurer

Insurance policies are offered on a "take it or leave it" basis, which make them:

Contracts of adhesion

All of the following are eligibility requirements for an association group EXCEPT

Contributory plans require a minimum of 25 participants

In the event of an illness, a(n) _______ _______ policy would reimburse an insured for loss of earnings.

Disability Income

A characteristic of preferred provider organizations (PPO's) would be

Discounted fees for the patient

The sections of an insurance contract which limit coverage are called

Exclusions

Which of the following is NOT. A consequence for placing business with an unauthorized insurer?

First degree misdemeanor

Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?

Guaranteed insurability rider

K has a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered

Guaranteed renewable

S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a

High Deductible Health Plan

In regards to representations or warranties, which of these statements is TRUE?

If material to the risk, false representations will void a policy

T applies for a disability income policy and has a history of back injuries. The insurer issued the policy with a statement that excludes coverage for back injuries. This statement is called a(n)

Impairment rider

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

What is the initial requirement for an insured to become eligible for benefits under the waiver of premium provision?

Insured must be under a physician's care

The __clause identifies which losses resulting from an accident or sickness are insured by the policy

Insuring

Which health policy clause specifies the amount of benefits to be paid?

Insuring ( "Insuring". In an Accident & Health policy, the insuring clause states the amount of benefits to be paid.

What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary requires his/her consent when a change of beneficiary is made?

Irrevocable beneficiary

Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a disability income policy

Issue the policy with an altered Time of Payment of Claims provision

If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?

Medicare Supplement

Which of the following BEST describes how a preferred provider organization (PPO) is less restrictive than a health maintenance organization (HMO)?

More physicians to choose from

S filed a written Proof of Loss for a Disability Income claim on September 1. The insurance company did not respond to the claim. S can take legal action against the insurer beginning

November 1 (60 days)

Which department oversees 'market conduct examinations' in Florida?

Office of insurance regulation

Which of these is NOT a type of agent authority?

Principal

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be paid to P's estate

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

Residual disability

Which provision allows a portion of any used medical benefits to be restored following a particular amount of benefit has been used, or after the policy has been in effect for a particular period of time?

Restoration of used benefit

Which of the following provisions is NOT required in HMO contracts/certificates?

Seven-day grace period

The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in which of the following programs?

Social Security Disability Income

Which of the following statements about the classification of applicants is INCORRECT?

Substandard applicants are never declined by underwriters

Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges

The maximum amount considered eligible for reimbursement by an insurance company under a health plan

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

The maximum sum payable would be the capital sum, or $25,000.

Group/voluntary long-term care policy premiums are typically deducted from the employee's income and

are less costly as compared to individual long term care coverage

Medicare part c is:

available to those who are enrolled in Medicare Part A and Part B

The guarantee of insurability option provides a long-term care policyowner the ability to

buy additional coverage at a later date

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

capital sum

The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a (n):

closed panel

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

daughter

An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to

determine if the applicant is an acceptable risk by completing standard underwriting procedures

The reason for a business having a Business Overhead Expense Disability Plan is to cover

fixed business expenses

The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the

initial deductible

Multiple Employer Welfare Arrangement (MEWA) provides what type of benefits?

insurance

G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the Intoxicants and Narcotics exclusion in G's policy, who is responsible for paying the medical bills?

insured

An insurer must provide an insured with claim forms within __ days after receiving notice of a loss.

15 days

According to Florida law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant?

At the time of application

When must insurable interest be present in order for a life insurance policy to be valid?

At the time of application

Group health plans typically contain a coordination of benefits (COB) provision. The provisions purpose is to

Avoid the duplication of benefit payments

Any violations of the Florida financial institutions code may be investigated by the

Department of financial services (DFS)

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

Disability Buy-Sell

S takes out a health insurance policy which contains a provision that states that the agent does not have the authority to change the policy or waive any of its provisions. Which health policy provision is this?

Entire Contract

An insurance company would MOST likely pay benefits under an accidental death and dismemberment policy for which of the following losses?

Loss of eyesight due to an accidental injury

Which of the following actions is required by an insured who leaves the primary area of medical coverage and seeks medical care?

Obtain prior approval from the insurer for the medical service

What does a Guaranteed Insurability rider provide a Disability Income policyowner?

The ability to periodically increase the amount of coverage without evidence of insurability

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

In Florida, the underwriting and issuance of a master group health policy requires that all employees

are eligible to participate, regardless of their individual health history

The coordination of benefits (COB) provision exists in order to

avoid duplication of benefit payments

Medicaid was designed to assist individuals who are

below a specific income limit

A health reimbursement arrangement must be established:

by the employer

If an agent combines premiums collected with their personal funds, they have engaged in

commingling

Major medical policies typically

contain a deductible and coinsurance

Which of the following does social security NOT provide benefits for?

dismemberment

Under an individual health insurance policy, the time limit of certain defenses provision states that nonfraudulent misstatements first become incontestable two years

from the date that the policy was issued

J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to?

health maintenance organization

A policy of adhesion can only be modified by whom? The agent The applicant The primary beneficiary The insurance company

insurance company

J was reviewing her Health Insurance policy and noticed the phrase "This policy will only pay for a semi-private room". This phrase is considered to be a(n)

internal limit

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

irrevocable

In Florida, an element of an insurance transaction would be

issuing an insurance contract

Which of the following is NOT. A limited benefit plan?

life insurance policies

Basic Hospital and Surgical policy benefits are

lower than the actual expenses incurred

Deductibles are used in health policies to lower

overuse of medical services

Insurance policies are considered aleatory contracts because

performance is conditioned upon a future occurrence

Which of the following is considered to be the time period after a health policy is issued, during which no benefits are provided for illness?

probationary period

The Consideration clause of an insurance contract includes

the schedule and amount of premium payments

Association Plans that are designed to provide health benefits to their members are regulated by the state because

they are insured by an authorized insurer

An example of an unfair claims settlement practice is

turning down a claim without providing the basis of denial

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

war

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?

*F (In this situation, the proceeds from E's life insurance policy will go to F. Insurable interest only needs to exist at the time of application.)

___ can be defined as "using the contract values of an existing policy to purchase a new policy with an existing insurer"

Churning

When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the

Entire Contract provision

"A producer does not have the authority to change a policy or waive any of its provisions". The health provision that best describes this statement is called the

Entire contract

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT

Exception: Bilateral Unilateral, aleatory, and adhesion are all special features of insurance contracts.

P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to the

Fair credit reporting act

In Florida, when agents recommend changes be made for existing coverage, the agent must follow established procedures. The name of this rule is called the

Florida Replacement Rule

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the initial premium

Nonprofit life insurance providers that are covered by a special section in the Florida insurance code are called

Fraternal life insurance organizations

Which of these is considered a true statement regarding Medicaid?

Funded by both state and federal governments

All of these are characteristics of a health reimbursement arrangement (HRA) EXCEPT

HRA is entirely funded by the employee

The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the

Insuring clause

A life insurance arrangement which circumvents insurable interest statutes is called

Investor-Originated Life Insurance

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

Less restrictive

T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect?

Less than $5,000 per month benefit regardless of the cause

Under Florida law, which of the following provisions is NOT required in a Medicare Supplement policy?

Limitation on pre-existing conditions for up to 12 months

In major medical expense policies, what is the objective of a stop loss provision

Limits an insured's out-of-pocket medical expenses

Under a guaranteed renewable health insurance policy, the insurer

May cancel the policy for nonpayment only

Asset protection can be provided by a long-term care partnership policy if the policyholder qualifies for

Medicaid

The health insurance program which is administered by each state and funded by both the federal and state governments is called

Medicaid

Which Unfair Trade Practice involves an agent suggesting that an insurance policy is like a share of stock? *Twisting *Intimidation *Misrepresentation *Sliding

Misrepresentation

Which of the following best describes a hospital indemnity policy?

Pays a stated amount per day of a covered hospitalization stay

Which of the following types of insureds are life insurance companies allowed to make policy rate discrimination against?

People that smoke

Which Long Term Care insurance statement is true?

Pre-existing conditions must be covered after the coverage has been in force for six months

Which of these statements accurately describes the waiver of premium provision in an accident and health policy

Premiums are waived after the insured has been totally disabled for a specified time period

What is the consideration given by an insurer in the consideration clause of a life policy?

Promise to pay a death benefit to a named beneficiary

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

Revocable

Why must an accident & health insurance applicant answer all questions on the application?

Statements and representations on the application are part of the consideration for issuing a policy

The Insuring Clause

States the scope and limits of the coverage

A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast?

Stock company is owned by its shareholders. Mutual company is owned by its policyholders.

An agent selling Medicare Supplement policies must provide every applicant with a(n)

Suitability form

R becomes disabled and owns an individual Disability Income policy. When is R eligible to receive disability benefits?

Upon satisfying the elimination period requirement