INSURANCE EXAM PRACTICE BRIAN CALDWELL

Which of the following is NOT a goal of risk retention? A) To minimize the insured's level of liability in the event of a loss B) To reduce expenses and improve cash flow C) To increase control of claim reserving and claim settlements D) To fund losses that cannot be insured

A) To minimize the insured's level of liability in the event of a loss

What is the purpose of COBRA? A) To provide continuation of coverage for terminated employees B) To provide coverage for the dependents C) To provide health coverage for people with low income D) To protect the insureds against insolvent insurers

A) To provide continuation of coverage for terminated employees

In a group prescription drug plan, the insured typically pays what amount of the drug cost? A) Full amount until a deductible is met, then a small copay B) Copayment C) None D) Full amount until a deductible is met, then nothing for the rest of the year

B) Copayment

The authority granted to an agent through the agent's contract is referred to as: A) Absolute authority B) Express authority C) Apparent Authority D) Implied Authority

B) Express Authority

Which of the following is true about the requirements regarding HIV exams? A) HIV exams may not be used as a basis for underwriting B) The applicant must give prior informed written consent C) Results may be disclosed to the agent and the underwriter D) Prior informed oral consent is required from the applicant

B) The applicant must give prior informed written consent

How do employer contributions to a Health Savings Account (HSA) affect the insured's taxes? A) The employer contributions are deducted from the individual insured's tax calculations B) The employer contributions are not included in the individual insured's taxable income C) The employer contributions are taxed at the same rate as the Social Security tax rate D) The employer contributions are taxed to the individual insured as earned income

B) The employer contributions are not included in the individual insured's taxable income

A single mother wants to make sure that if she is unable to work for health reasons, she and her child would be protected financially. Which of the following insurance plans would best suit her needs? A) Accidental death & dismemberment B) Total disability plan C) Workers compensation D) Comprehensive health insurance plan

B) Total disability plan

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as: A) Implied Warranty B) Utmost Good Faith C) Reasonable Expectations D) A Warranty

B) Utmost Good Faith

If during the underwriting process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information practices? A) At the time of application B) At the time the insurer first collects the information C) At the time of policy delivery D) Never, since the information was obtained from the applicant

C) At the time of policy delivery

Most scheduled plans provide first-dollar benefits without: A) Copays B) Exclusions and conditions C) Coinsurance and deductibles D) Premiums

C) Coinsurance and deductibles

On a major medical insurance policy, the amount that an insured must pay on a claim before the insurer will pay is known as: A) Inside Limit B) Coinsurance C) Deductible D) Copayment

C) Deductible

Which of the following factors about the insured determines the amount of disability benefit that the insured will receive? A) Marital status B) Age C) Income D) Gender

C) Income

The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called: A) Occupational coverage B) Workers compensation C) Nonoccupational coverage D) Unemployment coverage

C) Nonoccupational coverage

Health benefit plans may not include pre-existing provisions excluding coverage for a period beyond: A) 1 year B) 90 days C) 30 days D) 6 Months

D) 6 months

Generally, "creditable coverage" does not include insurance that has lapse in coverage for more than: A) 6 months B) 12 months C) 33 days D) 63 days

D) 63 days

A tornado that destroys property would be an example of which of the following? A) A pure risk B) A Loss C) A Physical Hazard D) A Peril

D) A Peril

Benefit periods for individual short-term disability policies will usually continue from: A) 6 months to 2 years B) 2 years to age 65 C) 1 weeks to 4 weeks D) 3 months to 3 years

A) 6 months to 2 years

What percentage of individually-owned disability income benefits is taxable? A) 0% B) 50% C) 100% D) Amount paid by insured

A) 0%

Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days? A) 20 B) 100 C) 80 D) 3

A) 20

What is the elimination period for Social Security disability benefits? A) 5 months B) 6 months C) 12 months D) 3 months

A) 5 months

What is reinsurance? A) An agreement between a ceding insurer and assuming insurer B) An agreement between an originating insurer and a ceding insurer C) An agreement between a domestic insurer and a foreign insurer D) An agreement between and insurer and an insured

A) An agreement between a ceding insurer and assuming insurer

All of the following are true of the Key Person disability income policy EXCEPT: A) Benefits are considered taxable income to the business B) Premiums are not deductible to the business C) It is typically written to protect the company in the event a key employee becomes disabled and is unable to work D) The income may be used to find a replacement for the key employee

A) Benefits are considered taxable income to the business

A health insurance plan that covers all accidents and sicknesses that are not specifically excluded from the policy is referred to as a: A) Comprehensive plan B) General Plan C) Service Plan D) Broad Plan

A) Comprehensive Plan

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is: A) Conditional B) Aleatory C) Personal D) Unilateral

A) Conditional

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the: A) Consideration Clause B) Insuring Clause C) Pre-exisiting Conditions clause D) Eligibility clause

A) Consideration Clause

Under which of the following employer-provided plans are the benefits taxable to an employee in proportion to the amount of premium paid by the employer? A) Disability Income B) Major Medical C) Dental Expense D) Basic Medical Expense

A) Disability Income

Events or conditions that increase the chances of an insured loss occurring are referred to as: A) Hazards B) Exposures C) Risks D) Perils

A) Hazards

Regarding long-term care coverage, as the elimination period gets shorter, the premium: A) Increases B) Remains constant C) Premiums are not based on elimination periods D) Decreases

A) Increases

The type of dental plan which is incorporated into a major medical expense plan is a/an: A) Integrated dental plan B) Supplemental dental plan C) Stand-alone dental plan D) Blanket dental plan

A) Integrated dental plan

Which of the following programs is made up of 4 parts, where the first part is paid for by FICA, and the second part is financed by premiums and payroll taxes? A) Medicare B) Blue Cross C) Blue Shield D) Medicaid

A) Medicare

Medicare Advtange is also known as: A) Medicare Part C B) Medicare Part D C) Medicare Part A D) Medicare Part B

A) Medicare Part C

An insured does not have to pay co-insurance or deductibles on a full-series mouth x-ray, but does have to pay a deductible to get his cavities filled. Which dental plan does he have? A) Nonscheduled B) Limited C) Procedure-based D) Scheduled

A) Nonscheduled

Under which plan does preventative dental treatment not apply toward the deductible? A) Nonscheduled B) Focused C) Provisional D) Limited

A) Nonscheduled

All of the following are examples of risk retention EXCEPT: A) Premiums B) Deductibles C) Copayment D) Self-insurance

A) Premiums

An underwriter may reject an application for health insurance if the rejection is based upon which of the following? A) Prescription usage B) Sexual preference C) Blindness D) Genetic Characteristics (such as sickle cell)

A) Prescription usage

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe? A) Presumptive disability B) Dismemberment disability C) Partial disability D) Residual disability

A) Presumptive disability

What is the term for the entity that an agent represents regarding contractual agreements with third parties? A) Principal B) Client C) Designee D) Insured

A) Principal

An insured is scheduled to have two cavities filled. He knows in advance what benefits will be paid for the procedure. Which clause is responsible for the advanced notification? A) Prior authorization B) Fixed rate C) Scheduled benefits D) Advanced benefit notification

A) Prior authorization

What method do insurers use to protect themselves against catastrophic losses? A) Reinsurance B) Indemnity C) Pro rata liability D) Risk management

A) Reinsurance

Which of the following is an example of a peril covered in an accident and health insurance policy? A) Sickness B) Alcoholism C) Smoking D) Death

A) Sickness

What type of information is NOT included in a certificate of insurance? A) The cost the company is paying for monthly premiums B) The policy benefits and exclusions C) The procedures for filing a claim D) The length of coverage

A) The cost the company is paying for monthly premiums

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action? A) The old policy should stay in force until the new policy is issued B) There should be at least a 10-day gap between the policies C) Policies must overlap to cover pre-existing conditions D) The old policy must be cancelled before the new one can be issued

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

A nonresident person can receive a nonresident producer license if all of the following are true, EXCEPT: A) The person's home state awards resident producer licenses to nonresidents of the state on the limited basis B) The person has submitted the proper request for licensure and has paid the fees prescribed C) The person has submitted or transmitted to the Commissioner the application for licensure D) The person is currently licensed as a resident and in good standing in his home state

A) The person's home state awards resident producer licenses to nonresidents of the state on the limited basis

Under a credit disability policy, until what point will payments to the creditor be made for the insured? A) Until the disability ends or the debt is satisfied, whichever is sooner B) Only for 6 months after the onset of a disability C) Until the insurer cancels the policy D) until age 65

A) Until the disability ends or the debt is satisfied, whichever is sooner

An insured has been quoted an estimated cost for a procedure from their health carrier. This quote must include all of the following EXCEPT: A) an exact and final price of the procedure B) the copayment amount C) the deductible amount D) an out-of-pocket amount

A) an exact and final price of the procedure

No insurance institution or producer may base an adverse underwriting decision in whole or in part: A) on the existence of a previous adverse underwriting decision or the fact that an individual previously obtained insurance coverage through a residual marketing mechanism B) on further personal information obtained as the result of information received from such insurance-support organization C) on further information obtained from an insurance institution or producer responsible for a previous adverse underwriting decision D) on personal information received from an insurance-support organization whose primary source of information is insurance institutions

A) on the existence of a previous adverse underwriting decision or the fact that an individual previously obtained insurance coverage through a residual marketing mechanism

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A) telling a client that his first premium will be waived if he purchases the insurance policy today B) inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest C) charging a client a higher premium for the same policy as another client in the same insuring class D) making deceptive statements about a competitor

A) telling a client that his first premium will be waived if he purchases the insurance policy today

The insuring clause of a disability policy usually states all of the following except: A) the method of premium payment B) the identities of the insurance company and the insured C) That insurance against loss is provided D) the types of losses covered

A) the method of premium payment

All of the following statements about Medicare supplement insurance policies are correct EXCEPT: A) They cover the cost of extended nursing home care B) They cover Medicare deductibles and copayments C) they supplement Medicare benefits D) they are issued by private insurers

A) they cover the cost of extended nursing home care

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees: A) to renew the policy until the insured has reached age 65 B) to charge a lower premium every year the policy is renewed C) not to change the premium rate for any reason D) to renew the policy indefinitely

A) to renew the policy until the insured has reached age 65

Every insurer must file all rates, rating plans, and modifications to its plans with the Commissioner at least how many days prior to the effective date of use? A) 10 days B) 15 days C) 20 days D) 30 days

B) 15 days

Nonqualified distributions from an MSA are included in the employee's gross income and subject to a penalty tax of: A) 10% B) 20% C) 25% D) 50%

B) 20%

The Medicare supplement renewal commissions paid in the third year must be as high as the commission of which year? A) 1st B) 2nd C) 3rd D) 4th

B) 2nd

A policy form is deemed to be approved by the Commissioner if it has been on file for at least how many days? A) 21 days B) 30 days C) 60 days D) 90 days

B) 30 days

Health benefits plans are prohibited from including waiting periods that exclude coverage for more than: A) 6 months B) 4 months C) 18 months D) 63 days

B) 4 months

On a LTC policy, what is the minimum percentage of one year's nursing home benefits dollar amount that must be equated to total home health care? A) 25% B) 50% C) 75% D) 100%

B) 50%

How long is an open enrollment period for Medicare supplement policies? A) 90 days B) 6 months C) 1 year D) 30 days

B) 6 months

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? A) Personal B) Adhesion C) Unilateral D) Conditional

B) Adhesion

In reference to the standard Medicare Supplement benefits plans, what does the term standard mean? A) Coverage options and conditions are developed for average individuals B) All providers will have the same coverage options and conditions for each plan C) Coverage options and conditions comply with the law, but will vary from provider to provider D) All plans must include basic benefits A-N

B) All providers will have the same coverage options and conditions for each plan

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? A) Assumed B) Apparent C) Express D) Implied

B) Apparent

The Commissioner must examine each domestic and foreign company in order to determine its financial condition, ability to fulfull its obligations, compliance with insurance laws, and dealings with its policyholders: A) At least once in every 2 years and whenever deemed necessary the Commissioner B) At least once in every 5 years and whenever deemed necessary the Commissioner C) Only as deemed necessary the Commissioner D) At least once in every 3 years and whenever deemed necessary the Commissioner

B) At least once in every 5 years and whenever deemed necessary the Commissioner

Which of the following is NOT an enrollment period for Medicare Part A applicants? A) General Enrollment B) Automatic Enrollment C) Initial Enrollment D) Special Enrollment

B) Automatic Enrollment

Prior to issuance of a Long-Term Care policy to an applicant age 80 or older, the insurer must obtain all of the following EXCEPT: A) Copies of medical records B) Date of previous doctor visit C) Report of a physical examination or assessment of functional capacity D) Attending physician's report

B) Date of previous doctor visit

The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the: A) Master policy B) Entire contract C) certificate of insurance D) aleatory contract

B) Entire contract

Guarantee of insurability option in long-term care policies allows the insured to: A) Secure the policy's nonforfeiture values regardless of the insured's age or health status B) Increase benefit levels without providing proof of insurability C) Add dependents to the plan without providing proof of their insurability D) Replace the existing LTC policy based on the original underwriting

B) Increase benefit levels without providing proof of their insurability

Which of the following is true regarding the taxation of the premium in group accidental death and dismemberment policies? A) It is received tax-free by the employees B) It is deductible as an ordinary business expense C) It is deductible by the employees D) It is taxed to the employee as ordinary income

B) It is deductible as an ordinary business expense

Every insurer marketing Long-Term Care insurance must establish marketing procedures to ensure all of the following EXCEPT: A) Every reasonable efforts is made to identify an applicant's other insurance B) LTC policies are marketed effectively to prospective insureds C) Comparisons of policies are fair and accurate D) Excessive insurance will not be sold

B) LTC policies are marketed effectively to prospective insureds

An insurance company wants to obtain the insurance history of an applicant. which source releases coded information to insurers regarding information included on previous insurance applications? A) Federal Bureau of Investigation B) Medical Information Bureau C) Insurer's Protection Guild D) Integrated Insurer's Support

B) Medical Information Bureau

The continuing education requirement for licensees, during the initial licensing period, is a: A) minimum of 30 hours of instruction to include 4 hours of ethics training B) Minimum of 60 hours of instruction C) Minimum of 45 hours of instruction D) Minimum of 45 hours of instruction to include 6 hours of ethics training

B) Minimum of 60 hours of instruction

Premium payments for personally-owned disability income policies are: A) Tax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions B) Not tax deductible C) Eligible for tax credits D) Tax deductible

B) Not tax deductible

When does Medicare cover nursing home care? A) Medicare covers all nursing home care for eligible policyholders B) Only if it is part of treatment for a covered illness or injury C) Only if the deductible has been met D) Only for those age 80 and older

B) Only if it is part of treatment for a covered illness or injury

Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds? A) Guaranteed renewable B) Optionally renewable C) Conditionally renewable D) Cancellable

B) Optionally renewable

Which renewal option does NOT guarantee renewal and allows the insurance company to refuse renewal of a policy at any premium due date? A) Noncancellable B) Optionally renewable C) Conditionally renewable D) Guaranteed renewable

B) Optionally renewable

A participating insurance policy may do which of the following? A) Require 80% participation B) Pay dividends to the policyowner C) Provide group coverage D) Pay dividends to the stockholder

B) Pay dividends to the policyowner

Which of the following occupations would have the lowest disability insurance premiums? A) Police officer B) Personal Trainer C) Construction worker D) Stunt pilot

B) Personal trainer

Which of the following is the most common time for errors and omissions to occur on part of an insurer? A) Application Process B) Policy Delivery C) Policy Renewal D) Underwriting

B) Policy Deliver

Which of the following describes taxation of individual disability income insurance premiums and benefits? A) Premiums are tax deductible, and benefits are taxable B) Premiums are not tax deductible, and benefits are not taxable C) Premiums are not tax deductible, but benefits are taxable D) Premiums are tax deductible, but benefits are not taxable

B) Premiums are not tax deductible, and benefits are not taxable

Willie, a private investigator was hired by an insurer to obtain a character report on Joan, an applicant. Willie pretends to be a reporter working on a story about working women in Joan's town. During the conversation, Joan is asked a variety of questions for which the answers will be used to determine the final underwriting decision. This is an example of: A) Investigative news reporting B) Pretext interviewing C) Covert underwriting D) Insurance fraud

B) Pretext interviewing

Health insurance underwriting is best defined as: A) reporting and rejection of risks B) selection, classification and rating of risks C) transacting of insurance D) issuance of policies

B) Selection, classification and rating of risks

If an insurer becomes insolvent, which of the following would pay benefits to policyholders? A) The federal reserve fund B) The Guaranty Association C) The NAIC Fund D) The State

B) The Guaranty Association

Which of the following would qualify as a competent party in an insurance contract? A) The applicant is under the influence of a mind-boggling medication at time of application B) The applicant has a prior felony conviction C) The applicant is intoxicated at time of application D) The applicant is a 12-year-old student

B) The applicant has a prior felony conviction

Which of the following statements concerning group health insurance is CORRECT? A) Under group insurance, the insurer may reject certain individuals from coverage B) The employer is the policyholder C) Only the employer receives a certificate of insurance D) Each employee receives a policy

B) The employer is the policyholder

Which is NOT true regarding an insured who is considered to be a standard risk? A) Special restrictions on the policy are not necessary B) The insured may have to pay slightly higher premiums C) The insured's lifestyle is incorporated into this risk judgment D) The insured's level of health is representative of others in the same cohort

B) The insured may have to pay slightly higher premiums

Which of the following is NOT a feature of a noncancellable policy? A) The insured has the right to renew the policy for the life of the contract B) The insurer may terminate the contract only at renewal for certain conditions C) The premiums cannot be increased beyond the amount stated in the policy D) The guarantee to renew coverage usually applies until the insured reaches a certain age

B) The insurer may terminate the contract only at renewal for certain conditions

Which of the following is true regarding Medicare supplement policies? A) They must be available to those aged 60 and over B) They must be guaranteed renewable C) They must have a 15-day free-look period D) They must contain a minimum of Plans A and B

B) They must be guaranteed renewable

Which of the following statements is true concerning employer group dental plans? A) They are exempt from COBRA laws B) They seldom contain a conversion privilege C) They always contain a conversion privilege D) They are only marketed as stand-alone plans

B) They seldom contain a conversion privilege

The Commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and: A) To report all insurance-related transactions to the sponsoring insurer on a weekly basis B) Who assumes responsibility for all acts of the temporary licensee C) May impose additional requirements designed to protect insurers who license them D) Will limit the duration of such license to a period not to exceed 120 days

B) Who assumes responsibility for all acts of the temporary licensee

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce: A) Without receiving written consent from a Federal Judge B) Without receiving written consent from an insurance regulatory authority C) Under any circumstances D) Unless they have served an appropriate prison sentence

B) Without receiving written consent from an Insurance regulatory authority

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT: A) an offer to share in commissions generated by the sale B) dividends from a mutual insurer C) an offer of employment D) stocks, securities, or bonds

B) dividends from a mutual insurer

Any person who knowingly and willfully obtains false pretenses information about an individual from an insurance institution, insurance representative, or insurance-support organization will be: A) have all insurance licenses revoked and be barred from the insurance industry in this state B) fined not more than $10,000, imprisoned for not more than one year, or both such fine and imprisonment C) guilty of insurance fraud and be imprisoned for not more than 3 years D) fined not more than $1,000 per offense with a maximum fine not to exceed $25,000

B) fined not more than $10,000, imprisoned for not more than one year, or both such fine and imprisonment

Which type of care is NOT covered by Medicare? A) hospital B) long-term care C) hospice D) respite

B) long-term care

In cases where a covered employee is eligible for Medicare benefits to treat end stage renal disease with dialysis for kidney transplant, which of the following is correct? a) Medicare is primary for the first 12 months of treatment and then employer group insurance is secondary b) Medicare is the secondary payer during the first 30 months of treatment c) Medicare in the employer group insurance plan will share the cost equally d) Because Medicare does not cover treatment of ESRD the group plan will pay 100%

B) medicare is the secondary payer during the first 30 months of treatment

Medical savings accounts are only available to groups of how many employees? A) between 2 and 100 B) no more than 50 C) no more than 25 D) 100 or more

B) no more than 50

Bob holds himself out to the public as an insurance adviser. He is not duly licensed as an insurance adviser. Such an act is punishable by a fine of: A) not less than $50 nor more than $1,000 B) not less than $50 nor more than $500 C) not less than $100 nor more than $500 D) not less than $500 nor more than $1,000

B) not less than $50 nor more than $500

The Insurance Commissioner has the authority to do all the following EXCEPT: A) examine books and records of companies and individuals B) rewrite insurance laws at any time C) issue cease and desist orders D) issue certificates of authority and licenses

B) rewrite insurance laws at any time

In a disability policy, the elimination (or waiting) period refers to the period between: A) during which any specific illness or accident is excluded from coverage B) the first day of disability and the day the insured starts receiving benefits C) the effective date of the policy and the date the first premium is due D) coverage under a disability policy and coverage under social security

B) the first day of disability and the day the insured starts receiving benefits

What is the maximum fine for paying a commission or any other compensation to a person who not properly licensed for acting as an insurance producer in this state? A) $50 B) $100 C) $500 D) $1,000

C) $500

What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider? A) for the duration of the disability or the contract, depending on which ends first B) 1 month C) 1 year D) 2 years

C) 1 year

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to: A) 3 years B) 5 years C) 10 years D) 12 years

C) 10 years

How long does the insurance company have to notify the Commissioner of a new producer appointment? A) 5 days B) 7 days C) 15 days D) 30 days

C) 15 days

Under a nonscheduled plan, what portion of the balance could an insured expect to pay for basic services? A) 80% B) 100% C) 20% D) 50%

C) 20%

An applicant was denied for coverage by the insurance company. He made a written request for the medical records used in the underwriting process to be released to his doctor. The insurance company must provide the information within: A) 14 business days B) 45 business days C) 30 business days D) 30 calendar days

C) 30 business days

What is the duration of the free-look period for Medicare supplement policies? A) 10 days B) 15 days C) 30 days D) 60 days

C) 30 days

A carrier must maintain records of each grievance process for how many years? A) 3 years B) 5 years C) 7 years D) 10 years

C) 7 years

If an insurance company offers Medicare supplement policies, it must offer which of the following plans? A) B-N B) A-D C) A D) A&B

C) A

An insured wants to buy a disability income policy that pays a maximum monthly benefit of $1,200. To make sure that the disability benefit keeps up with the inflation, the insured would need to add: A) 5% more to the premium each year B) An additional monthly benefit rider C) A cost of living rider D) A guaranteed purchase option rider

C) A cost of living rider

An insurer was just caught misrepresenting the terms of a policy. What fine does he face? A) A fine of between $100 and $1,000 and imprisonment for up to 6 months B) A fine of up to $1,000 or imprisonment for up to 2 years C) A fine of up to $1,000 or imprisonment for up to 6 months D) A fine of between $100 and $1,000 and imprisonment for up to 1 year

C) A fine of up to $1,000 or imprisonment for up to 6 months

The Omnibus Budget Reconciliation Act of 1990 (OBRA) requires that large group health plans must provide primary coverage for disabled individuals under: A) age 65 who are retired B) age 59 1/2 who are retired C) age 65 who are not retired D) age 59 1/2 who are not retired

C) Age 65 who are not retired

What documentation grants express authority to an agent? A) Fiduciary contract B) State provisions C) Agent's contract with the principal D) Agent's insurance license

C) Agent's contract with the principal

Which of the following is NOT applied toward the deductible under. a nonscheduled plan? A) Wisdom tooth extraction B) Gingivitis treatment C) Annual dental exam D) Root canal

C) Annual Dental Exam

In a replacement situation, all of the following must be considered EXCEPT: A) Limitations B) Exclusions C) Assets D) Benefits

C) Assets

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT: A) Fully insured status B) Waiting period of 5 months C) Being age 65 D) Inability to perform any gainful work

C) Being age 65

Who must sign the notice regarding replacement? A) applicant only B) agent only C) both the applicant and agent D) both the agent and the insurer

C) Both the applicant and agent

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as: A) Rebating B) Misleading Advertising C) Defamation D) Coercion

C) Coercion

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A) Contract of adhesion B) Acceptance C) Consideration D) Legal purpose

C) Consideration

The rider that may be added to a disability income policy that allows for an increase in the benefit amount under certain conditions is called: A) double indemnity B) residual benefits C) Cost of Living (COLA) D) waiver of premium

C) Cost of living (COLA)

Which of the following is considered to be a morale hazard? A) Working as a firefighter B) Engaging in illegal activities C) Driving Recklessly D) Smoking

C) Driving recklessly

Which of the following statements is true regarding LTC insurance? A) LTC policies may not include any riders B) LTC policies do not have a free-look period C) Every policy must offer nonforfeiture benefits to the applicant D) Every policy must offer reduced paid-up insurance to the applicant

C) Every policy must offer nonforfeiture benefits to the applicant

Which of the following is INCORRECT concerning taxation of disability income benefits? A) If the insured paid the premiums, any disability income benefits are tax-free B) If the benefits are for a permanent loss, the benefits paid to the employee are not taxable C) If paid by the individual, the premiums are tax deductible D) If the employer paid the premiums, income benefits are taxable to the insured as ordinary income

C) If paid by the individual, the premiums are tax deductible

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? A) unfair discrimination B) defamation C) Illegal D) a legal advertising strategy

C) Illegal

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the: A) consideration clause B) probationary period C) insuring clause D) incontestability clause

C) Insuring clause

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person represents what type of hazard? A) Physical B) Legal C) Morale D) Moral

C) Morale

An insured has health insurance that covers them at work and at home. The policy was written on what basis? A) Short-term B) Extended C) Occupational D) Nonoccupational

C) Occupational

What term is used to describe when a medical caregiver contracts with a health organization to provide services to its members and subscribers, but retains the right to treat patients who are not members or subscribers? A) Restrictive rights B) Indemnity Contract C) Open panel D) Closed panel

C) Open panel

Which of the following is NOT a ratings classification that denotes the level of risk associated with a given insured? A) Preferred B) Standard C) Poor D) Substandard

C) Poor

Which health insurance provision describes the insured's right to cancel coverage? A) Insuring Clause B) Cancellation provision C) Renewal provision D) Policy duration provision

C) Renewal provision

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability? A) partial disability B) income replacement C) residual disability D) recurrent disability

C) Residual disability

Whenever the Commissioner has reason to believe that any person is engaged in any unfair method of competition or any unfair or deceptive act or practice, the Commissioner will serve a notice of a hearing, the time and place of which CANNOT be: A) Later than 30 days after the date such notice was served B) Sooner than 30 days after the date such notice was served C) Sooner than 21 days after the date such notice was served D) Later than 21 days after the date such notice was served

C) Sooner than 21 days after the date such notice was served

Which of the following is NOT covered under Plan A in Medigap services? A) The 20% Part B coinsurance amounts for Medicare approved services B) The first 3 pints of blood each year C) The Medicare Part A deductible D) Approved hospital costs for 365 additional days after Medicare benefits end

C) The Medicare Part A deductible

All of the following are requirements from the written application for a license to act as an insurance adviser EXCEPT: A) The application must also contain a statement as to the trustworthiness and competency of the applicant, signed by at least three reputable citizens of this commonwealth B) The application must state his residence, occupation, and all business affiliations for the ten years next preceding the date of the application C) The application must state his professional credentials and all political affiliations for which he has received compensation or served as a member D) The application must state the name, age, residence, and occupation of the applicant at the time of making the application

C) The application must state his professional credentials and all political affiliations for which he has received compensation or served as a member

Who does a life settlement broker represent? A) Both the life settlement provider and owner B) The life settlement provider C) The policyowner D) The Massachusetts Division of Insurance

C) The policyowner

In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this? A) The right to revoke the policy B) The right to raise premiums as a result of court rulings C) The right to determine the wording of a policy D) The right to refute the rulings

C) The right to determine the wording of a policy

Which of the following statements regarding conditional receipts is true? A) They purchase temporary insurance, up to 6 months B) They become part of the policy C) They are temporary insuring agreements D) They guarantee the insurer will approve the application

C) They are temporary insuring agreements

What types of services may NOT be provided under the long-term care's assisted living care? A) Assistance with dressing and bathing B) Reminders regarding medication C) Visits by a registered nurse D) Linens and personal laundry service

C) Visits by a registered nurse

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? A) An individual who doesn't qualify for Medicare may be eligible B) The gap of coverage for eligibility is a period of 63 or less days C) An individual who was previously covered by group health insurance for 6 months is eligible D) an individual who has used up COBRA continuation is eligible

C) an individual who was previously covered by group health insurance for 6 months is eligible

Which of the following entities is responsible for paying the producer's appointment renewal fee? A) the guarantee association B) producer C) appointing insurer D) commissioner

C) appointing insurer

A Notice of Information Practices must be given to the applicants for an insurance policy at all of the following intervals EXCEPT: A) at policy delivery B) any time personal information is collected from additional sources other than the applicant C) at policy application D) at policy renewal

C) at policy application

When an insurer offers services like preadmission testing, second opinions regarding surgery and preventative care, which term would best apply? A) claims reduction B) claims discrimination C) case management provision D) cost reduction

C) case management provision

Which of the following is NOT a cost-saving service in a medical plan? A) second surgical opinions B) risk sharing C) denial of coverage D) preventive care

C) denial of coverage

As it pertains to group health insurance, COBRA stipulates that: A) terminated employees must be allowed to convert their group coverage to individual policies B) group coverage must be extended for terminated employees up to a certain period of time at the employer's expense C) group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense D) retiring employees must be allowed to convert their group coverage to individual policies

C) group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense

All of the following are characteristics of a Major Medical Expense policy EXCEPT: A) blanket coverage B) coinsurance C) low maximum limits D) deductibles

C) low maximum limits

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? A) $1,000 B) $100 per violation C) Revocation of license D) $2,500

D) $2,500

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? A) 5 B) 3 C) 2 D) 1

D) 1

According to OBRA, what is the minimum number of employees required to constitute a large group? A) 15 B) 20 C) 50 D) 100

D) 100

For how many days of skilled nursing facility care will Medicare pay benefits? A) 30 B) 60 C) 90 D) 100

D) 100

For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense? A) 50% B) 60% C) 90% D) 100%

D) 100%

Under the Affordable Care Act, what percentage of preventive care must be covered without cost sharing? A) 25% B) 50% C) 80% D) 100%

D) 100%

What is a penalty tax for nonqualified distributions from a health savings account (HSA)? A) 8% B) 10% C) 12% D) 20%

D) 20%

In the event a policy lapses due to nonpayment of a premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid? A) 10 days B) 25 days C) 30 days D) 45 days

D) 45 days

In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits? A) 7 days B) 10 days C) 30 days D) 60 days

D) 60 days

A hospital indemnity policy will pay: A) Income lost while the insured is in the hospital B) All expenses incurred by the stay in the hospital C) Any expenses incurred by the stay in the hospital, minus coinsurance payments and deductibles D) A benefit for each day the insured is in a hospital

D) A benefit for each day the insured is in a hospital

An insurer used fraudulent representations to procure the payment of premiums. What sort of punishment does she face? A) A fine of between $100 and $1,000 or imprisonment for up to 6 months B) A fine of up to $1,000 and imprisonment for up to 2 years C) A fine of up to $1,000 and imprisonment for up to 6 months D) A fine of between $100 and $1,000 or imprisonment for up to 1 year

D) A fine of between $100 and $1,000 or imprisonment for up to 1 year

Which of the following hospice expenses would NOT be covered in a cost-containment setting? A) Tylenol B) Morphine C) Special hospital bed D) Antibiotics

D) Antibiotics

Under a Key Person disability income policy, premium payments: A) are made by the employee and are not tax-deductible B) are made by the employee and are tax-free C) are made by the business and are tax-deductible D) are made by the business and are not tax-deductible

D) Are made by the business and are not tax-deductible

What is the maximum period during which an insurer may contest fraudulent misstatements made in a health insurance application? A) 90 days after the effective policy date B) 6 months after the effective policy date C) 1 year after the effective policy date D) As long as the policy is in force

D) As long as the policy is in force

To be eligible for tax credits under the ACA, individuals must have income that is what percent of the Federal Poverty Level? A) Higher than 300% B) Less than 10% C) Between 10% and 100% D) Between 100% and 400%

D) Between 100% and 400%

Combination plans are comprised of two types of plan features: basic and: A) Scheduled B) Expanded C) Limited D) Comprehensive

D) Comprehensive

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? A) Benefits received by the employee are free from federal income tax B) Premiums paid by the employer are deductible as a business expense C) Employee paid premiums may be deducted if certain conditions are met D) Employee benefits are tax deductible the year in which they were received

D) Employee benefits are tax deductible the year in which they were received

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company? A) Consumer Privacy Act B) Conditional receipt C) Disclosure rule D) Fair Credit Reporting Act

D) Fair Credit Reporting Act

Which of the following statements is CORRECT concerning the relationship between Medicare and HMOs? A) HMOs do not pay for services covered by Medicare B) Medicare Advantage is Medicare provided by an approved HMO only C) All HMOs and PPOs charge premiums beyond what is paid by Medicare D) HMOs may pay for services not covered by Medicare

D) HMOs may pay for services not covered by Medicare

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? A) Stop-loss B) Consideration C) Reasonable expectations D) Indemnity

D) Indemnity

Freddy receives a premium from his client. He fails to pay the premiums collected to the company after the insurer makes a written demand upon him. Upon conviction he will be guilty of: A) Commingling B) Fraud C) Misdemeanor D) Larceny

D) Larceny

All of the following are true regarding the Medical Information Bureau (MIB) EXCEPT: A) MIB information is reported to underwriters in coded form B) MIB reports contain previous insurance information C) Insurers may not refuse to accept an application solely due to information in an MIB report D) MIB reports are based upon information supplied by doctors and hospitals

D) MIB reports are based upon information supplied by doctors and hospitals

Julie must have orthodontic work performed on her incisors. Which type of service would this be called, under a nonscheduled plan? A) Basic service B) Minor service C) Repair service D) Major Service

D) Major service

In group insurance, what is the policy called? A) Entire contract B) Certificate of authority C) Certificate of insurance D) Master policy

D) Master policy

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report: A) are entitled to obtain a copy of the report from the party who ordered it B) must be advised that a copy of the report is available to anyone who requests it C) may sue the reporting agency in order to get inaccurate data corrected D) Must be informed of the source of the report

D) Must be informed of the source of the report

Which of the following statements is INCORRECT concerning Medicare Part B coverage? A) Participants under Part B are responsible for an annual deductible B) Part B will pay 80% of covered expenses, subject to Medicare's standards for reasonable charges C) It is a voluntary program designed to provide supplementary medical insurance to cover physician services, medical services and supplies not covered under Part A D) Part B coverage is provided free of charge when an individual turns age 65

D) Part B coverage is provided free of charge when an individual turns age 65

A medical insurance plan in which the health care provider is paid a regular fixed amount for providing care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called: A) Indemnity plan B) Reimbursement plan C) Fee-for-service plan D) Prepaid plan

D) Prepaid plan

Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? A) Transfer B) Avoidance C) Retention D) Reduction

D) Reduction

Which of the following is NOT a feature of a guaranteed renewable provision? A) the insured has a unilateral right to renew the policy for the life of the contract B) coverage is not renewable beyond the insured's age 65 C) the insured's benefits cannot be reduced D) the insurer can increase the policy premium on an individual basis

D) The insurer can increase the policy premium on an individual basis

Regarding the return of premium option for LTC policies, what happens to the premium if the policy lapses? A) The insurer will not return any premiums in the case the policy is allowed to lapse B) The premium will only be returned if the insured dies C) The insurer will return all of the premiums paid D) The insurer will return a percentage of the premiums paid

D) The insurer will return a percentage of the premiums paid

Issue age policy premiums increase in response to which of the following factors? A) increased deductible B) inflation C) age D) increased benefits

D) increased benefits

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as: A) twisting B) false advertising C) coercion D) rebating

D) rebating

Which of the following is correct regarding selecting a primary care physician in a PPO plan? A) an insured must receive pre-certification prior to visiting a preferred provider B) insureds typically pay lower out-of-pocket costs for out-of-network providers C) out-of-network providers may be used for an additional premium D) the insured may choose medical providers not found on the preferred list

D) the insured may choose medical providers not found on the preferred list

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy? A) only if the insured is age 65 or older B) All LTC expenses are tax deductible C) Only if the insured does not itemize the expenses D) when the expenses exceed a certain percentage of the insured's adjusted gross income

D) when the expenses exceed a certain percentage of the insured's adjusted gross income

Any individual insurance provider who allows his license to lapse may, within 12 months from the due date of the renewal fee, reinstate the same license: A) by passing a written examination and the unpaid renewal fee plus interest accrued must be paid B) by passing a written examination and a penalty of double the unpaid renewal fee must be paid C) without the necessity of passing a written examination, but the unpaid renewal fee plus interest accrued must be paid D) without the necessity of passing a written examination, but a penalty fee of double the unpaid renewal fee must be paid

D) without the necessity of passing a written examination, but a penalty fee of double the unpaid renewal fee must be paid

As deductible amounts increase, premium amounts change in what way? A) Decrease B) Increase C) Remain the same. Changes in premium amounts do not affect deductible amounts D) Either increase or decrease

A) Decrease

An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? A) Direct Response Marketing B) Independent Agency Marketing C) Illegal D) Insurance Telemarketing

A) Direct Response Marketing

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the: A) Entire Contract Clause B) Time limit on certain defenses clause C) Incontestability clause D) Legal action against use clause

A) Entire contract clause

A Health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective? A) Immediately B) After 14 Days C) After 21 days D) After 31 days

A) Immediately

Which of the following entities has the authority to make changes to an insurance policy? A) Insurer's executive officer B) Department of insurance C) Broker D) Producer

A) Insurer's executive officer

An insured severely burns her hand, but is not classified as disabled. Which of the following types of coverage would cover at least a portion of the insured's medical expenses? A) Medical reimbursement benefit B) Medical expense compensation C) Accidental death & dismemberment D) Partial disability

A) Medical reimbursement benefit

In health underwriting, it would be inappropriate to decline a risk using any of the following factors EXCEPT: A) mental illness B) Genetic characteristics C) Marital status D) Blindness

A) Mental Illness

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply? A) No coverage will apply, since the injury could have been foreseen B) No coverage will apply, since disability income policies cover sickness only C) Coverage will apply since the break was accidental D) Coverage will apply, but will be reduced by 50%

A) No coverage will apply, since the injury could have been foreseen

What is the official name for the Social Security program? A) Old Age Survivors Disability Insurance B) Social Insurance Program C) Defined Benefit Retirement Insurance D) Qualified Pension Plan

A) Old Age Survivors Disability Insurance

When an individual is covered under two health insurance policies that have duplicate benefits which could make a claim for benefits because of an injury or illness profitable, it is called: A) overinsurance B) Double indemnity coverage C) Fraternal coverage D) Pro-rate coverage

A) Overinsurance

All of the following are marketing arrangements used by insurers EXCEPT: A) Reinsurance System B) General Agency System C) Direct Response Marketing System D) Independent Agency System

A) Reinsurance System

Which of the following will vary the length of the grace period in health insurance policies? A) The mode of the premium payment B) The length of any elimination period C) The length of time the insured has been insured D) The term of the policy

A) The mode of the premium payment

A policy with a 31-day grace period implies: A) The policy will not lapse for 31 days if the premium is not paid when due B) The policyholder may return the policy for a full refund within 31 days C) The policy is incontestable after 31 days of delivery D) The policy benefits must be paid within 31 days after a claim is submitted

A) The policy will not lapse for 31 days if the premium is not paid when due

What is the purpose of a Medicare Carve-out or Supplements? A) They pay deductibles or copayments that are not paid by Medicare B) They act as replacement insurance for Medicaid C) They pay for excess expenses not paid by Medicare because of pre-existing conditions D) They act as excess insurance paying those covered expenses not paid by Medicare because of previous disabilities

A) They pay deductibles or copayments that are not paid by Medicare

Which of the following is NOT true regarding partial disability? A) This is a form of insurance that covers part-time workers B) The insured can still report to work and receive benefits C) Benefit payments are typically 50% of the total disability benefit D) An insured would qualify if he couldn't perform some of his normal job duties

A) This is a form of insurance that covers part-time workers

How is emergency care covered for a member of an HMO? A) An HMO emergency specialist will cover the patient B) A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area C) A member of an HMO may receive care at any emergency facility, at the same cost as if in his or her own service area D) HMOs have salaried member physicians, but they do not cover emergency care

B) A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area

All of the following are correct about the required provisions of a health insurance policy EXCEPT: A) The entire contract clause means the signed application, policy, endorsements and attachments constitute the entire contract B) A reinstated policy provides immediate coverage for an illness C) Proof-of-loss forms must be sent to the insured within 15 days of notice of claim D) A grace period of 31 days is found in an annual pay policy

B) A reinstated policy provides immediate coverage for an illness

Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? A) SEC B) AM Best C) NAIC D) Consumer's Guide

B) AM Best

A dental plan that provides coverage based upon a specified maximum scheduled amount for each procedure and pays on a 'first dollar' basis with no deductible or coinsurance is a: A) Nonscheduled plan B) Basic of scheduled plan C) Combination plan D) Comprehensive plan

B) Basic or scheduled plan

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis as classified as: A) Binding Contracts B) Contracts of Adhesion C) Unilateral Contracts D) Aleatory Contracts

B) Contracts of Adhesion

The gatekeeper of an HMO helps: A) Determine which doctors can participate in an HMO plan B) Control Specialist costs C) Determine who will be allowed to enroll in an HMO program D) Prevent double coverage

B) Control specialist costs

The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as: A) Proof of loss B) Legal Actions C) Time limit on certain defenses D) Payment of claims

B) Legal actions

Which of the following do the Standard and Preferred risk categories share? A) Permanent Coverage B) Premiums are not elevated C) More medical evaluations are required D) Possible modifications to include expanded coverage

B) Premiums are not elevated

Which of the following are main factors taken into account when calculating residual disability benefits? A) Present earnings and standard cost of living B) Present earnings and earnings prior to disability C) Earnings prior to disability and the length of disability D) Employee's full-time status and length of disability

B) Present earnings and earnings prior to disability

Which of the following statements is an accurate comparison between private and government insurers? A) Private insurers provide insurance in areas where the government will not B) Private insurers may be authorized to transact insurance by state insurance departments C) Insurance provided by the government is called federal insurance D) Private insurers offer fewer lines of insurance than government insurers

B) Private insurers may be authorized to transact insurance by state insurance departments

In forming an insurance contract, when does acceptance usually occur? A) When an insured submits an application B) When an insurer's underwriter approves coverage C) When an insurer delivers a policy D) When an insurer receives an application

B) When an insurer's underwriter approves coverage

Which of the following is true of a PPO? A) Claim forms are completed by members on each claim B) No copayment fees are involved C) Its goal is to channel patients to providers that discount services D) The most common type of PPO is the staff model

C) Its goal is to channel patients to providers that discount services

When may an insurer require an insured to provide genetic information? A) When establishing insurability B) Only during the underwriting process C) Never D) Upon policy renewal

C) Never

Which clause allows both the insured and dentist to know in advance which benefits will be paid? A) Advanced Benefit Notification B) Fixed Rate C) Precertification D) Preadmission

C) Precertification

After the elimination period, a totally disabled insured qualified for benefits from a disability income policy that has a waiver of premium rider. What will happen to the premium that was paid into the policy during the elimination period? A) Premiums will be prorated B) Premiums will be waived C) Premiums will be refunded D) Premiums will be retained by the company, but no further premium will be required for the duration of the disability

C) Premiums will be refunded

When benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis? A) Limited B) Scheduled C) Reimbursement D) Service

C) Reimbursement

What provision can reduce the disability benefit based upon the insured's current income? A) Pro rata provision B) Rehabilitation benefit C) Relation of earnings to insurance D) Waiver of monthly premium

C) Relation of earnings to insurance

Which of the following is NOT the consideration in a policy? A) The premium amount paid at the time of application B) The promise to pay covered losses C) The application given to a prospective insured D) Something of value exchanged between parties

C) The application given to a prospective insured

Which of the following is NOT a characteristic of a group long-term disability plan? A) The benefit period may be up to age 65 B) The benefit can be up to 66 and 2/3% of one's monthly income C) The benefit can be up to 50% of one's yearly income D) The elimination period is the same as in the short-term plan's benefit period

C) The benefit can be up to 50% of one's yearly income

Which of the following is NOT the purpose of HIPAA? A) To prohibit discrimination against employees based on their health status B) To limit exclusions for pre-existing conditions C) To provide immediate coverage to new employees who had been previously covered for 18 months D) To guarantee the right to buy individual policies to eligible individuals

C) To provide immediate coverage to new employees who had previously been covered for 18 months

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as: A) Benefit Schedule B) Gatekeepers C) Usual, customary and reasonable D) Relative-value schedule

C) Usual, customary and reasonable

The benefits for individual disability plans are based on: A) The employer's net worth B) The number of employees of the company C) A percentage of the worker's income D) A flat amount

D) A flat amount

To comply with the Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? A) When the applicant's credit is checked B) When the policy is delivered C) At the initial interview D) At the time of application

D) At the time of application

A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have? A) Broker B) Subscriber only C) Insured only D) Both subscriber and insured

D) Both subscriber and insured

A producer who fails to separate premium monies from his own personal funds is found guilty of: A) Larceny B) Embezzlement C) Theft D) Commingling

D) Commingling

What is the goal of the HMO? A) Providing free health services B) Limiting the deductibles and coinsurance to reduce costs C) Providing health services close to home D) Early detection through regular checkups

D) Early detection through regular checkups

Which of the following are the authorities that an agent can hold? A) Apparent and Allowed B) Authorized and Admitted C) Primary and Secondary D) Express and Implied

D) Express and Implied

Which of the following is another name for a primary care physician in an HMO? A) Subscriber B) Referring physician C) Specialist D) Gatekeeper

D) Gatekeeper

All of the following are differences between individual and group health insurance EXCEPT: A) In individual policies, the individual selects coverage options, while in a group plan all employees are covered for the same coverage which is chosen by the employer B) Individual coverage can be written on an occupational or nonoccupational basis, while group plans cover only nonoccupational C) Individual policies are renewable at the option of the insured, while group usually terminates when the individual leaves the group D) Individual insurance does not require medical examinations, while group insurance does require medical examinations

D) Individual insurance does not require medical examinations, while group insurance does require medical examinations

What type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled? A) Group disability B) Disability buy-sell C) Business overhead D) Key person disability

D) Key person disability

A guaranteed renewable health insurance policy allows the: A) Policyholder to renew the policy to a stated age and guarantees the premium for the same period B) Policy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term C) Insurer to renew the policy to a specified age D) Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class

D) Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class

Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT: A) Due to age or health, the policy may change dramatically B) Pre-existing conditions that were previously covered may not be covered under the replacing policy C) Benefits may change D) Premiums always stay the same

D) Premiums always stay the same

Which of the following is NOT provided by an HMO? A) Services B) Financing C) Patient Care D) Reimbursement

D) Reimbursement

An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary? A) Primary B) Contingent C) Irrevocable D) Revocable

D) Revocable

In major medical insurance policies, when the insured's share of coinsurance reaches a certain amount, the insured is no longer obligated to pay it. This feature is known as: A) Maximum benefits B) Deductible C) Coordination of benefits D) Stop-loss

D) Stop-loss

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen? A) The PPO will not pay any benefits at all B) The insured will be required to pay a higher deductible C) The PPO will pay the same benefits as the insured had seen a PPO physician D) The PPO will pay reduced benefits

D) The PPO will pay reduced benefits

An insured has a Social Insurance Supplement rider in her disability income plan. Following a disability, she begins receiving benefit payments from the insurer. She then begins receiving Social Security benefits that are smaller than the SIS benefit payments. At that point, her insurer ends the SIS benefit payments. Which one of the following best describes the situation? A) Miscommunication. The proper authorities should be notified in order to end Social Security payments so that the SIS rider will continue to pay B) Although a mistake may have occurred, the insured has no resource C) This is typical of an SIS rider D) The insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider and the actual benefit

D) The insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit

An insurance advertisement exaggerates the benefits of an insurance policy, due to human error at the insurer's advertising agency. Who will the Department of Insurance hold responsible for the exaggeration? A) Inadvertent errors are not subject to any penalties B) The advertising agency C) The person who made the error D) The insurer

D) The insurer

What is the purpose of the rehabilitation benefit in disability insurance? A) To compensate the insured for the lost income B) To refund the insured's premium paid during the disability C) To help the insured recover from a disability D) To cover the expenses of retraining the insured to return to work

D) To cover the expenses of retraining the insured to return to work

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? A) ASAP B) Within 20 days C) Within 60 days D) Within 90 days or as soon as reasonably possibly, but not to exceed 1 year

D) Within 90 days or as soon as reasonably possible, but not to exceed 1 year