insurance questions
Which of the following would be a typical maximum benefit offered by major medical plans?
$1 million
Any licensed person who violates a cease and desist order must forfeit and pay a maximum sum of
$10,000 for each violation.
A noncontributory group disability income plan has a 30-day elimination period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to a covered disability, the employee will receive
$12,000, all of which is taxable.
William has a $20,000 Whole Life Policy with double indemnity benefits. He has failed to make a premium payment, and is killed accidentally while the policy is in the grace period. What will his beneficiary receive?
$40,000 minus the amount of the missed premium payment
The insured elected the extended term value of his policy, which gave him $7,000 worth of insurance for 15 years. He exercised this option in July of 1970 and died 8 years later. If he designated the benefits to be paid to his beneficiary in the amount of $6.30 per $1,000 each month, what would be the beneficiary's monthly benefit?
$44.10
The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses?
$50,000
An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?
$500
An insured has a major medical policy with a $500 deductible and 80/20 coinsurance. The insured is hospitalized and sustains a $2,500 bill. What is the maximum amount that the insured will have to pay?
$900
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?
1 The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.
For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?
100%
S is a sole business proprietor who owns a medical expense plan. What percentage of the cost of the plan may he deduct?
100%
What is the percentage of participation required in a Noncontributory Group Plan?
100%
Insured health plans must provide mental health benefits on a nondiscriminatory basis for the diagnosis and treatment of biologically-based mental health disorders for children and adolescents under what age?
19 years old
HIPAA applies to groups of
2 or more.
Every small employer carrier must actively offer to small employers at least how many health benefit plans?
2 plans
The time limit of certain defenses provision prohibits insurers from denying a claim due to misrepresentation, as long as the policy has been in force for at least
2 years.
A 35-year-old man wants to have a death benefit of $10,000 to age 55 with $10,000 in cash at age 55. Which type of policy should he buy?
20-year endowment
If a producer is found guilty of a violation which has caused a claimant to suffer actual economic damages, a court may award punitive damages in addition to the amount of the claim. This amount cannot exceed what percentage of the claim?
25%
The Patient Protection and Affordable Care Act mandates that insurers provide coverage for adult children of the insured up to the age of
26
Most health maintenance contracts must provide benefits for dependent children of the insured under the age of
26.
The Patient Protection and Affordable Care Act mandates that insurers provide coverage for adult children of the insured up to the age of
26.
A policy form is deemed to be approved by the Commissioner if it has been on file for at least how many days?
30 days
Licensees must inform the Commissioner of a change of address within
30 days of the change.
Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months?
30 months
What is the grace period in a group life insurance contract?
31 days
What is the period of coverage for events such as death or divorce under COBRA?
36 months
One of the differences between group underwriting and individual underwriting is that there is little or no medical information required regarding plan participants in groups of
50 or more.
Benefit periods for individual short-term disability policies will usually continue from
6 months to 2 years.
In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits?
60 days
At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?
65
A carrier must maintain records of each grievance process for how many years?
7 years
What is a penalty tax for nonqualified distributions from a health savings account?a)8%
8%
Jason is insured under his employer's group health insurance. He splits the cost of the premiums with his employer. This is an example of
A contributory plan.
An insurer was just caught misrepresenting the terms of a policy. What fine does he face?
A fine of up to $1,000 or imprisonment for up to 6 months
According to the Diagnostic and Statistical Manual of Mental Disorders (DSM) which of the following would NOT be considered a biologically-based mental disorder?
A physical handicap
All of the following are correct about the required provisions of a health insurance policy EXCEPT
A reinstated policy provides immediate coverage for an illness.
All of the following individuals may qualify for Medicare health insurance benefits EXCEPT
A retired person age 50.
Most health insurance policies exclude all of the following EXCEPT
Accidental injury.
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
Adhesion
An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued?
Adjust the claim benefit to reflect the insured's true age
What term refers to an insurance company that is licensed to do business in this state?
Admitted
Which of the following is the closest term to an authorized insurer?
Admitted
What is the limiting age for dependent children of the insured in blanket policies?
Age 26
Which term refers to insurance companies that are incorporated under the laws of foreign countries?
Alien
Which of the following is true regarding the replacement of an HMO group medical plan?
All previously covered persons who are still employees must be covered.
In reference to the standard Medicare Supplement benefits plans, what does the term standard mean?
All providers will have the same coverage options and conditions for each plan.
Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account?
Amanda is 67 and is covered by a basic medical expense policy
An employee elects to invest part of his salary each year in an individual retirement account (IRA). What is a tax advantage of doing this?
Amounts deposited are deducted from taxable income.
When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision
Amounts payable under the policy will reflect the insured's correct age.
Which of the following hospice expenses would NOT be covered in a cost-containment setting?
Antibiotics
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?
Apparent
Which of the following types of agent authority is also called "perceived authority"?
Apparent
The purpose of rate regulation is to promote the public welfare by regulating insurance rates in order to assure that they
Are not excessive, inadequate, or unfairly discriminatory .b)Authorize and regulate cooperative action among insurers in rate-making .c)Neither prohibit nor encourage uniformity in insurance rates, rating systems, rating plans, or rating practices.
The classification "Small Employer" means any person actively engaged in a business that on at least 50% of its working days during the preceding year employed
At least 1 and not more than 50 persons.
What document describes an insured's medical history, including diagnoses and treatments?
Attending Physician's Statement
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
Basic or scheduled plan.
Who must sign the notice regarding replacement?
Both the applicant and agent
What is a unique characteristic of Whole Life Insurance?
Builds cash value
Which of the following options best depicts how the eligibility of members for group health insurance is determined?
By conditions of employment
Which of the following is true regarding inpatient hospital care for HMO members?
Care can be provided outside of the service area.
When an insurer offers services like preadmission testing, second opinions regarding surgery, and preventative care, which term would best apply
Case management provision
Which would NOT be an element of an ideally insurable risk?
Catastrophic perils
What is the insurance definition of peril?
Cause of loss
To legally transact insurance in this state, an insurer must obtain which of the following?
Certificate of Authority
Which of the following would NOT be used in preventive care?
Chemotherapy
A producer who fails to separate premium monies from his own personal funds is guilty of
Commingling.
An insured fails to disclose known facts in an application for insurance. What may the insured be guilty of?
Concealment
An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurer's schedule. This is called
Concurrent review.
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract
Conditional
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?
Conditional
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions.
Representations are written or oral statements made by the applicant that are
Considered true to the best of the applicant's knowledge.
Which of the following includes information regarding a person's credit, character, reputation, and habits?
Consumer report
Which of the following is NOT covered under Part B of a Medicare policy?
Continuation provision
Which of the following provisions must be included on the first page of a Medicare supplement policy, which states the insurer's right to change premium amounts?
Continuation provision
An insurance producer license will remain in effect unless revoked or suspended, as long as the licensing fee prescribed is paid and
Continuing education requirements for resident individual producers are met by the due date.
The gatekeeper of an HMO helps
Control specialist costs.
Which of the following terms describes a specific dollar amount of the cost of care that must be paid by the member?
Copayment
An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement?
Cost-containment
Which of the following is NOT true of basic medical expense plans?
Coverage for catastrophic medical expenses
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
Date of previous doctor visit.
Which features describe a Decreasing Term policy?
Decreasing death benefit; level premium.
What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?
Diagnostic and preventive care
Which of the following statements about occupational vs. nonoccupational coverage is TRUE?
Disability insurance can be written as occupational or nonoccupational.
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer.
Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. Her policy would be classified as what type of policy?
Dread Disease Policy
Which of the following is NOT covered by Health Maintenance Organizations (HMOs)?
Elective services
The HMO Act of 1973 required employers to offer an HMO plan as an alternative to regular health plans if the company had more than 25 employees. How has this plan since changed?
Employers are no longer forced to offer HMO plans.
Which provision states that the contract and the application form the entire contract between the contract owner and the
Entire Contract
What is a primary benefit of a Renewable Term Life policy?
Evidence of insurability is not required for renewing.
What is the difference between the Medicare approved amount for a service or supply and the actual charge?
Excess charge
What process will the insurance company use to monitor the insured's hospital stay to make sure that everything is proceeding according to schedule
Excessive benefits may be taxable.
What type of group rating uses the actual experience of the group as a factor in developing the rates to be charged?
Experience rating
The authority granted to an agent through the agent's contract is referred to as
Express authority.
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?
Fair Credit Reporting Act
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Which policy is a combination of Permanent Whole Life insurance and Level Term insurance and provides installment coverage at the death of the insured?
Family Maintenance policy
Which policy is a permanent policy on the head of the household and smaller term riders on the spouse and children?
Family Policy
What is the main eligibility factor for the MassHealth program?
Family income
The insured dies and the benefits of the policy are paid to the beneficiary over a stipulated period of time. What is the name of this settlement option?
Fixed Period
Which type of coverage is defined by individual contracts issued to employees or association members under an arrangement in which the employer or association agrees to collect the premiums and remit them to the insurer?
Franchise
Which provision allows a person to return a Medicare supplement policy within 30 days for a full premium refund?
Free Look
How are HMO territories typically divided?
Geographic areas
A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?
Guaranteed
In insurance transactions, fiduciary responsibility means
Handling insurer funds in a trust capacity.
A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT
Income
The amount of disability benefits that an insured receives often depends upon the insured's
Income at the time of the application.
What type of information is NOT included in a certificate of insurance?
Income.
Which options are beneficiary designation options?
Individual and Class
All of the following are differences between individual and group health insurance EXCEPT
Individual insurance does not require medical examinations, while group insurance does require medical examinations.
Which of the following refers to "own occupation" disability?
Insured is unable to perform duties of the occupation for which he/she was educated and trained.
When a person applies for Medicare supplement insurance, whose responsibility is it to confirm that the applicant does not already have accident or sickness insurance in force?
Insurer
In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost
Is not covered.
What is the benefit of experience rating?
It allows employers with low claims experience to get lower premiums.
Which of the following is true regarding health insurance?
It could provide payments for loss of income.
What is franchise insurance?
It is health coverage for small groups whose numbers are too small to qualify for true group insurance
What is a primary benefit of an Automatic Premium Loan?
It keeps a policy from lapsing due to a missed premium.
Which of the following statements is NOT correct concerning the COBRA Act of 1985?
It requires all employers, regardless of the number or age of employees, to provide extended group health coverage.
Which type of life insurance policy protects a company from loss caused by the death of an officer
Key Person
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers
Which features characterize a Straight Whole Life Policy?
Level premiums and level face amounts.
Which feature is unique to annuities?
Lifetime income stream
Which of the following insurance coverages would be allowed with an MSA?
Long-term care
If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT
Loss of the owner's income.
When compared with the administrative cost found in individual coverage, the per capita administrative cost in group health insurance is
Lower.
Which of the following is NOT correct concerning a medical savings account (MSA)?
MSAs are only available to groups with at least 100 employees.
A health insurance plan which involves financing, managing, and delivery of health care services and involves a group of providers who share in the financial risk of the plan or who have an incentive to deliver cost effective service, is called
Managed care plan.
In group insurance, what is the policy called?
Master policy
Which factor is an advantage of Group Term Life insurance?
Medical underwriting is NOT required.
In cases where a covered employee is eligible for Medicare benefits to treat end-stage renal disease (ESRD) with dialysis or kidney transplant, which of the following is correct?
Medicare is the secondary payer during the first 30 months of treatment.
When a replacement is involved, an agent is required to give the applicant a notice regarding replacement of life insurance and a comparative information form. When must this be done?
No later than when the application is taken.
Medical savings accounts are only available to groups of how many employees?
No more than 50
Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage?
No, the group must be formed for a purpose other than obtaining group insurance.
Premium payments for personally-owned disability income policies are
Not tax deductible.
The Commissioner may issue a temporary insurance producer license without requiring an examination for a period
Not to exceed 180 days
What term is used to describe when a medical caregiver contracts with a health organization to provide services to its members or subscribers, but retains the right to treat patients who are not members or subscribers?
Open panel
#1. 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
Overinsurance.
Who has the right to exercise all privileges and options under an individual life insurance policy?
Owner
What must an insured do to reinstate a lapsed policy?
Pay all back premiums with interest and show insurability to the satisfaction of the company.
An accidental misstatement of a policyowner's age is not discovered until the policy has been in effect for three years. What should the insurance company do?
Pay claims based on what the premiums paid would have purchased at the correct age.
An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would
Pay the claim.
Which of the following factors would be an underwriting consideration for a small employer carrier?
Percentage of participation
Which requirement is for the benefit of the insurer not the policyowner?
Premium due date
Which of the following do the Standard and Preferred risk categories share?
Premiums are not elevated.
Which of the following are the main factors taken into account when calculating residual disability benefits?
Present earnings and earnings prior to disability
The beneficiary dies shortly before the insured and the insured has no other named beneficiary. How will the Common Disaster Clause apply?
Prevent the proceeds from going into the estate of the beneficiary
Rose bought three policies from the same insurer. Her benefits have exceeded the maximum allowed by the insurer. Which of the following will happen?
Pro rata benefit reduction
What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid?
Prospective review
A man's physician submits claim information to his insurer before she actually performs a medical procedure on him. She is doing this to see if the procedure is covered under the patient's insurance plan and for how much. This is an example of
Prospective review.
A producer in another state wants to become a producer in Massachusetts. The other state gives the same privileges to Massachusetts producers wanting to be licensed in that state as it does its own producers. Massachusetts therefore extends the privileges of its producers to the prospective producer of the other state. What is this called?
Reciprocity
A producer who fails to separate premium monies from his own personal funds is guilty ofa)Larceny.
Reciprocity
Paul is a producer in Vermont and wants to become a producer in Massachusetts. The Department will waive certain examination requirements, provided that Vermont would waive these same requirements if a Massachusetts producer sought licensure in Vermont. What term is used to describe this phenomenon?
Reciprocity
Which option is a nonforfeiture option?
Reduced Paid-Up
Installing deadbolt locks on the doors of a home is an example of which method of handling risk?
Reduction
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance
When an employee is still employed upon reaching age 65 and eligible for Medicare, which of the following is the employee's option?
Remain on the group health insurance plan and defer eligibility for Medicare until retirement
What is the accounting measurement called that upholds the insurer's obligation to a policyholder?
Reserves
Regarding cost containment in medical plans, what type of review process do employers and insurers use to evaluate the utilization review process and the effectiveness of the professionals involved in large insurance claims?
Retrospective review
An applicant has a history of heart disease in his family, so he would like to buy a health insurance policy that strictly covers heart disease. What type of policy is this?
Specified coverage
What is a characteristics of a stock insurance company?
Stockholders have ownership
Which of the following are responsible for making premium payments in an HMO plan?
Subscribers
Which of the following is a health care program funded by the federal government for the retirees and spouses of the military services?
TRICARE
All of the following coverages are usually included under a dental insurance plan EXCEPT
Teeth whitening.
Which statement is NOT a part of insurance contracts?
Terms of the contract are negotiable.
If an insurer becomes insolvent, which of the following would pay benefits to policyholders?
The Guaranty Association
An insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. What organization can help the insurer accomplish this?
The Medical Information Bureau
What is meant by the term "Fifth Dividend Option"?
The One-Year Term Dividend Option
Which of the following is NOT a characteristic of a group long-term disability plan?
The benefit can be up to 50% of one's yearly income.
A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?
The benefits will be coordinated
A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?
The benefits will be coordinated.
What type of information is NOT included in a certificate of insurance?
The cost the company is paying for monthly premiums
Which of the following statements concerning group health insurance is CORRECT?
The employer is the policyholder.
What is the mode of premium payment?
The frequency of the premium payment.
What is a characteristic of a variable annuity?
The insured bears any investment risk.
What is necessary in order to be eligible to receive benefits from a long-term care policy?
The insured must be unable to perform some activities of daily living.
What is a renewal based on when exercising a renewability option in a term life policy?
The insured's attained age
What happens when the insured dies and a loan exists against the contract?
The loan is deducted from the amount of death proceeds and the difference paid to the beneficiary.
The insuring clause of a disability policy usually states all of the following EXCEPT
The method of premium payment.
Which of the following is NOT a service providers plan?
The mode of the premium payment
A policy with a 31-day grace period implies
The policy will not lapse for 31 days if the premium is not paid when due.
How does a member of an HMO see a specialist?
The primary care physician refers the member.
Which of the following is correct about Medicare?
The program is divided into four parts (A-D).
Mr. Smith, a policyholder, has elected to use his dividends to purchase paid-up additions and now he desires to withdraw all of these additions. What will he receive?
The total cash surrender value of the paid-up additions computed as of the date of surrender.
Which of the following is an example of a producer's fiduciary duty?
The trust that a client places in the producer in regard to handling premiums.
For the purpose of insurance, risk is defined as
The uncertainty or chance of loss.
What happens to the proceeds of a life insurance policy if there is not a named beneficiary?
They are payable to the state in which the policyholder died.
Which statement is most accurate concerning irrevocable beneficiaries?
They may be changed only upon the written consent of that beneficiary.
An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss?
Time of Payment of Claims
What is the purpose of the Fair Credit Reporting Act(FCRA)?
To protect the consumer's right to privacy.
Why would you purchase life insurance rather than annuities?
To provide an estate.
What is the purpose of COBRA?
To provide continuation of coverage for terminated employees
What is the purpose of the Guaranteed Insurability Rider?
To provide the option to purchase more of the same kind of insurance without evidence of insurability.
Premiums paid by self-employed sole proprietors or partners for medical expense insurance are
Totally tax deductible.
Evaluating information that establishes adverse selection risk is the purpose of which stage of insurance?
Underwriting
An insured owes his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this?
Unpaid premium
Under a credit disability policy, until what point will payments to the creditor be made for the insured?
Until the disability ends or the debt is satisfied, whichever is sooner
Which type of life insurance provides benefits that fluctuate according to the value of the equities backing the contract?Which type of life insurance provides benefits that fluctuate according to the value of the equities backing the contract?
Variable Life
What types of services may NOT be provided under the long-term care's assisted living care?
Visits by a registered nurse
An insurer's agent accepted a verbal notification of a claim, even though the insurance policy specifies it must be in writing. What is this an example of?
Waiver
Which term is defined as a material stipulation in the policy that may void coverage if it is breached?
Warranty
How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company?
Within 90 days or as soon as reasonably possible, but not to exceed 1 year
All of the following are essential benefits required to be included in all health plans purchased in the Marketplace EXCEPT
dult dental care.
All of the following are requirements from the written application for a license to act as an insurance adviser EXCEPT
he application must state his professional credentials and all political affiliations for which he has received compensation or served as a member.
An insurer offers a policy very similar to Medicare, although it differs slightly. An agent tells an applicant that the policy is Medicare, since the policies are so similar anyway. Which of the following is true?
is practice is illegal.
Which of the following individuals will be eligible for coverage on the Health Insurance Marketplace?
permanent resident lawfully present in the U.S.