PRACTICE EXAM HEALTH AND ACCIDENT
Presenting any written or oral statement in support of or in opposition to a claim payment, while knowing that the statement contains false or misleading information material to the claim, would be best considered a)A violation of the New Jersey Insurance Fraud Prevention Act. b)A permissible act. c)Grounds for license revocation. d)A violation of the "Unsatisfied Claim and Judgment Fund Law."
a)A violation of the New Jersey Insurance Fraud Prevention Act.
What is a branch office? a)An office in this state where the licensee conducts insurance business, other than a principal office b)The licensee's principal office c)The insurer's principal office in this state d)The insurer's office in another state where nonresident producers conduct business
a)An office in this state where the licensee conducts insurance business, other than a principal office
Who makes up the Medical Information Bureau?a)Insurers b)Hospitals c)Former insured d)Physicians and paramedics
a)Insurers
A producer or insurer who violates the solicitation regulations can be ordered to pay a fine for each violation of up to a)$5,000. b)$1,000. c)$2,000. d)$3,000.
c)$2,000.
A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT a)Limb. b)Life. c)Income. d)Eyesight.
c)Income.
A producer was found guilty of a 3rd violation of the Insurance Code. What would be the monetary penalty he will have to pay? a)$15,000 b)$25,000 c)$5,000 d)$10,000
d)$10,000
an agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. who must then initial that change: A: agent B: applicant C: executive officer of the company D: insured
B: applicant
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 a)Conditions. b)Consideration. c)Legal purpose. d)Offer and acceptance.
a)Conditions.
An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day a)Elimination period. b)Blackout period. c)Probationary period. d)Waiver of benefits period.
a)Elimination period
Which of the following statements is correct concerning taxation of long-term care insurance? a)Excessive benefits may be taxable. b)Benefits may be taxable as ordinary income. c)Premiums may be taxable as income. d)Premiums are not deductible in any case.
a)Excessive benefits may be taxable.
As it pertains to group health insurance, COBRA stipulates that a)Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. b)Retiring employees must be allowed to convert their group coverage to individual policies c)Terminated employees must be allowed to convert their group coverage to individual policies. d)Group coverage must be extended for terminated employees up to a certain period of time at the employer's expense.
a)Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense.
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party? a)Insurer to the insured b)Insured to the insurer c)Insurer to the Department of Insurance d)Insured to the Department of Insurance
a)Insurer to the insured
Which of the following premium modes would result in the highest annual cost for an insurance policy?a)Monthly b)Quarterly c)Semi-annual d)Annual
a)Monthly
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
Which of the following insurers are owned by stockholders? a)Stock b)Mutual c)Reciprocal d)Fraternal
a)Stock
All of the following are considered limited lines of authority EXCEPT a)Surplus lines. b)Credit insurance c)Travel insurance. d)Bail bonds.
a)Surplus lines.
Which of the following is NOT a feature of a noncancellable policy? a)The insurer may terminate the contract only at renewal for certain conditions. b)The premiums cannot be increased beyond the amount stated in the policy. c)The guarantee to renew coverage usually applies until the insured reaches certain age. d)The insured has the right to renew the policy for the life of the contract.
a)The insurer may terminate the contract only at renewal for certain conditions.
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
Which of the following is included in the term "insurance-related conduct"? a)Transmitting funds between producers and the insurance company b)Insurer's acting with the scope of the Insurance Code c)Producer's ethical behavior d)Producer licensing
a)Transmitting funds between producers and the insurance company
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? a)7 days b)10 days c)31 days d)60 days
b)10 days
When a disabled dependent child reaches the age limit for coverage, how long does the policyowner have to provide proof of dependency in order for the dependent to remain covered under the policy? a)15 days b)31 days c)60 days d)10 days
b)31 days
An insurance producer is acting as a broker when he or she negotiates for an insurance contract on behalf of a)Another insurance producer b)A client. c)A financial institution. d)The insurer.
b)A client.
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.
What type of policy allows the insurance company to cancel a policy at any time? a)Noncancellable b)Cancellable c)Renewable d)Guaranteed renewable
b)Cancellable
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)Eligibility Clause. b)Consideration Clause. c)Insuring Clause. d)Pre-existing Conditions Clause.
b)Consideration Clause.
Which of the following is NOT an exclusion in medical expense insurance policies? a)Routine dental care b)Coverage for dependents c)Military duty d)Self-inflicted injuries
b)Coverage for dependents
Which of the following is NOT true regarding Basic Surgical Expense coverage? a)It is commonly written in conjunction with Hospital Expense policies. b)Coverage is unlimited c)There is no deductible. d)Contracts include a surgical schedule
b)Coverage is unlimited
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?a)Nonadmitted b)Foreign c)Domestic d)Alien
b)Foreign
Rob is being treated by a physical therapist in his apartment for a disorder which, if he were not treated there, would have to be treated on an inpatient basis in the hospital. What kind of care is this? a)Satellite health care b)Home health care c)Residential health care d)Remote health care
b)Home health care
Which of the following refers to nursing and other health care services rendered to a person in his or her residence on a part-time or intermittent basis? a)Remote health care b)Home health care c)Residential care d)Hospice
b)Home health care
A life insurance policy has a legal purpose if both of which of the following elements exist? a)Policyowners and named beneficiaries b)Insurable interest and consent c)Underwriting and reciprocity d)Offer and counteroffer
b)Insurable interest and consent
Which of the following is true regarding a term health policy? a)It is noncancellable. b)It is nonrenewable. c)It is conditionally renewable. d)It is guaranteed renewable.
b)It is nonrenewable.
Which of the following statements is NOT correct regarding Medicare? a)Medicare Part B provides physician services. b)Medicare Advantage must be provided through HMOs. c)Medicare Advantage may include prescription drug coverage at no cost d)Medicare Part A provides hospital care.
b)Medicare Advantage must be provided through HMOs.
Which type of Medicare policy requires insureds to use specific healthcare providers and hospitals (network providers), EXCEPT in emergency situations? a)Preferred b)Medicare SELECT c)Medicare Advantage d)Medicare Part A
b)Medicare SELECT
The primary eligibility requirement for Medicaid benefits is based upon a)Number of dependents. b)Need. c)Whether the claimant is insurable on the private market. d)Age.
b)Need.
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
All of the following are unfair claims settlement practices EXCEPT a)Failing to acknowledge pertinent communication pertaining to a claim. b)Suggesting negotiations in settling the claim. c)Refusing to pay claims without conducting a reasonable investigation. d)Failing to adopt and implement reasonable standards for settling claims.
b)Suggesting negotiations in settling the claim.
What program was established by New Jersey to guarantee access to health coverage for individuals and small employers, regardless of health status, age, claims history, or other risk factors? a)The New Jersey Standard Health Care Program b)The Individual Health Coverage Program c)The Health Care Quality Act d)The New Jersey Insurance Guaranty Association
b)The Individual Health Coverage Program
Whose responsibility is it to determine if all of the questions on an application have been answered? a)The beneficiary b)The agent c)The insurer d)The applicant
b)The agent
An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? a)The group plan will pay depending on the employee's recovery. b)The group plan will not pay because the employee was injured at work. c)The group plan will pay. d)The group plan will pay a portion of the employee's expenses.
b)The group plan will not pay because the employee was injured at work.
In which of the following situations would Social Security Disability benefits NOT cease? a)The individual has undergone therapy and is no longer disabled b)The individual's son gets a part-time job to help support the family c)The individual reaches age 65 d)The individual dies
b)The individual's son gets a part-time job to help support the family
Who does an insurance agent represent? a)Him/herself b)The insurer c)The insured d)The Department
b)The insurer
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 certain age.
b)The insurer may terminate the contract only at renewal for certain conditions.
Which of the following is true regarding elimination periods and the cost of coverage? a)Elimination periods have no effect on the cost of coverage. b)The longer the elimination period, the lower the cost of coverage c)The shorter the elimination period, the lower the cost of coverage d)The longer the elimination period, the higher the cost of coverage
b)The longer the elimination period, the lower the cost of coverage
An organization licensed as a producer business entity based in New York would like to transact insurance in New Jersey. Which of the following is true? a)The organization will need to obtain a nonresident business entity license, which will secure nonresident status for the business itself and all of its producers .b)The organization will need to obtain a nonresident business entity license, and its producers will need to obtain nonresident licenses c)The organization will not have to obtain a nonresident license, unless more than 50% of its business is conducted in New Jersey. However, its producers will need to obtain nonresident licenses. d)The organization will not have to obtain a nonresident license, since it is a business entity. However, all of its producers will need to have nonresident licenses.
b)The organization will need to obtain a nonresident business entity license, and its producers will need to obtain nonresident licenses
An insurer is closing a branch office in this state. Within how many days of the office closing must the insurer notify the Department? a)10 days b)15 days c)30 days d)90 days
c)30 days
What is the period of coverage for events such as death or divorce under COBRA? a)31 days b)12 months c)36 months d)60 days
c)36 months
Medicare supplement policies cannot establish a new deductible or waiting period for the recurrence of a condition for which treatment was given within a)12 months b)24 months. c)6 months d)9 months.
c)6 months
What percentage of eligible employees must participate on a small employer group health insurance plan? a)25% b)50% c)75% d)100%
c)75%
Which of the following statements regarding Business Overhead Expense policies is NOT true? a)Any benefits received are taxable to the business. b)Leased equipment expenses are covered by the plan. c)Benefits are usually limited to six months. d)Premiums paid for BOE are tax-deductible.
c)Benefits are usually limited to six months.
After a person's employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true? a)The employee can convert from group to individual insurance within 31 days of termination. b)The premium of the individual health insurance policy can be higher than the original policy. c)By law, the new, individual policy must provide the same benefits as the group insurance policy. d)Continuation of group coverage need not include dental, vision, or prescription drug benefits.
c)By law, the new, individual policy must provide the same benefits as the group insurance policy.
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as a)Aleatory contracts. b)Binding contracts. c)Contracts of adhesion. d)Unilateral contracts.
c)Contracts of adhesion.
Under the New Jersey Temporary Disability Law, a "covered individual" is any person who has been out of work for less than 2 weeks or who is employed by a a)Legal employer. b)Liable employer. c)Covered employer. d)Group employer.
c)Covered employer.
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
In which of the following locations would skilled care most likely be provided? a)In an outpatient setting b)At a physician's office c)In an institutional setting d)At the patient's home
c)In an institutional setting
Producer's and insurer's actions related to insurance transactions, from selling insurance to processing claims are referred to as a)Licensee's responsibilities. b)Agent's authority. c)Insurance-related conduct. d)Producer actions.
c)Insurance-related conduct.
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.
Individual health insurance policies must provide all of the following benefits for the treatment of alcoholism EXCEPT a)Treatment at a detoxification facility. b)Confinement as an inpatient at a licensed residential treatment facility. c)Limited hospital policy benefits. d)Inpatient care in a hospital for alcoholism.
c)Limited hospital policy benefits.
Which of the following provide(s) funding for the New Jersey Life and Health Guaranty Association? a)Fundraising b)Insolvent insurers c)Member insurers d)Tax payers
c)Member insurers
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
All of the following would be considered an insurance transaction EXCEPT a)Advising a policyholder regarding a claim b)Negotiating coverage. c)Obtaining an insurance license. d)Soliciting a policy.
c)Obtaining an insurance license.
All of the following professional designations are recognized by the Department as acceptable substitutes for education and examination requirements EXCEPT a)Chartered Financial Consultant (ChFC) b)Chartered Life Underwriter (CLU) c)Professional Insurance Agent (PIA) d)Chartered Property/Casualty Underwriter (CPCU)
c)Professional Insurance Agent (PIA)
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
How do employer contributions to a Health Savings Account 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.
c)The employer contributions are taxed at the same rate as the Social Security tax rate.
In order for an insured under Medicare Part A to receive benefits for care in a skilled nursing facility, which of the following conditions must be met? a)There is no benefit provided under Medicare Part A for skilled nursing care. b)The insured must cover daily copayments. c)The insured must have first been hospitalized for 3 consecutive days. d)The insured must have a Medicare supplement insurance policy.
c)The insured must have first been hospitalized for 3 consecutive days.
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)Policies must overlap to cover pre-existing conditions. b)The old policy must be cancelled before the new one can be issued. c)The old policy should stay in force until the new policy is issued .d)There should be at least a 10-day gap between the policies.
c)The old policy should stay in force until the new policy is issued
Which provision states that the insurance company must pay Medical Expense claims immediately? a)Legal Actions b)Relation of Earnings to Insurance c)Time of Payment of Claims d)Payment of Claims
c)Time of Payment of Claims
If a person violates a cease and desist order, the Commissioner can turn the matter over to the New Jersey Superior Court for further legal action and can assess a fine for each violation of up to a)$10,000. b)$1,000. c)$3,000. d)$5,000.
d)$5,000.
To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan? a)5 years b)12 months c)63 days d)18 months
d)18 months
What is a penalty tax for nonqualified distributions from a health savings account? a)8% b)10% c)12% d)20%
d)20%
Bill's license was revoked 2 years ago. How much longer will he have to wait in order to request his license to be reinstated? a)He can apply now. b)1 year c)2 years d)3 years
d)3 years
Licensees must file with the Department a branch office registration form within how many days before business is first conducted there? a)10 b)15 c)20 d)30
d)30
How long is the free-look period with a Medicare supplement policy? a)10 days b)15 days c)20 days d)30 days
d)30 days
Once the person meets the stringent requirements for disability benefits under Social Security, how long is the waiting period before any benefits will be paid? a)12 months b)Benefits will be paid immediately. c)90 days d)5 months
d)5 months
An insurance producer refused to comply with a subpoena. What would be the producer's penalty for this violation? a)A fine and an imprisonment b)A fine up to $10,000 c)Imprisonment up to 6 months d)A fine up to $5,000
d)A fine up to $5,000
Presenting any written or oral statement in support of or in opposition to a claim payment, while knowing that the statement contains false or misleading information material to the claim, would be best considered a)A permissible act. b)Grounds for license revocation. c)A violation of the "Unsatisfied Claim and Judgment Fund Law." d)A violation of the New Jersey Insurance Fraud Prevention Act.
d)A violation of the New Jersey Insurance Fraud Prevention Act.
Which of the following is the closest term to an authorized insurer? a)Certified b)Licensed c)Legal d)Admitted
d)Admitted
What is reinsurance? a)An agreement between an originating insurer and a ceding insurer b)An agreement between a domestic insurer and a foreign insurer c)An agreement between an insurer and an insured d)An agreement between a ceding insurer an assuming insurer
d)An agreement between a ceding insurer an assuming insurer
Which of the following is the legal name of a corporation or partnership under which a licensee conducts insurance business? a)Assumed name b)Legal name c)Name of reference d)Business name
d)Business name
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.
d)Coercion.
Which of the following establishes minimum standards for any policy that will be marketed as a Medicare supplement policy? a)NAIC b)Federal Insurance Regulation Board c)Department of Banking and Insurance d)Commissioner
d)Commissioner
What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur? a)Optionally renewable b)Noncancellable c)Guaranteed renewable d)Conditionally renewable
d)Conditionally renewable
A policy which covers medical costs related to a specific condition is called a a)Condition-Specific Policy. b)Specific Condition Policy. c)Limited Coverage Policy. d)Dread Disease Policy.
d)Dread Disease Policy.
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?a)Defamation b)Coercion c)Misrepresentation d)False advertising
d)False advertising
When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement? a)Defamation b)Twisting c)Rebating d)False financial statement
d)False financial statement
How many pints of blood will be paid for by Medicare Supplement core benefits? a)None; Medicare pays for it all b)Everything after first 3 c)1 pint d)First 3
d)First 3
Which one of the following is an eligibility requirement for Social Security disability income benefits? a)Experiencing at least one year of disability b)Being at least 50 years of age c)Currently employed status d)Fully insured status
d)Fully insured status
A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis? a)Noncancellable b)Nondiscriminatory c)Indemnity d)Guaranteed
d)Guaranteed
Which of the following is NOT required information a producer must provide before soliciting insurance?a)The nature of producer's relationship with the insurer being represented b)The name of the insurer the producer represents c)Producer's name d)Producer contact information
d)Producer contact information
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of a)Coercion. b)Twisting. c)Controlled business. d)Rebating.
d)Rebating.
Shelia has an embolism in her brain. After a week-long hospitalization and subsequent bed rest, she is allowed to work again. Three months later, she develops a second brain embolism. Which provision would determine whether a new set of benefits would cover the second embolism? a)Elimination Period Provision b)Relapse Clause c)Corridor Clause d)Recurrent Disability Provision
d)Recurrent Disability Provision
What method do insurers use to protect themselves against catastrophic losses? a)Indemnity b)Pro rata liability c)Risk management d)Reinsurance
d)Reinsurance
The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the a)Counties b)Federal Government. c)Insurers in a state. d)States.
d)States.
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a)Inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest b)Charging a client a higher premium for the same policy as another client in the same insuring class c)Making deceptive statements about a competitor d)Telling a client that his first premium will be waived if he purchases the insurance policy today
d)Telling a client that his first premium will be waived if he purchases the insurance policy today
Whose responsibility is it to determine if all of the questions on an application have been answered? a)The insurer b)The applicant c)The beneficiary d)The agent
d)The agent
An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy? a)The principal amount in a lump sum b)The capital amount in monthly installments c)The principal amount in monthly installments d)The capital amount in a lump sum
d)The capital amount in a lump sum
An applicant for a producer's license has successfully completed all of the steps necessary to obtain the license. The soon-to-be producer does not want to wait until he receives his license in order to begin working. Which of the following is possible? a)The person must wait until the license is issued. b)The person must apply for a shortened preliminary period. c)As long as the producer is appointed, he may begin working, and the license will be issued with a retroactive date. d)The person can obtain a temporary work authority.
d)The person can obtain a temporary work authority.
Which of the following is true regarding optional benefits with long-term care policies? a)Only standard benefits are available with LTC policies. b)They are offered at no additional cost to the insured. c)They are included in all policies. d)They are available for an additional premium.
d)They are available for an additional premium.
Which of the following best describes the purpose of Coordination of Benefits regulations? a)They discourage people from purchasing temporary insurance or dread disease plans. b)They allow people who are insured under two or more health plans to collect full benefits from each plan. c)They encourage people to purchase two or more health plans by allowing duplication of benefits under certain circumstances. d)They discourage overinsurance and avoid duplication of benefits by permitting a reduction of benefits when a person is covered by more than one plan.
d)They discourage overinsurance and avoid duplication of benefits by permitting a reduction of benefits when a person is covered by more than one plan.
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)Relative-value schedule. b)Benefit schedule. c)Gatekeepers. d)Usual, customary and reasonable.
d)Usual, customary and reasonable.