test 1

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 a)$14,000, all of which is taxable. b)$12,000, none of which is taxable. c)$12,000, all of which is taxable. d)$14,000, none of which is taxable.

$12,000, all of which is taxable.

An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay? a)20% of the total cost b)$120 a day c)$100 a day d)80% of the total cost

$120 a day

An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay? a)$100 a day b)80% of the total cost c)20% of the total cost d)$120 a day

$120 a day (Most LTC policies will pay the benefit amount in a specific fixed dollar amount per day, regardless of the actual cost of care.)

An insured has a major medical policy with a $500 deductible and a coinsurance clause of 80/20. If he incurs medical expenses of $4,000, the insurer would pay a)$3,500. b)$2,500. c)$2,800. d)$3,200.

$2,800.

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? a)$0 b)$500 c)$1,000 d)$2,000

$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? a)$500 b)$900 c)$1,000 d)$2,500

$900

According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level? a)Death of a spouse b)Age 40 c)Marriage d)Birth of a child

Death of a spouse

An insured buys an individual long-term care policy and is not satisfied with the provisions. Within how many days will the insured be able to return the policy for a full premium refund? a)10 days b)15 days c)20 days d)30 days

10 days

#1. For how many days of skilled nursing facility care will Medicare pay benefits? a)30 b)60 c)90 d)100

100

For how many days of skilled nursing facility care will Medicare pay benefits? a)30 b)60 c)90 d)100

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? a)18 years old b)19 years old c)21 years old d)25 years old

19 years old

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would the insured be receiving benefits under an "own occupation" disability plan? a)1 month b)The insured would not receive any benefits. c)3 years d)2 years

2 years

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%.

20%.

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

30 days

In the event a policy lapses due to nonpayment of 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

45 days

If an insured's cognitive impairment results in the lapse of a long-term care policy, how long from the policy lapse may the insured request reinstatement? a)30 days b)3 months c)5 months d)LTC policies cannot be reinstated.

5 months

Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within a)30 days. b)60 days. c)90 days. d)120 days.

90 days.

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

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

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

A reinstated policy provides immediate coverage for an illness.

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.

An exact and final price of the procedure.

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)The copayment amount. b)The deductible amount. c)An out-of-pocket amount. d)An exact and final price of the procedure.

An exact and final price of the procedure.

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

An individual who was previously covered by group health insurance for 6 months is eligible

A Notice of Information Practices must be given to the applicants for an insurance policy at all of the following intervals EXCEPT a)Any time personal information is collected from additional sources other than the applicant. b)At policy application. c)At policy renewal. d)At policy delivery.

At policy application.

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 renewal. b)At policy delivery. c)Any time personal information is collected from additional sources other than the applicant. d)At policy application.

At policy application.

All of the following are utilized by an underwriter in order to underwrite an applicant EXCEPT a)Agent's report. b)Attending physician report. c)Investigative consumer report. d)Birth certificate.

Birth certificate.

Medicaid is sponsored by what kind of sources? a)Federal only b)State only c)Both state and federal d)Private companies

Both state and federal

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as a)Coercion. b)Rebating. c)Misleading advertising. d)Defamation.

Coercion.

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.

Coercion.

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a)Adhesion b)Consideration c)Good faith d)Representation

Consideration

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)Contracts of adhesion. b)Unilateral contracts. c)Aleatory contracts. d)Binding contracts.

Contracts of adhesion.

Which of the following is NOT true of basic medical expense plans? a)Coverage for catastrophic medical expenses b)No deductibles c)First-dollar coverage d)Low dollar limits

Coverage for catastrophic medical expenses

Which of the following is NOT true of basic medical expense plans?a)Coverage for catastrophic medical expenses b)No deductibles c)First-dollar coverage d)Low dollar limits

Coverage for catastrophic medical expenses

#6. All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT a)Death benefits are paid only if death occurs within 24 hours of an accident. b)Accidental death benefits are paid only if death results from accidental bodily injury as defined in the policy. c)Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent. d)Accidental death and dismemberment insurance is considered to be limited coverage.

Death benefits are paid only if death occurs within 24 hours of an accident. (the death benefit will be paid if the accidental death occurs within 90 days of the accident, not 24 hours.)

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)Copayment. b)Inside limit. c)Coinsurance. d)Deductible.

Deductible.

A Waiver of Premium provision may be included with which kind of health insurance policy? a)Dread Disease b)Disability Income c)Basic medical d)Hospital indemnity

Disability Income

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)Basic Medical Expense b)Disability Income c)Major Medical d)Dental Expense

Disability Income

Which of the following is NOT covered by Health Maintenance Organizations (HMOs)? a)Routine physicals b)Well-baby care c)Elective services d)Immunizations

Elective services

Health Savings Accounts (HSAs) are designed to a)Insure against catastrophic losses. b)Provide duplicate coverage for health care expenses. c)Help individuals save for qualified health expenses. d)Increase individual interest income.

Help individuals save for qualified health expenses.

In which of the following cases would a credit disability policy be issued? a)If an insured has filed bankruptcy and his premiums are waived, he can be issued a credit disability policy. b)If an individual is in debt to a specific creditor, payments will be made for him/her until the return to work. c)If a person receives disability benefits, he or she is eligible for credits on their group policies for future disabilities. d)A person receiving disability benefits cannot receive a credit disability policy.

If an individual is in debt to a specific creditor, payments will be made for him/her until the return to work.

The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT a)Coverage for preventive benefits. b)Individual tax deduction for premiums paid. c)Right to appeal. d)No lifetime dollar limits.

Individual tax deduction for premiums paid.

The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT a)Individual tax deduction for premiums paid. b)Right to appeal. c)No lifetime dollar limits. d)Coverage for preventive benefits.

Individual tax deduction for premiums paid.

Which of the following entities must approve all Medicare supplement advertisements? a)Consumer Protection Agency b)Insurance Commissioner or Director c)NAIC d)Federal Association of Insurers

Insurance Commissioner or Director

Concerning Medicare Part B, which statement is INCORRECT? a)It offers limited prescription drug coverage. b)It provides partial coverage for medical expenses not fully covered by Part A. c)It is fully funded by Social Security taxes (FICA). d)It is known as medical insurance.

It is fully funded by Social Security taxes (FICA).

If an employer provides health insurance for its employees, which of the following is true regarding pregnancy coverage? a)It must be considered a disability. b)It can be grounds for requiring the employee to take leave. c)It must be covered to the same extent as any other medical condition. d)It can be excluded.

It must be covered to the same extent as any other medical condition.

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)Payment of claims. b)Proof of loss. c)Legal actions. d)Time limit on certain defenses.

Legal actions.

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.

Legal actions.

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

MIB reports are based upon information supplied by doctors and hospitals.

What type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities? a)Medical Reimbursement Benefit b)Partial Disability c)Basic Accidental Injury d)Accidental Death & Dismemberment

Medical Reimbursement Benefit

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

Medical reimbursement benefit

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits? a)No benefits b)Full benefits c)Partial benefits d)Full benefits until the blindness lifts

No benefits

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 $100 nor more than $500. b)Not less than $500 nor more than $1,000. c)Not less than $50 nor more than $1,000. d)Not less than $50 nor more than $500.

Not less than $50 nor more than $500.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are a)Guaranteed. b)Not taxable since the IRS treats them as a return of a portion of the premium paid. c)Paid at a fixed rate every year. d)Taxable as ordinary income.

Not taxable since the IRS treats them as a return of a portion of the premium paid.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are a)Paid at a fixed rate every year. b)Taxable as ordinary income. c)Guaranteed. d)Not taxable since the IRS treats them as a return of a portion of the premium paid.

Not taxable since the IRS treats them as a return of a portion of the premium paid.

Under most dental plans, what limitations are posed for denture replacement? a)No limitations b)Only the initial dentures are covered. c)Once every 5 years d)Once every 10 years

Once every 5 years

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

Optionally renewable

Medicare Part A services do NOT include which of the following? a)Outpatient Hospital Treatment b)Post hospital Skilled Nursing Facility Care c)Hospitalization d)Hospice Care

Outpatient Hospital Treatment

Prior to purchasing a Medigap policy, a person must be enrolled in which of the following? a)Parts A and B of Medicare b)All four parts of Medicare c)Any private insurance policy d)Only Part A of Medicare

Parts A and B of Medicare

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

Pay dividends to the policyowner

Which of the following is the most common time for errors and omissions to occur on the part of an insurer? a)Policy renewal b)Underwriting c)Application process d)Policy delivery

Policy delivery

A guaranteed renewable health insurance policy allows the a)Policy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term. b)Insurer to renew the policy to a specified age. c)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 and guarantees the premium for the same period.

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

What type of health care plan allows insureds to select a physician or hospital from a list of providers without being required to submit claim forms? a)Preferred Provider Organization b)Self-insured plan c)Managed Care Plan d)Health Maintenance Organization

Preferred Provider Organization

What type of health care plan allows insureds to select a physician or hospital from a list of providers without being required to submit claim forms? a)Self-insured plan b)Managed Care Plan c)Health Maintenance Organization d)Preferred Provider Organization

Preferred Provider Organization

Which of the following is correct regarding the taxation of group medical expense premiums and benefits? a)Premiums are not tax deductible and benefits are taxed. b)Premiums are not tax deductible and benefits are not taxed. c)Premiums are tax deductible and benefits are taxed. d)Premiums are tax deductible and benefits are not taxed.

Premiums are tax deductible and benefits are not taxed.

All of the following are examples of risk retention EXCEPT a)Premiums. b)Deductibles. c)Copayments. d)Self-insurance.

Premiums.

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.

Pretext interviewing.

Under a disability income policy, the insurer does not pay a monthly benefit that is equal to the insured's previous income. The reason for paying a benefit amount that is less than the insured's income is to a)Prevent overutilization and malingering. b)Prevent the insured from obtaining excess insurance. c)Enable the insurer to provide affordable coverage. d)Enable the insurer to reduce variable costs.

Prevent overutilization and malingering.

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death? a)Double the amount of the death benefit b)Refund of premiums c)Principal sum d)Capital sum

Principal sum

Rose bought three policies from the same insurer. Her benefits have exceeded the maximum allowed by the insurer. Which of the following will happen? a.) Pro rata benefit reduction b)Full distribution of each policy's benefit c)Termination of two of the policies d)Termination of all of the policies

Pro rata benefit reduction

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization? a)Provide medical services at a reduced cost b)Provide medical services only from physicians in the network c)Provide the subscriber a choice of physicians d)Provide the subscriber a choice of hospitals

Provide medical services only from physicians in the network

What method do insurers use to protect themselves against catastrophic losses? a)Indemnity b)Pro rata liability c)Risk management d)Reinsurance

Reinsurance

What method do insurers use to protect themselves against catastrophic losses? a)Pro rata liability b)Risk management c)Reinsurance d)Indemnity

Reinsurance

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

Relation of earnings to insurance

What provision can reduce the disability benefit based upon the insured's current income? a)Waiver of monthly premium b)Pro rata provision c)Rehabilitation benefit d)Relation of earnings to insurance

Relation of earnings to insurance

Which of the following is NOT covered under Part B of a Medicare policy? a)Routine dental care b)Home health care c)Lab services d)Physician expenses

Routine dental care

Whenever the Commissioner has reason to believe that any person has 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.

Sooner than 21 days after the date such notice was served.

Whenever the Commissioner has reason to believe that any person has 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)Sooner than 21 days after the date such notice was served. b)Later than 21 days after the date such notice was served. c)Later than 30 days after the date such notice was served. d)Sooner than 30 days after the date such notice was served.

Sooner than 21 days after the date such notice was served.

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? a)Term health coverage b)Comprehensive care coverage c)Specified coverage d)Single indemnity protection

Specified coverage

Workers Compensation benefits are regulated by which entity? a)State government b)Employer c)Insurer d)Federal government

State government

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 if the insured had seen a PPO physician. d)The PPO will pay reduced benefits.

The PPO will pay reduced benefits.

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? a)Neither plan would pay. b)Each plan will pay in equal shares. c)The insured will have to select a plan from which to collect benefits. d)The benefits will be coordinated.

The benefits will be coordinated.

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 capital amount in monthly installments b)The principal amount in monthly installments c)The capital amount in a lump sum d)The principal amount in a lump sum

The capital amount in a lump sum

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 monthly installments b)The capital amount in a lump sum c)The principal amount in a lump sum d)The capital amount in monthly installments

The capital amount in a lump sum

Which of the following is correct regarding selecting a primary care physician in a PPO plan? a)Insureds typically pay lower out-of-pocket costs for out-of-network providers. b)Out-of-network providers may be used for an additional premium. c)The insured may choose medical providers not found on the preferred list. d)An insured must receive pre-certification prior to visiting a preferred provider.

The insured may choose medical providers not found on the preferred list.

Which of the following is correct regarding selecting a primary care physician in a PPO plan? a)Out-of-network providers may be used for an additional premium. b)The insured may choose medical providers not found on the preferred list. c)An insured must receive pre-certification prior to visiting a preferred provider. d)Insureds typically pay lower out-of-pocket costs for out-of-network providers.

The insured may choose medical providers not found on the preferred list.

Which of the following is NOT a feature of a guaranteed renewable provision? a)Coverage is not renewable beyond the insured's age 65. b)The insured's benefits cannot be reduced. c)The insurer can increase the policy premium on an individual basis. d)The insured has a unilateral right to renew the policy for the life of the contract.

The insurer can increase the policy premium on an individual basis.

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.

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

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

The insurer will return a percentage of the premiums paid.

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

The insurer will return a percentage of the premiums paid.

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

The policyowner

If a policy is rated-up, which of the following is true? a)The number of exclusions decreases. b)The number of benefits increases. c)The premium increases. d)The premium decreases.

The premium increases.

All of the following are true regarding the use of pretext interviews to obtain consumer information for an insurance transaction EXCEPT a)The insurer believes that the applicant has misrepresented material facts. b)The insurer believes that the applicant is guilty of insurance fraud in any form. c)The use of pretext interviews is never permitted. d)If there is a reasonable belief that criminal activity is involved.

The use of pretext interviews is never permitted.

An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation?a)They are not deductible. b)They are taxed as income. c)They are tax deductible. d)They are considered after-tax contributions.

They are tax deductible.

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.

They are temporary insuring agreements.

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? a)Legal Actions b)Time of Payment of Claims c)Incontestability d)Physical Exam and Autopsy

Time of Payment of Claims

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

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