Test 12

Question 11 of 30 Which of the following terms applies to an insurance company that operates in State A but is domiciled in State B, from the perspective of residents in State A? alien company foreign company unauthorized company domestic company

foreign company Explanation: Any company that does business in a state other than the one in which it is domiciled is classified as a foreign company in the state where it does business.

Question 17 of 30 Under the rules of agency, an insurance agent acts on behalf of which of the following? client regional office state insurance department insurer

insurer Explanation: A principal is the party on whose behalf the agent acts. An agent is the party who acts for another? this case, the insurance company

Question 26 of 30 Major medical policies have all of the following characteristics EXCEPT specified plan deductibles, coinsurance, and high maximum benefits stop-loss provisions exclusions for pre-existing conditions

specified plan Explanation: The main characteristics of major medical policies are deductibles, coinsurance, and high maximum benefits. In addition, most contain stop-loss provisions and exclusions for pre-existing conditions.

Question 25 of 30 A waiting period (also called an exclusion period) is the time that must pass before a person is eligible for coverage under the terms of a health plan. Who determines the length of the waiting period? State insurance departments determine the length of the waiting period for group health plans. Insurers determine the length of the waiting period in policies they issue. Employers and insurers determine the length of the waiting period. Employers determine the length of the waiting period.

Employers and insurers determine the length of the waiting period. Explanation: Employers and insurers, not the states, determine the length of the waiting period.

Question 24 of 30 Which of the following statements about a guaranteed renewable disability income policy is correct? The insurer can never increase the premiums. The insurer can increase the premiums once every two years only The insurer can increase the premiums only if it increases the premium for all policies in the same class. The insurer can increase the premium only if the insured makes a claim

The insurer can increase the premiums only if it increases the premium for all policies in the same class. Explanation: If a policy is noncancelable, the premiums never increase

Question 2 of 30 All of the following are true statements regarding health insurance premiums EXCEPT: A certain portion of each premium is set aside as a reserve. The expense factor is used in the computation of premiums. Interest is included with expense to compute premiums Unlike life insurance, health insurers cannot invest health insurance premiums

Unlike life insurance, health insurers cannot invest health insurance premiums Explanation: Like life insurance premiums, the insurer invests health insurance premiums to earn a return. The insurer's expected investment return is also factored into its premium rates.

Question 28 of 30 How long can the look-back period be for pre-existing conditions before the insured enrolled in a group health plan? 1 month 3 months 12 months 6 months

6 months Explanation: As a general rule, the look-back period can be no more than six months before the insured enrolled in the plan.

Question 3 of 30 Which of the following does NOT provide independent ratings of insurance companies' financial strength and claims-paying abilities? A.M. Best Duff and Phelps Moody's Securities and Exchange Commission

Securities and Exchange Commission Explanation: Duff and Phelps is a well-known insurance company rating organization. The Securities and Exchange Commission (SEC) does not provide insurance company ratings.

Question 30 of 30 What does the entire contract provision state? The policy is the contract between the insured and the insurance carrier. The policy and any outside oral or written agreements form the contract between the insured and the insurance carrier. The policy, attached riders, and endorsements make up the entire contract. The policy, attached riders, and endorsements make up the entire contract, and that only a licensed agent of the company can make any changes to the policy.

The policy, attached riders, and endorsements make up the entire contract. Explanation: The entire contract provision states that the policy, attached riders, and endorsements make up the entire contract.

Question 14 of 30 Which of the following types of health insurance benefit is paid weekly or monthly due to injury or sickness? disability insurance medical expense coverage blanket coverage scheduled coverage

disability insurance Explanation: Loss of income or disability insurance is a valued contract that pays weekly or monthly benefits due to injury or sickness. The benefit is a percentage of the insured's past earnings

Question 16 of 30 Which of the following types of medical expense coverage typically pay benefits directly to the insured? PPO HMO major medical Managed care

major medical Explanation: Major medical coverage pays benefits directly to the insured unless payment is assigned to the provider, in which case the provider is paid directly

Question 5 of 30 In some cases, employees contribute to their employer's group health insurance plans. Greg contributes to his group health plan, but his contributions are not tax deductible. What can Greg deduct? whatever premium amount is above 10 percent of his adjusted gross income plus any unreimbursed qualified medical expenses the amount of the premium, plus any unreimbursed qualified medical expenses unreimbursed medical expenses whatever premium amount is above 10 percent of his AGI less any reimbursed medical expenses

whatever premium amount is above 10 percent of his adjusted gross income plus any unreimbursed qualified medical expenses Explanation: Greg can deduct whatever premium amount is above 10 percent of his AGI plus (not less) any unreimbursed (not reimbursed) qualified medical expenses

Question 23 of 30 Nursing home care benefits under Medicare Part A last for how long? 20 days 100 days 60 days 90 days

100 days Explanation: After the first 20 days of care, the patient must pay a coinsurance amount. Beyond 100 days, no Medicare benefits are available for care in a skilled nursing facility

Question 21 of 30 All of the following are true regarding coverage of hospice care under Medicare EXCEPT: Nursing care is covered. Counseling services are covered. A deductible is required before coverage begins Drugs and occupational therapy are covered.

A deductible is required before coverage begins Explanation: The hospice benefit has no deductible requirement. Medicare pays reasonable costs of providing hospice care. However, beneficiary pays a small daily coinsurance amount.

Question 13 of 30 ABC Computers has 150 employees while Omni Computers has 25 employees. Which of the following is true if both companies apply for group health insurance coverage? Omni's employees will pay lower premiums than ABC's employees Omni's employees may be required to submit evidence of insurability while ABC's will not ABC's employees will pay lower premiums than Omni's employees. ABC's plan will be experience-rated because of the number of group members while Omni's plan will be community-rated

ABC's employees will pay lower premiums than Omni's employees. Explanation: Group health insurance contracts are issued on either an experience-rated or community-rated basis. The size of the group does not affect which rating system is used

Question 19 of 30 Which of the following statements about health insurance waiting periods is correct? All potential plan participants must have the same waiting period, regardless of their health conditions. Waiting periods and pre-existing exclusion periods do not have to run concurrently A waiting period is the time that must pass before an employer offers health benefits to its employees A waiting period is also called an elimination period.

All potential plan participants must have the same waiting period, regardless of their health conditions. Explanation: A waiting period is also called an exclusion period, not an elimination period.

Question 7 of 30 In individual medical expense insurance policies, which of the following is an effect of the guaranteed renewable provision? Guaranteed renewable coverage is usually less expensive than otherwise comparable noncancelable coverage. Guaranteed renewable coverage is generally more marketable to insureds in professional occupations. Guaranteed renewable coverage is usually more expensive than otherwise comparable noncancelable coverage. The guaranteed renewable provision cannot appear in disability income insurance policies available to all occupation classes.

Guaranteed renewable coverage is usually less expensive than otherwise comparable noncancelable coverage. Explanation: Guaranteed renewable coverage is usually less expensive than otherwise comparable noncancelable coverage, not more marketable to insureds in professional occupations.

Question 15 of 30 Which of the following best characterizes how overinsurance affects insurers? If many insurers are insuring for the same risk, it limits the ability of the insured to seek damages if the claim is ever denied lf many insurers are insuring for the same risk, the insured will receive duplicate benefits from multiple insureds. If many insurers are insuring for the same risk, it limits the liability of any one insurer's policy to the proportion of the total benefits it assumes If many insurers are insuring for the same risk, the insured may end up receiving no benefits if all insurers cancel the coverage.

If many insurers are insuring for the same risk, it limits the liability of any one insurer's policy to the proportion of the total benefits it assumes Explanation: If many insurers are insuring for the same risk, then it limits the liability of any one insurer's policy to the proportion of the total benefits it assumes.

Question 12 of 30 Which of the following is not a requirement for a risk to be insurable? Loss must be ascertainable. Loss must be catastrophic. Loss must be uncertain. Loss must present an economic hardship.

Loss must be catastrophic. Explanation: A catastrophic loss is not the determining factor. The potential loss must be ascertainable for the risk to be insurable.

Question 8 of 30 Sherry operates her business as a sole proprietor. The company buys a disability insurance policy on her to fund a buy-sell agreement in the event of her disability. It treats the premiums as a business expense. Assuming Sherry's disability, all of the following are correct statements EXCEPT: Policy premiums are tax deductible to the business. Policy proceeds may be taxable to the business. Sherry will have a capital gain on her business interest as a result of the sale. Policy proceeds are tax deductible to the business.

Policy proceeds are tax deductible to the business. Explanation: If the company did not deduct the policy premiums as a business expense, the proceeds will be taxable to the business. Sherry will have a capital gain on her business interest as a result of the sale.

Question 10 of 30 Jason wishes to make a minor change to his new health insurance contract. Which of the following can make the change? Jason Jason and the agent an executive officer of the company the state insurance commissioner, director, or superintendent

an executive officer of the company Explanation: Only an executive officer of the company can make changes to the policy

Question 27 of 30 The NAIC's model law sets forth certain optional provisions that can be included in a health insurance policy. Which of these is not one of these optional provisions? change of occupation provision misstatement of age provision incontestability provision unpaid premiums provision

incontestability provision Explanation: The time limit on certain defenses or incontestability provision is one of the NAIC's standard provisions and is not among the optional provisions.

Question 1 of 30 A continuous period of creditable coverage under a health insurance policy requires uninterrupted coverage for how long? less than 6 months no more than 63 days at least 2 months 12 months

no more than 63 days Explanation: A continuous period of creditable coverage is the period during which an individual was covered by creditable coverage without an interruption for 63 days or more.

Question 4 of 30 To qualify for an insurance agent's license, a person must have all of the following EXCEPT: a college degree a good reputation and character a licensing fee 18 years of age

a college degree Explanation: To qualify for a license, an applicant must be at 18 least years old, be of good moral character, not have been convicted of a felony or crime involving dishonesty, complete a prelicensing education program, pay the licensing fees, be a U.S. citizen (or legally authorized to work in the United States), and pass the required state examination. A criminal background check may also be required.

Question 18 of 30 Group health plans that provide medical expense coverage have a conversion privilege. All of the following statements about conversion privileges are correct, EXCEPT: The conversion privilege allows individual insureds to convert their group coverage to an individual plan with the same insurer. Insurers can evaluate the person and charge the appropriate premium for the converted coverage Insurers cannot evaluate the person and charge the appropriate premium for the converted coverage. The insurer cannot deny the person coverage even if he or she would otherwise be considered uninsurable.

Insurers cannot evaluate the person and charge the appropriate premium for the converted coverage. Explanation: Insurers can evaluate the person and charge the appropriate premium.

Question 6 of 30 Jason is a newly licensed solicitor in Ohio. For which of the following parties may he solicit insurance contracts? a licensed agent a licensed broker an insurance company an insurance agency

a licensed agent Explanation: A solicitor may solicit insurance only for a licensed and appointed agent, who is responsible for signing and submitting the applications to the insurance company.

Question 29 of 30 All of the following are common types of government health insurance plans EXCEPT Medicare Medicaid the disability program under Social Security federal workers' compensation plans

federal workers' compensation plans Explanation: Medicaid is a common type of government health insurance.

Question 22 of 30 Which of the following allows an HMO and PPO member to get medical service outside of the provider network? HMO waiver open choice rider point-of-service option PCP open choice option

point-of-service option Explanation: The point-of-service (POS) option allows insureds to see any medical provider they want, which they cannot do in a traditional HMO. In this way, the POS option returns some of the freedom of a traditional indemnity plan to the insured.

Question 9 of When collecting personal financial or health information, an insurance company is required to do all of the following EXCEPT notify individuals about the company's privacy practices. describe conditions under which the company may disclose the information to other parties. provide methods for individuals to prevent disclosure of the information. provide individuals with copies of documents disclosed to other parties.

provide individuals with copies of documents disclosed to other parties. Explanation: When collecting or using nonpublic personal financial or health information, an insurer must notify individuals about the insurer's privacy policies and practices, describe conditions under which the insurer may disclose this information to other parties, and provide methods for individuals to prevent this disclosure.

Question 20 of 30 When two or more health insurance plans cover a claimant, the order in which the plans will pay benefits depends on all of the following factors EXCEPT whether the plan covers the insured as a dependent. whether the plan is supplemental insurance. whether the incontestable period has expired. whether the insured is employed

whether the incontestable period has expired. Explanation: Factors that determine the order in which a plan will pay benefits when more than one health plan covers a claimant include whether the plan covers the insured as a dependent, whether the plan supplements other insurance, and whether the insured is employed.