Chapter 1 Health insurance -health insurance basics

In underwriting a substandard risk, which of the following is INCORRECT? A Additional exclusions could be included to modify the underlying policy coverage. B A discounted premium would be charged. C The policy could be modified in the coverage or amount of coverage requested. D The applicant could be rejected for coverage.

A discounted premium would be charged. - A substandard risk is one below the insurer's standard or average risk guidelines. An individual can be rated as substandard for any number of reasons-- poor health, dangerous occupation, or dangerous avocations. Some substandard risks are rejected outright, while others will be accepted for coverage at a higher premium.

Which of the following losses will be covered by a group medical expense policy? A An injury resulting from active military duty B An intentionally self-inflicted injury C An elective cosmetic surgery D A pre-existing condition

A pre-existing condition - re-existing conditions can no longer be excluded from coverage by individual or group medical expense policies. All the other examples are exclusions from coverage.

Which of the following groups would probably be covered by blanket insurance? A A publishing company B People who obtain temporary insurance C A university's sports team D A large family

A university's sports team - A blanket policy covers members of a particular group when they are participating in a particular activity. Such groups include students, campers, passengers on a common carrier, or sports teams. Often the covered individual's name is not known because individuals come and go. Unlike group health insurance the individuals are automatically covered, and they do not receive a certificate of insurance.

The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have? A Accident-only B Restrictive C Accidental Death D Comprehensive

Accident-only - Accident-only policies cover medical benefits related to an accident. Medical conditions related to sickness are not covered.

Which term describes a situation in which people who are the most likely to have claims are also the most likely to seek insurance? A Law of large numbers B Adverse selection C Insurable interest D Double indemnity

Adverse selection - The concept of adverse selection means that the people who are most likely to have claims are also the most likely to seek insurance. This concept is used primarily in the process of underwriting, when insurers decide which applicants to cover; insurers try to minimize adverse selection as much as possible.

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

Assets. - In a replacement situation the agent must be careful to compare the benefits, limitations and exclusions found in the current and the proposed replacement policy.

A group policy used to provide accident and health coverage on a group of persons being transported by a common carrier, without naming the insured persons individually is called A Blanket Policy. B Activity policy. C Specified disease policy. D Certificate of Coverage Policy.

Blanket Policy.- A single policy covering several certificate holders without naming the insured individually is a blanket policy.

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

Comprehensive plan. - Comprehensive health plans cover all accidents and sicknesses, with the exception of those conditions specifically stated in policy exclusions. Limited health insurance covers only those conditions that are stated in the policy.

Which benefits would a disability plan most likely pay? A Medical expenses associated with a disability B Income lost by the insured's inability to work C Rehabilitation costs D Copayments

Income lost by the insured's inability to work - Disability benefits are paid to those who are unable to work as they normally would, due to an accident or illness. Benefits are designed to help the insured recover income lost as a result of the disability. The amount of benefits that an insured receives is determined by the insured's earned income and is usually limited to a certain percentage of that amount.

In franchise insurance, premiums are usually A Lower than individual policies or group policies. B Higher than individual policies or than group policies. C Higher than individual policies, but lower than group policies. D Lower than individual policies, but higher than group policies.

Lower than individual policies, but higher than group policies. - Premiums charged are generally less than for an individual policy, but more than group coverage.

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

Mental illness - Insurers cannot decline a risk based on blindness or deafness, genetic characteristics, marital status, or sexual orientation. Mental illness is part of the prospective insured's physical condition and can be used in determining the underwriting decision.

An applicant for health insurance has not had a medical claim in 5 years. He exercises daily and does not smoke or drink. What classification do you assume the applicant would receive from his insurer? A Low-risk B Standard C Superior D Preferred

Preferred - The "preferred" status indicates that an insured is in excellent physical condition and employs healthy lifestyles and habits. These individuals qualify for lower premiums than those who are in the lower categories.

Which of the following will NOT be covered under an individual health insurance policy? A The applicant's spouse B The applicant's house help C The applicant's adopted child D The applicant

The applicant's house help - Individual health policies can cover the applicant and the applicant's spouse and children. Underwriting includes all of the people who would be insured under the plan.

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

Until the disability ends or the debt is satisfied, whichever is sooner - A credit disability policy is issued only to those in debt to a specific creditor. In case of disability, payments to the creditor will be made for the insured until he or she is able to return to work.

In which of the following situations is it illegal for an insurer to disclose privileged information about a insure? A. An auditor for auditing purposes B. researcher for marketing purposes C. Department of insurance to assess legal compliance D. Law enforcement authority for law oriented purposes

researcher for marketing purposes - There are certain circumstances in which it is legal for an insurer to disclose privileged information about an insured, including law enforcement, auditing, and legal purposes.