Health Insurance Test #3
An insurance agent represents her: A) company. B) self. C) client. D) applicant.
Answer: A An insurance agent solicits insurance for an insurer. Agents represent the insurer and not the insured in an insurance transaction. In contrast, brokers represent the insured rather than the insurer, because a broker is not an agent of the insurer.
Major risk factors in health insurance underwriting include all of the following EXCEPT: A) physical condition. B) marital status. C) habits or lifestyle. D) occupation.
Answer: B Physical condition, habits or lifestyle (moral hazards) and occupation are major risk factors in health insurance. Marital status is not a risk factor.
A life or accident and health insurance agent's license may be issued to: A) only an individual or a corporation with officers named as sublicensees. B) a person who is at least 17 years old. C) a person, firm, or corporation. D) anyone who takes the written examination.
Answer: C A person, firm, or corporation, or any individual or entity acting as an insurance producer may receive a license to sell life or accident and health insurance.
Major risk factors in health insurance underwriting include the following EXCEPT: A) occupation. B) physical condition. C) marital status. D) lifestyle.
Answer: C The major risk factors in health insurance are physical condition, moral hazards, and occupation. Marital status is not a risk factor.
All of the following statements pertaining to risk are correct EXCEPT: A) a stock market venture is an example of a pure risk. B) pure risk involves only the chance of loss; there is never a possibility of gain or profit. C) uncertainty regarding financial loss is the definition of risk; therefore, it is characteristic of both pure and speculative risks. D) only pure risks are insurable.
Answer: A A stock market venture involves the chance of both gain and loss and is, therefore, a speculative risk. Pure risk involves only the chance of loss. Reference: 1.4.1 in the License Exam Manual.
Which of the following is NOT considered an unfair trade practice? A) Replacement. B) Coercion. C) Intimidation. D) Boycott.
Answer: A Any act of boycott, coercion or intimidation that would result in an unreasonable restraint or monopoly of insurance business is considered an unfair trade practice.
Individual health insurance policies are typically written on which basis? A) Claims rated. B) Participating. C) Experience rated. D) Nonparticipating.
Answer: D Health insurance policies may be written on either a participating or nonparticipating basis. Most individual health insurance is issued on a nonparticipating basis. Group health insurance, however, is generally participating and provides for dividends or experience rating.
State insurance departments regulate all of the following dental plans EXCEPT: A) indemnity plans. B) plans with preferred provider organizations. C) capitation plans. D) direct reimbursement plans offered through self-insured groups.
Answer: D State insurance departments regulate insurers that sell indemnity plans, capitation plans, and plans with preferred provider organizations. State insurance departments do not regulate direct reimbursement plans offered through self-funded group insurance and dental discount plans.
Which of the following is NOT an example of illegal misrepresentation? A) Making an inaccurate or incomplete entry in a record with the intent to deceive. B) Publishing a pamphlet that includes the name of an agent whose death occurred immediately after publication. C) Using a name that knowingly implies that a company is a licensed insurer when it is not. D) Promising specific amounts of future dividends when they are not guaranteed.
Answer: B Misrepresentation includes making a false entry in a record with the intent to deceive, using a name that deceptively implies that the company is a licensed insurer when it is not, and misrepresenting the terms and benefits of a policy. In every case, the intent to deceive is an element of the crime. Therefore, inadvertent inclusion of the deceased agent's name in the pamphlet, without an intent to deceive, does not rise to the level of illegal misrepresentation.
With what provision of a standard health insurance policy would the following clause be associated: "The insured and the insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium." A) Grace period provision. B) Reinstatement provision. C) Time limit on certain defenses provision. D) Cancellation provision.
Answer: B The reinstatement provision provides that when a policy lapses due to nonpayment of premium, but the insured subsequently pays the renewal premium (which the insurer accepts without requiring an application for a new policy), the policy will be reinstated with the same provisions and rights as before (with the exception of coverage for sickness-related losses within the first ten days after reinstatement).
Which of the following groups is least likely to be eligible for coverage through a group health plan? A) A professional association that wishes to provide coverage for members nationally. B) A group of neighbors who wish to insure themselves and their families. C) A college alumni association that offers coverage for member alumni. D) An automobile manufacturer that will offer coverage to its customers.
Answer: B To qualify, the members must be a natural group formed for a purpose other than to obtain insurance. As a result, families in a neighborhood will likely not qualify.
All of the following statements are correct regarding reinstatement of a sickness and accident insurance policy EXCEPT: A) the insurer's acceptance of a late premium without requiring a reinstatement application constitutes automatic reinstatement. B) the reinstatement provision must be included in every sickness and accident insurance policy. C) a reinstated policy only covers loss due to sickness for the first ten days. D) if an application is required, the policy is automatically reinstated 45 days after the application is submitted so long as the application is not approved or disapproved before that time.
Answer: C A reinstated policy covers only loss due to accidental injury for the first ten days after reinstatement, after which it covers loss from sickness as well.
Which of the following types of agent authority is specifically set forth in writing in the agent's contract? A) Implied. B) Personal. C) Express. D) Apparent.
Answer: C Express authority is the authority a principal gives to its agent. Express authority is granted by means of the agent's contract, which is the principal's appointment of the agent to act on its behalf. Reference: 3.3.3 in the License Exam Manual.
All of the following organizations may be classified as service organizations EXCEPT: A) a Blue Cross/Blue Shield organization. B) a preferred provider organization. C) a health insurance company. D) a health maintenance organization.
Answer: C Service organizations offer health insurance and health care services. A health insurance company sells only health insurance and not health care services.
In an insurance transaction, a licensed broker legally represents the: A) guaranty association. B) insurer. C) state insurance department. D) insured.
Answer: D In an insurance transaction, a licensed broker represents the insured or the beneficiary and not the insurer. Reference: 1.10.1.3 in the License Exam Manual.
Under the New York Disability Benefits Law, which of the following statements regarding disability benefits payable to an insured is CORRECT? A) No employee can be required or permitted to waive rights to benefits. B) An employer can request exemption from the New York Disability Benefits Law. C) Employees may opt out of the benefits if they prefer not to contribute to the cost of the premiums. D) Benefits provided for under the law may be denied at the discretion of the employer.
Answer: A Employees cannot be allowed to or required to waive their rights to benefits under the New York Disability Benefits Law (DBL) unless they are receiving Social Security retirement benefits. Recipients of Social Security retirement benefits may waive DBL benefits and will be excused from the employee contribution requirement.
An insurance contract is prepared by one party, the insurer, rather than by negotiation between the contracting parties. Which of the following statements explains this characteristic of insurance contracts? A) The insurance contract is a contract of adhesion. B) The insurance contract is a unilateral contract. C) The insurance contract is a conditional contract. D) The insurance contract is an aleatory contract.
Answer: A Insurance contracts are contracts of adhesion, meaning that they are prepared by one party, the insurer. They are not negotiated contracts. In effect, the applicant "adheres" to the terms of the contract when he or she accepts it.
Long-term care policies can limit or exclude coverage for all of the following EXCEPT: A) family history of heart condition. B) treatment provided in a government facility, not required by law. C) intentionally self-inflicted injury. D) preexisting conditions or diseases.
Answer: A Long-term care policies cannot exclude or limit coverage by type of illness, treatment, medical condition, or accident. They may limit or exclude preexisting conditions or diseases, intentionally self-inflicted injury, and mental or nervous disorders. Loss resulting from Alzheimer's disease, senile dementia, and other organic brains syndromes or senility diseases cannot be excluded or limited.
Which of the following may an insurer or agent offer in connection with the sale of life or accident and health insurance? A) Free medical diagnoses. B) Noncash incentives, such as travel vouchers. C) A separate agreement to provide mortgage funds to the policyowner. D) A premium rate discount.
Answer: A Medical exams, diagnoses, or nursing services offered to some or all policyholders in connection with the sale of life or accident and health insurance are not prohibited inducements to purchase insurance.
From an insurer's perspective, when a group is organized for some definite purpose other than to obtain group insurance, it is known as: A) a natural group. B) a blanket group. C) a specific group. D) a contributory group.
Answer: A When a group is organized for some definite purpose other than to obtain group insurance, it is considered a natural group, such as a company's employees or members of an association. Natural groups are those that are not formed for the purpose of obtaining group insurance. Only natural groups may be insured under a group health plan.
A Medical Savings Account consists of a(n): A) private fee-for-service plan and a savings account. B) high deductible insurance policy and a savings account. C) HMO and a separate account. D) PPO and a separate account.
Answer: B A Medical Savings Account consists of two parts: a high deductible insurance policy and a savings account. The policy pays for at least all Medicare-covered items and services after an enrollee meets the annual deductible. Medicare pays the premium for the policy and deposits the difference between the premium and the fixed amount Medicare allots for each enrollee in the individual's savings account. Reference: 16.8.5 in the License Exam Manual.
What is the minimum age at which a person may become a licensed producer? A) 16 years. B) 18 years. C) 25 years. D) 21 years.
Answer: B A person applying for a resident insurance producer license must apply to the director on either the uniform application form or a form the director has approved. To be licensed, the applicant must be at least 18 years old; not have committed an act that is grounds for license denial, suspension, or revocation; and have paid the required fees. Applicants also must have successfully passed the examinations for the lines of authority for which they have applied.
Joy, age 50, owns an individual long-term care insurance policy and pays $1,000 a year in premiums. After getting injured in a car accident, Joy needed skilled nursing care, for which her policy paid $150 a day in benefits. Which of the following statements is CORRECT? A) Joy must include all of the LTC benefits received in her income because she is younger than age 65. B) Joy can exclude all of the LTC benefits from income. C) Joy must include part of the LTC benefits received in income. D) Joy cannot take an income tax deduction for any of the LTC premiums paid.
Answer: B Amounts received under a long-term care insurance contract are treated as amounts received for personal injuries and sickness and are generally not includable in gross income. However, the amount of LTC benefits that can be excluded from income is limited to the greater of the costs incurred for qualified LTC services (less payments received for reimbursement) or $260 per day (in 2007, with increases every year). Reference: 25.3.1 in the License Exam Manual.
Which of the following is the best definition of a medical savings account (MSA)? A) Self-insurance. B) Combination of high-deductible health insurance with a savings plan. C) Combination of an HMO and a savings plan. D) Combination of low-deductible health insurance with a savings plan.
Answer: B An MSA combines high-deductible health insurance with tax-deductible contributions to a savings plan. Beginning in 2003, these accounts have been replaced by health savings accounts (HSAs). Reference: 16.8.5 in the License Exam Manual.
Accurate Data Inc. pays $5,000 a year in premiums for a disability insurance policy covering its senior vice president, David Mills. If David later becomes disabled and receives the monthly benefits under the policy: A) Accurate Data cannot take a tax deduction for the premiums paid. B) David must pay income and FICA tax on the benefits received. C) Accurate Data must pay the income and FICA tax on the benefits received. D) David will not have to pay income and FICA tax on the benefits received.
Answer: B If Accurate Data Inc. purchases a disability income policy on David Mills, who receives the monthly benefits upon becoming disabled, David must pay income and FICA tax on the benefits received (note that it is David who is receiving the benefits, not Accurate Data Inc.). However, Accurate Data can take a deduction for the premiums paid.
If a company has 2,000 employees eligible for a noncontributory group life insurance program, how many would be required to participate? A) 500.00 B) 2,000.00 C) 1,000.00 D) 1,500.00
Answer: B If a group life insurance plan is noncontributory, 100% of eligible persons must be insured.
Debbie is concerned that her health insurance coverage is inadequate. Which of the following is the best reason for her to purchase an indemnity-type medical expense policy? A) It will pay the difference between what her other insurance covers and her actual expenses. B) It will pay a specified per-day benefit. C) It will pay all or part of her deductible. D) It will pay a percentage of her coinsurance.
Answer: B Indemnity-type medical expense policies pay a flat, per-day benefit for each day the insured is hospitalized. This will help Debbie meet the noncovered expenses of her confinement.
All of the following are examples of misrepresentation EXCEPT: A) making a false entry in a record with the intent to deceive. B) telling a prospect about the amount of unused premiums that were refunded to policyowners during the past 5 years. C) using a name that deceptively implies that the company is a licensed insurer when it is not. D) promising specific amounts of future dividends when they are not guaranteed.
Answer: B It is illegal to circulate any false or misleading information about an insurance contract, insurer, or other licensee, such as assuring policyholders that they will receive specific future dividends when they are not guaranteed. It is also considered misrepresentation to make a false entry in a record with the intent to deceive and to use a name that deceptively implies that the company is a licensed insurer when it is not. However, it is not illegal to tell a prospect about the amount of unused premiums that were refunded to policyholders during previous years if the information was true.
All the following statements regarding Medicare supplement insurance policies are correct EXCEPT: A) they must provide coverage for at least 90 days of nursing home care but may require a daily co-payment. B) they may duplicate benefits provided by Medicare. C) they must conform to one of 12 standardized plans, labeled A through L. D) they must provide a minimum of 30 days from the date of delivery during which the policyowner may return the policy for a full premium refund.
Answer: B Medicare supplement policies must have a 30-day free-look period and provide standardized coverages, but they cannot duplicate benefits available from Medicare.
Under Social Security, a worker's primary insurance amount (PIA) is: A) the amount his surviving spouse will receive upon the worker's death. B) an amount equal to the worker's full retirement benefit at the full retirement age or disability benefit. C) a total of benefits received during the first year of retirement. D) larger than the combined insurance benefit payable to the worker and spouse at age 62.
Answer: B The primary insurance amount (PIA) is the amount equal to a worker's full retirement benefit at full retirement age or disability benefit. Benefits are reduced if a worker retires before age 65. Reference: 14.3 in the License Exam Manual.
The purpose of Medicare supplement insurance is to provide: A) coverage to elderly people who are not covered under a corporate plan for retired employees. B) coverage for certain expenses not fully covered by Medicare. C) coverage for certain medical expenses before the insured becomes eligible for Medicare. D) an alternative insurance plan for people who do not want to use Medicare.
Answer: B The primary purpose of Medicare supplement insurance is to augment Medicare by paying hospital, medical, or surgical expenses that Medicare does not cover because of the deductibles, coinsurance amounts, or other limitations. Medicare supplement policies cannot contain benefits that duplicate those provided by Medicare.
The insurance industry in the United States is regulated primarily by: A) the Supreme Court. B) the states. C) the president of the United States. D) Congress.
Answer: B Throughout the history of insurance in the United States, the industry has been regulated primarily by the states rather than by the federal government. The McCarran-Ferguson Act recognized that state regulation of insurance was in the public's best interest and exempted the insurance industry from the federal regulation required for most interstate commerce industries. However, it gave the federal government the right to apply antitrust laws to the extent that the insurance business is not regulated by the states. To avoid federal intervention, each state has revised its insurance laws to conform to these requirements. Reference: 2.3.2 in the License Exam Manual.
Which of the following has primary responsibility for regulating the insurance industry in the United States? A) President. B) States. C) U.S. Supreme Court. D) Congress.
Answer: B Throughout the history of insurance in the United States, the industry has been regulated primarily by the states rather than by the federal government. The McCarran-Ferguson Act recognized that state regulation of insurance was in the public's best interest and thus exempted the insurance industry from the federal regulation required for most interstate commerce industries. However, it did give the federal government the right to apply antitrust laws to the extent that insurance business is not regulated by the state. To avoid federal intervention, each state has revised its insurance laws to conform to these requirements. Reference: 2.3.1.3 in the License Exam Manual.
An example of a state-administered disability program is: A) Medigap. B) workers' compensation. C) Social Security. D) Medicare.
Answer: B Workers' compensation is an example of a state-administered disability program. Medicare is a federal social insurance program. Medigap, or Medicare supplement insurance, is a type of insurance policy offered by commercial insurers. Social Security is a federally administered program providing retirement and disability benefits. Reference: 16.12 in the License Exam Manual.
An employee is eligible to continue his health insurance under COBRA rules. Which of the following statements is CORRECT? A) He can continue the coverage for up to 36 months, even if he obtains new coverage elsewhere. B) He can increase the benefits he will receive from his plan up to 102% of his previous coverage. C) His coverage under COBRA will be identical to that which he had under his group plan. D) His coverage can be continued even if the employer terminates the entire health plan.
Answer: C An eligible employee is entitled to coverage that is identical to his previous plan. Under COBRA rules, his coverage will be terminated if he obtains insurance elsewhere. To be insured under 2 policies will violate the prohibition on gain without loss and will result in overinsurance. The actual coverage will be the same as his original plan, but the premium may be increased up to 102% of the previous rate. Coverage will end if the entire plan is terminated. Reference: 22.5.2 in the License Exam Manual.
Which one of the following may be used as a reason to cancel a long-term care policy? A) Age of the insured. B) Deterioration of the insured's mental health. C) Nonpayment of premiums. D) Deterioration of the insured's health.
Answer: C Except for nonpayment of premiums, no long-term care contracts can be cancelled. Furthermore, an insured's age or deterioration of mental or physical health cannot be the basis for an insurer's refusal to renew a long-term care contract. Reference: 24.12 in the License Exam Manual.
A third-grade teacher with a congenital hip dislocation wishes to purchase a disability income policy, but fears she will not be insurable. What option does she have to get coverage? A) She may purchase a limited policy that will cover the disability resulting from accidents that happen only at school. B) She will not receive coverage under any circumstances. C) She may purchase a policy with an extra premium to cover any disability that would involve her hip. D) She may purchase a policy if she changes her occupation to something less hazardous.
Answer: C Policy issuance alternatives may be employed to provide coverage to persons who ordinarily would be considered uninsurable. She may be issued a policy with an extra premium (rate-up) charge or with an exclusion rider that would eliminate coverage for any resulting disability related to her hip.
Which of the following riders provides for changes in the benefit payable based on changes in the Consumer Price Index? A) Social Security rider. B) Guaranteed insurability rider. C) Cost of living adjustment rider. D) Payables rider.
Answer: C The cost of living adjustment (COLA) rider allows for indexing the monthly or weekly benefit payable under a disability policy to changes in the Consumer Price Index.
Which of the following statements regarding the respite care provision under a long-term care policy is CORRECT? A) It pays a benefit to reimburse other family members who provide care for the insured. B) It pays a benefit for the insured to return home for short visits. C) It pays a benefit for a family caregiver to get away from her duties for a short period of time. D) It pays a benefit for the insured to take a break at an approved day spa or adult day care.
Answer: C The respite care provision pays the cost of either bringing in a substitute provider to the insured's home or moving the insured to a care facility for a period of time. Its purpose is to give an unpaid caregiver (such as spouse or other family member) relief from her daily duties. Reference: 24.9.8 in the License Exam Manual.
All of the following are duties of the Commissioner EXCEPT: A) enforcing insurance laws. B) determining if an insurer's rates are unfairly discriminatory. C) writing insurance laws. D) examining domestic insurers.
Answer: C The state legislature is responsible for writing insurance laws for the state. The Commissioner is responsible for implementing and enforcing those laws. Reference: 2.3.2.1 in the License Exam Manual.
Which of the following primarily regulates the insurance industry in the United States? A) National Association of Insurance Commissioners. B) President. C) States. D) Congress.
Answer: C Throughout the history of insurance in the United States, the industry has been regulated primarily by the states rather than by the federal government. The McCarran-Ferguson Act recognized that state regulation of insurance was in the public's best interest and thus exempted the insurance industry from the federal regulation required for most interstate commerce industries. However, it did give the federal government the right to apply antitrust laws to the extent that insurance business is not regulated by the state. To avoid federal intervention, each state has revised its insurance laws to conform to these requirements.
In regards to HIPAA, which of the following statements is NOT correct? A) If the new employee has gone without health insurance for more than 63 days between jobs, the waiting period for preexisting conditions can be reinstated. B) This law makes it easier for individuals to change jobs and still maintain continuous health coverage. C) Group plans can impose more than a 12-month preexisting condition exclusion for a person who sought medical advice, diagnosis, or treatment within the previous 6 months. D) For full health coverage to be immediately available to a new employee, that person must have had continuous prior coverage for a period of at least 18 months.
Answer: C Under HIPAA, group plans CANNOT impose more than a 12-month preexisting condition exclusion for a person who sought medical advice, diagnosis, or treatment within the previous 6 months. This 12-month preexisting condition exclusion cannot be applied, however, in the case of newborns, adopted children or pregnancies existing on the effective date of coverage. Reference: 22.5.1 in the License Exam Manual.
When replacement is involved, each agent must: A) provide the existing insurer with a Notice Regarding Replacement of Life Insurance. B) notify the existing insurer of the replacement. C) submit to the existing insurer a statement signed by the applicant as to whether replacement is involved. D) provide the applicant with a Notice Regarding Replacement of Life Insurance.
Answer: D An agent involved in a replacement transaction must submit to the replacing insurer a statement signed by the applicant regarding any existing life insurance. This statement usually is part of the insurance application. Both the applicant and agent must sign a Notice Regarding Replacement of Life Insurance. The agent must submit a copy of the notice and all sales materials used to the replacing insurer and must also give the applicant copies of the sales materials used.
All of the following provisions are optional in an individual health insurance policy EXCEPT: A) unpaid premium provision. B) change of occupation provision. C) misstatement of age provision. D) incontestability provision.
Answer: D An incontestability provision stating that 2 years after the date of issue, no misstatements on the application can be used to void the policy or deny a claim (except fraudulent misstatements), is a mandatory provision in all individual health insurance policies. Three optional provisions are change of occupation, misstatement of age, and unpaid premium. A change of occupation provision provides for a change in benefits or premiums if an insured changes his occupation from a high-hazard occupation to one that is less hazardous and vice versa. A misstatement of age provision provides that if the insured's age was misstated, the insured will receive the benefits that the premium paid would have purchased at the correct age. An unpaid premium provision states that when a claim is paid, any premium due and unpaid may be deducted from the claim payment. Reference: 18.4 in the License Exam Manual.
Which of the following entities is an insurer? A) Insurance policyowner. B) Insurance producer. C) Insurance broker. D) Insurance company.
Answer: D An insurer (insurance company) is any person, corporation, association, order, or society that writes insurance or annuity contracts and is subject to the state insurance code. In contrast, an insurance producer is a person, partnership, or corporation required to be licensed under the laws of the state to sell, solicit, or negotiate insurance. A broker is a producer who, for a fee, places insurance for a person. Reference: 1.7 in the License Exam Manual.
Which of the following is NOT a purpose of a state comprehensive health insurance plan? A) To provide coverage for hospitalization and medical services to eligible persons. B) To cover persons who are not eligible for Medicare. C) To offer an annually renewable policy major medical expense coverage. D) To provide unlimited major medical coverage to eligible persons.
Answer: D Coverage is usually subject to a lifetime limit per covered individual. Eligible persons are required to pay deductibles and coinsurance. The other options list common minimum benefits. A lifetime limit per covered individual usually applies.
When conducting examinations, the Commissioner of Insurance can do all of the following EXCEPT: A) administer oaths. B) require the production of records, books, papers, and any other relevant documents. C) subpoena witnesses. D) require parties to appear only in person.
Answer: D During examinations, investigations or hearings, the Commissioner of Insurance can subpoena witnesses, take depositions, administer oaths, examine people under oath, and require the production of records, books, papers, and any other documents.
All of the following are required minimum benefits in policies providing hospital coverage EXCEPT: A) comprehensive maternity care. B) 1 annual mammogram for women age 50 and older. C) coverage for hospital care for diagnosis and treatment of correctable infertility. D) coverage for nursing home care at the insured's request.
Answer: D Hospital, surgical, or medical care policies must offer maternity care, infertility treatment, and appropriate mammography.
All the following actions are considered unfair trade practices EXCEPT: A) offering a prospective applicant a pair of tickets to an upcoming concert in exchange for the purchase of a life insurance policy being considered. B) refusing to meet with a person who is seeking to buy insurance because of the neighborhood in which he lives, if the neighborhood appears to make the individual an unacceptable insurance risk. C) criticizing a competing insurance company's policy on the basis of its surrender charge without noting that the proposed policy also has a surrender charge. D) presenting a sales illustration and stating that some values shown are guaranteed under the contract.
Answer: D Inducements to buy insurance, unfair discrimination, and misrepresentation are considered unfair trade practices. Presenting a sales illustration and stating that some values are guaranteed under the contract is not an unfair trade practice if the contract actually guarantees those values.
Insured losses are covered immediately after a health policy is reinstated when: A) all back premiums have been paid. B) hospitalization is required. C) claim forms are submitted with proof of loss. D) the losses result from accidental injuries.
Answer: D Insured losses are covered immediately after a health policy is reinstated when the losses result from accidental injuries. Insured losses from sickness will not be covered unless they occur at least ten days after reinstatement. This is to prevent adverse selection against the insurer. Reference: 18.3.4 in the License Exam Manual.
All of the following are unfair claim settlement practices EXCEPT: A) not making prompt and fair settlements when liability has become reasonably clear. B) attempting to refuse a claim based on a policy application that was altered by the insurer without the insured's knowledge. C) failing to adopt reasonable standards for promptly investigating claims. D) requiring the submission of a proof of loss form before paying a claim.
Answer: D It is illegal to engage in unfair trade settlement practices, which include attempting to settle or refusing a claim based on a policy application that the insurer altered without the insured's knowledge and failing to make prompt and fair settlements when liability has become reasonably clear. It is also considered an unfair trade settlement practice to fail to adopt and implement reasonable standards for promptly investigating claims. Although it is not illegal to require submission of a proof of loss form before paying a claim, requiring both a proof of loss form and a preliminary claim report, when both contain substantially the same information, is considered an unfair trade settlement practice.
What benefits does Medicare provide for treatment in a skilled nursing care facility after 100 days? A) Coverage for diagnostic services and medical supplies only. B) Reduced coverage with a higher copayment from the insured. C) Coverage for physical and occupational therapy only. D) None.
Answer: D Medicare does not pay benefits for treatment in a skilled nursing care facility beyond 100 days.
When appropriate, the Commissioner reports a violation of insurance law to: A) the state police. B) the public health department. C) a district attorney. D) the attorney general.
Answer: D Reporting any violation of insurance law to the attorney general is considered one of the duties of the Commissioner.
What authority establishes the minimum number of persons to be insured under a group health insurance policy? A) The insurance company. B) Federal law. C) The employer. D) State law.
Answer: D State law establishes the minimum number of persons to be insured under a group health insurance policy.