Insurance #7

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? A. Unlimited. B. None at all. C. 1 exam per week of the claim processing period. D. 2 exams per week of the claim processing period.

A. Unlimited Physical Exam and Autopsy provision allows the insurer to examine the insured as much as is reasonably necessary while the claim is being processed, provided that the insurer pays the expenses.

Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses? A. Stop loss limit B. Out of pocket limit C. First dollar coverage D. Corridor deductible

A. Stop-loss limit Stop-loss limit is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses.

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain A) A complete physician's statement. B) A statement that is sufficiently clear to identify the insured and the nature of the claim. C) A statement from the insured's employer showing that the insured was unable to work. D) An estimate of the total amount of medical and hospital expense for the loss.

B) A statement that is sufficiently clear to identify the insured and the nature of the claim.

Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? A. 50/50 B. 75/25 C. 80/20 D. 90/10

A. 50/50 After deductible has been paid, the insurance company will pay a specified amount for a physician's visit, while the insured pays the remaining percentage. This is called "coinsurance". Plans will often be listed in a fraction format, with the first number representing the amount that will be paid by the insurer. The less the insurer must pay with coinsurance payments, the lower the premiums will be. Therefore, Ray should choose the 50/50 plan.

The free-look provision allows for which of the following? A. A right to return the policy for a full premium refund. B. Immediate coverage when application is submitted. C. A guarantee that the policy will not lapse if the premium is overdue. D. A guarantee that policy will be issued.

A. A right to return the policy for a full premium refund. The free-look period is a mandatory provision found in health insurance policies that allows the applicant to examine the policy and if dissatisfied for any reason, return the policy for a full refund.

What type of policy allows the insurance company to cancel a policy at any time? A. Cancellable B. Renewable C. Guaranteed renewable D. Non-cancellable

A. Cancellable

A guaranteed renewable disability insurance policy A. Is renewable at the insured's option to a specified age. B. Is renewable at the option of the insurer to a specified age of the insured. C. Is guaranteed to have a level premium for the life of the policy. D. Cannot be cancelled by the insured before age 65.

A. Is renewable at the insured's option to a specified age. Guaranteed renewable means that the insured has the right to keep the policy until a specific age; however, while the insurer cannot increase the rates on an individual basis, the insurer can increase the rates for all insureds by class.

An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. on march 19, she had an accident and broke her leg. The insurance company would A. Pay the claim. B. Hold the claim as pending until the end of the grace period. C. Deny the claim. D. Pay half of her claim because the insured has an outstanding premium.

A. Pay the claim. Because the accident occurred during the grace period, the insurance company will pay the claim.

A guaranteed renewable health insurance policy allows the A. Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. B. Policyholder to renew the policy to a stated age and guarantees the premium for the same period. C. Policy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term. D. Insurer to renew the policy to a specified age.

A. Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. Coverage is guaranteed, but rates can be adjusted for the entire class.

An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy? A. The insured is in an accident and incurs a large claim. B. The insured does not pay the premium. C. The insured reaches the maximum age limit specified in the policy. D. Within two years of the application, the insurer discovers a misrepresentation.

A. The insured is in an accident and incurs a large claim. The company may not cancel coverage due to covered claims. All the rest are allowable reasons for an insurer to terminate the contract.

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees... A. To renew the policy until the insured has reached age 65. B. To charge a lower premium every year the policy is renewed. C. Not to change the premium rate for any reason. D. To renew the policy indefinitely.

A. To renew the policy until the insured has reached age 65. The guaranteed renewable provision is similar to the non-cancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. As with the non-cancellable policy, coverage is generally not renewable beyond the insured's age 65.

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the A) Legal action against us clause. B) Entire contract clause. C) Time limit on certain defenses clause. D) Incontestability clause.

B) Entire contract clause. Entire contract is a mandatory provision that is required by law.

When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. Which of the following statements correctly explains how this claim would be handled? A) The insurer may deny the claim since it was not notified within the required 20-day time frame B) The insured is considered to be notified since the notification to the agent equals notification to the insurer C) The insurer may delay the payment of this claim for up to 6 months D) The insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner

B) The insured is considered to be notified since the notification to the agent equals notification to the insurer

L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? A. $2,500 (the entire bill) B. $900 (deductible + 20% of the bill after the deductible [20% of $2,000]). C. $500 (amount of deductible) D. $1,000 (deductible + 20% of the entire bill).

B. $900 (deductible + 20% of the bill after the deductible [20% of $2,000]) L would first pay the $500 deductible; out of the remaining $2000, the insurer will pay 80% (1,600) and the insured will pay 20% (400)

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

B. 10 days The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision A. Because the misstatement occurred more than 2 yrs ago, it has no effect. B. Amounts payable under the policy will reflect the insured's correct age. C. The contract will be deemed void because of the misstatement of age. D. The elimination period will be extended 6 months for each year of age misstatement.

B. Amounts payable under the policy will reflect the insured's correct age. If an insured misstates his or her age upon policy application, the optional misstatement of age provision will change the payable benefit to that which would have been purchased at the insured's actual age.

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 Most medical expense policies will not cover expenses for dental care, self-inflicted injuries, or injuries incurred as a result of military service (among other exclusions). Most policies include coverage for dependents.

Insured Z's health insurance policy year begins in January. His policy contains a carry-over provision. In November, he has a small claim which is less than his deductible. Which of the following is true? A. The insured must satisfy this year's deductible, but next year's deductible will begin when or if he makes a claim in the following calendar year. B. The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible. C. The deductible will be waived. D. The insured is now eligible for an integrated deductible until the new policy year.

B. The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible. Under the carry over provision, if the insured did not incur sufficient medical costs during the year to meet the deductible, any medical expenses incurred during the last three months may be carried forward to the next year, offsetting the total deductible costs for that year.

Which of the following statements is most correct concerning the changing of an irrevocable beneficiary? A. They may be changed only on the anniversary date of the policy. B. They can be changed only with the written consent of that beneficiary. C. They may be changed at any time. D. They can never be changed.

B. They can be changed only with the written consent of that beneficiary.

Which provision states that the insurance company must pay Medical Expense claims immediately? A. Relation of Earnings to Insurance B. Time of Payment of Claims C. Payment of Claims D. Legal Actions

B. Time of Payment of Claims The Time Payment of Claims provision requires that claims will be paid immediately upon receipt of proofs of loss except for periodic payments, which are to be paid as specified in the policy.

Which of the following entities has the authority to make changes to an insurance policy? A. Producer B. insurer's executive officer C. Department of Insurance D. Broker

B. insurer's executive officer Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within A. 30 days of a loss. B. 60 days of a loss. C. 90 days of a loss. D. 20 days of a loss.

C. 90 days of a loss. Under the Uniform Required Provisions, proof of loss under a health insurance policy normally should be filed within 90 days of a loss.

Which of the following does the Insuring Clause NOT specify? A. The insurance company B. The name of the insured C. A list of available doctors D. Covered perils

C. A list of available doctors. The Insuring Clause lists the insured, the insurance company, what kind of losses are covered, and for how much the losses would be compensated.

A deductible is A. An insurer's obligation to the service provider. B. A nominal fee for the use of an insurer's services. C. A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits. D. A percentage of the medical bill the insured must pay before services will be rendered.

C. A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits. The purpose of a deductible is to have the insured absorb the smaller claims, while the coverage provided under the policy will absorb the larger claims. The higher the deductible, the lower the premium.

Items stipulated in the contract that the insurer will not provide coverage for are found in the A. Benefit Payment clause. B. Consideration clause. C. Exclusions. D. Insuring clauses.

C. Exclusions. Exclusions are restrictions of coverage as stated in the policy.

The provisions 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

C. Legal actions This mandatory provision requires that no legal action to collect benefits may be started sooner than 60 days after proof of loss is filed with the insurer. This gives the insurer time to evaluate the claim.

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policy owner? A. Entire Contract Clause B. Proof of Loss C. Payment of Claims D. Change of beneficiary

C. Payment of Claims The Payment of Claims provision states that the claims must be paid to the policy owner, unless the death proceeds need to be paid to a beneficiary.

Insurers may change which of the following on a guaranteed renewable health insurance policy? A. Individual rates B. No changes are permitted C. Rates by class D. Coverage

C. Rates by class On a guaranteed renewable health insurance policy, the insurer may increase premiums on a class basis only and not on an individual policy.

An insured has endured multiple surgeries and hospitalizations for an illness during the summer months. Her insurer no longer bills her for medical expenses. What term best describes the condition she has met? A. Maximum Loss Threshold B. Maximum Loss C. Stop-Loss limit D. Out-of-Pocket Limit

C. Stop-Loss limit A "Stop-Loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses.

An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand written letter to the insurer. Which of the following would be true? A. The insurer will be fined for not providing the claims forms. B. The insured must submit proof of loss to the department of insurance. C. The insured was in compliance with the policy requirements regarding claims. D. The claim most likely will not be paid since the official claims forms was not submitted.

C. The insured was in compliance with the policy requirements regarding claims. If claims forms are not furnished to the insured, the claimant is deemed to the complied with the requirements of the policy if he or she submits written proof of the occurrence, nature of the loss, and extend out the last of the insurer.

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.

C. The insurer can increase the policy premium on an individual basis. Guaranteed renewable provision has all the same features that the non-cancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.

Which of the following statements is true regarding coinsurance? A. The smaller the percentage that is paid by the insured, the lower the required premium will be. B. The smaller the percentage that is paid by the insured, the more consistent the required premium will be. C. The larger the percentage that is paid by the insured, the lower the required premium will be. D. The larger the percentage that is paid by the insured, the higher the required premium will be.

C. The larger the percentage that is paid by the insured, the lower the required premium will be. After the insured satisfies the policy deductible, the insurance company will usually pay the majority of the expenses -- typically 80% -- with the insured paying the remaining 20%. Other coinsurance arrangements exits, such as 90%/10%, 75%/25%; or 50%/50%. When the insured retains a larger share of the risk, they will pay a lower premium.

Which of the following is true regarding elimination periods and the cost of coverage? A. The longer the elimination period, the higher the cost of coverage. B. Elimination periods have no effect on the cost of coverage. C. The longer the elimination period, the lower the cost of coverage. D. The shorter the elimination period, the lower the cost of coverage.

C. The longer the elimination period, the lower the cost of coverage. The "elimination period" is a period of days which must expire after the onset of an illness or occurrence of an accident before before benefits will be payable. The longer the elimination period is, the lower the cost of coverage will be.

Which of the following will vary the length of the grace period in health insurance policies? A. The length of time the insured has been insured. B. The term of the policy. C. The mode of the premium payment. D. The length of any elimination period.

C. The mode of the premium payment. The grace period is 7 days on a policy with a weekly premium mode; 10 days if a monthly premium mode; 3 days on other premium modes.

What is the purpose of coinsurance provisions? A. To ensure payment to the doctors and hospitals. B. To share liability among different insurance companies. C. To help the insurance company to prevent over-utilization of the policy. D. To have the insured pay premiums to more than one company.

C. To help the insurance company to prevent over-utilization of the policy. The purpose of the coinsurance provision is for the insurance company to control costs and discourage over-utilization of the policy.

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. Benefit schedule B. Gatekeepers C. Usual, customary and reasonable. D. Relative-value schedule

C. Usual, customary and reasonable. The usual, customary and reasonable approach for determining insurance benefits is based upon the fess normally charged for specific procedures in the geographic location where the services are provided.

If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following? A. Cancel the policy B. Increase the premium C. Exclude coverage for on-the-job injury D. Adjust the benefit in accordance with the increased risk.

D. Adjust the benefit in accordance with the increased risk. A part of the premium rating concerns the hazard of occupation.

The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's A. Assumed age B. Average age C. Issue age D. Attained age

D. Attained age The premium charged for the increase will be based upon the attained age of the isnured.

The provision that provides for the sharing of expenses between the insured and the insurance company is A. Stop-loss. B. Deductible. C. Divided cost. D. Coinsurance.

D. Coinsurance. The larger the % that is paid by the insured, the lower the required premium will be.

A waiver of premium provision may be included with which kind of health insurance policy? A. Basic medical B. Hospital indemnity C. Dread disease D. Disability income

D. Disability income A waiver of premium rider generally is included with guaranteed renewable and non-cancellable individual disability income policies. it is a valuable provision because it exempts the insured from paying the policy's premium during periods of total disability.

Which of the following riders would NOT increase the premium for a policy owner? A. Payor benefit rider B. Waiver of premium rider C. Multiple indemnity rider D. Impairment rider

D. Impairment rider Impairment rider excludes a specified condition from coverage, therefore, reducing benefits. An insurance company will not charge extra for a rider that reduces benefits.

In respect to the consideration clause, which of the following is consideration on the part of the insurer? A. Offering a secondary policy to the applicant. B. Offering an unconditional contract. C. Explaining policy revisions to the applicant. D. Promising to pay in accordance with the contract terms.

D. Promising to pay in accordance with the contract terms.

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees A. To charge a lower premium every year the policy is renewed. B. Not to change the premium rate for any reason. C. To renew the policy indefinitely. D. To renew the policy until the insured has reached age 65.

D. To renew the policy until the insured has reached age 65. The guaranteed renewable provision is similar to the non-cancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. As with the non-cancellable policy, coverage is generally not renewable beyond the insured's age 65.

According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT A. The insurer must provide the insured with written notice of the cancellation. B. Claims incurred before cancellation must be honored. C. An insurance company may cancel the policy at any time. D. Unearned premiums are retained by the insurance company.

D. Unearned premiums are retained by the insurance company. This rider allows the insurer to cancel the policy at any time, or at the end of the policy period. Any unearned premium must be returned to the policyholder. If the insurer cancels, the unearned premium will be returned on a pro rata basis.

An insured misstates her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued? A. deny any claims and cancel the policy. B. deny paying a claim based on misrepresentation. C. pay the full amount of a claim because the contestable period has ended. D. adjust the claim benefit to reflect the insured's true age

D. adjust the claim benefit to reflect the insured's true age

What statement best describes the free look provision? A.

It allows the insured to return the policy within 10 days for a full refund or premiums if dissatisfied for any reason