Insurance Exam 2
The government is one of three primary types of insurers. Government insurance provides protections against fundamental risks. Which of the following is an example of a government insurance program? • A: Social Security
Coverage for a newborn will generally begin at what time in either an individual or group policy? • A: At birth
Which of the following statements pertaining to maintenance of an insurance producer's license is true? • A: Renewals must be submitted within at least 10 days before a producer's license expires.
Defamation occurs when • A: an individual or entity makes false, derogatory statements about an insurer's financial condition that are calculated to injure the insurer's business.
The producer must witness the insured signing the application. When premiums are collected by the producer, they must be remitted to the insurer within _____________. The producer must issue a receipt and premiums receipts must be kept on file for __________. • A: 5 business days, 5 years
Edward's license was revoked 5 years ago and now he wants to apply for reinstatement of his license. Along with the application, he must submit an affidavit that contains details of his activities since his license was revoked with all of the following EXCEPT: • A: Whether the applicant, or any business in which he owns twenty-five percent or more, has been a party to any legal or administrative proceedings
A hazard is best defined as: • A: something that increases the chance of loss.
Medicare Part C - also called Medicare Advantage Plans - came about as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Which of the following is available under the Medicare Advantage program? Private fee-for-service plans Managed care plans Preferred Provider plans A: All of the above
Bruce works as Supervisor and he also is one of his team that does pipe fitting. Bruce is interested in applying for disability coverage. In what occupational class will the underwriter place him for rating? • He will be rated as a pipe fitter, since that is the most hazardous occupation Bruce performs.
Short-term disability riders called ____________are available and provide benefits during the first 6-12 months of a claim. • A: Additional monthly benefit rider
An individual health plan must provide coverage for maternity benefits, including a minimum of __ hours of in-patient care following a vaginal delivery. • 48
All of the following actions are considered an unfair claims settlement practice EXCEPT: • A: Offering settlement options at the time of claim.
In New Jersey, a group health plan may impose a preexisting condition for which of the following: • A: 6 months for a condition, physical or mental, that the insured received a diagnosis, advice, treatment, care was rendered prior to enrollment.
All of the following actions are considered an unfair claims settlement practice EXCEPT: • A: Offering settlement options at the time of claim.
Both spouses are covered by their employer group plans for full family coverage. Based on usual guidelines, how is the order of coverage determined? • A: Primary coverage is usually determined by which parent's birthday comes earliest in the year.
All of the following types of policies will not be subject to coordination of benefits EXCEPT: • A: Group Policies
The Health Care Quality Act does all of the following EXCEPT: • A: Forbids any price increase for persons over 55
Felicia has a health policy with Exceptional Insurance Company. She is trying to understand her responsibilities as a policy holder with regard to filing a claim. She is required to do all of the following EXCEPT to properly file a claim. • A: Contact the insurance commissioner's office of consumer affairs if she is not paid within 30 days.
Marci has a disabling illness. She is recuperating at home. She has a policy that is providing her income during her recuperation. What type of policy does she most likely have? • A: Disability income policy
Health policies are written with exclusions to protect the insurer. Which of the following is not a common exclusion? • A: Injury from an accident
A vision plan will usually include benefits for all of the following Except: • A: Eye surgery
Insurers that offer insurance to people through the individual market are called private insurers. Which of the following does not fall in the private insurer category? • A: Self-insurers
One of the key features of any disability plan is the definition of what is required to be considered disabled. Mark is shopping for disability coverage. Which of the following offers him the most liberal definition of disability? • A: Unable to perform the duties of the insured's occupation
Insurers use a process called underwriting to identify the level of risk they are taking. Factors that impact the classification and rating of life risks include all of the following EXCEPT: • A: The applicant's sexual orientation
What legislation is responsible for requiring insurers to maintain standards for reporting and disclosure requirements of group health plans? • A: ERISA
Long Term Care plans are written on a: • A: Guaranteed renewable
Medicare was put in place through what mechanism? • An amendment to the Social Security law in 1965
Most dental plans require a dentist to submit a plan of treatment for dental expenses that exceed a specified dollar amount. Such as $500.00. This process is known as: • A: Pre-authorization
John wants to obtain a producer license in New Jersey. He must pass a written examination (the state licensing exam) in order to complete their producer license application. In addition he must complete an approved prelicensing course with the following time requirements. • A: Life Insurance 20 hours, Accident and Health Insurance 20 hours
The Commissioner has refused to renew Jane's producer's license. Which of the following is not a reason that he could refuse her application to renew her license? • A: Unknowingly accepting insurance business from an unlicensed insurance producer
If Department records, or information on an application or renewal form indicate that an applicant has not demonstrated the qualifications required by law, the Department is not required to - • A: Advise the Office of the Administrative Law
Upon request by any person, the Department must issue a certification of the license status of any currently licensed producer or producer licensed within the preceding ______. • A: Four years
A primary dental plan will usually cover which of the following services? • A: Cleaning, X-ray and fillings
What is the main purpose of a credit health insurance policy? • A: Pay off a creditor
Medicare Supplement policies may not exclude pre-existing conditions for more than: • A: 180 days
"Small employer" means, in connection with a group health plan, any person, firm, corporation, partnership, or political subdivision that employed an average of at least 2 but not more than __ eligible employees on business days. • A: 50
Michelle has filed her tax return for the previous tax year. She had significant medical expenses that were not reimbursed by insurance and they exceeded the 10% threshold on her adjusted gross income and she itemized the deductions. After her taxes were filed she received a check from the insurance company that reimbursed her for some of the expenses she deducted. What is the tax situation for these benefits? • Michelle should file an amended return, since reimbursed medical expenses do not count toward the 10% threshold
A cafeteria plan is designed to do which of the following: • Provide employees the flexibility to choose among available benefits to more closely meet their needs.
The Health Care Quality Act ________health insurance coverage to individuals and small employers, regardless of health status, age, claims history, or a risk factor. • A: Guarantees
An individual health insurance policy must cover all the following EXCEPT: • A: Parents for whom the insured has financial responsibility
If an agent allows his license to expire, he must do all of the following to reinstate his license EXCEPT: • A: Retake the insurance licensing examination
John is an agent for Superior Mutual Ins. He has presented a life policy to his friend, Walter, with the understanding that he will give Walter $200 out of his commission check, so he can qualify for the company trip if he buys the policy. This practice is called: • A: Rebating
Ralph is involved in an automobile accident and suffers injuries requiring hospitalization. He incurs a $4,000 bill at the hospital. He has a $500 deductible major medical with and 80/20 co-insurance. In reading the lab results from the emergency room, the insurance company finds that Ralph's blood alcohol level was well above the legal limit at the time of the accident. How much will the insurance company pay toward Ralph's hospital bill? • A: $0
Peter is covered by a hospital expense policy that has specified benefits. His plan allows $100 for daily room and board and $1,000 maximum for ancillary expenses. The surgical expense allows $500 maximum on a scheduled basis. Peter is hospitalized for 10 days with a surgeon's fee of $2,000. How much of the total expense for this hospital stay will Peter's insurance provide? The room rate is $200 and the ancillary expense is $1,500 • A: $2,500
Mandy is attempting to sell an insurance policy to her neighbor by asking him to complete and submit an application for insurance. Mandy is said to be - • A: Soliciting insurance
The Commissioner will approve the application for a business entity only if - • A: All of the above
Ed's producer's license has been revoked. He must wait _____ before applying for reinstatement and _____ before he can own any share of an insurance organization. • A: 5 years, 10 years
The New Jersey Life & Health Insurance Guaranty Association is a group of licensed insurance companies created by the legislature in 1992. All of the following are true about the association EXCEPT: • A: Only insurance companies that are incorporated in New Jersey are required to be members of the association.
A health policy will be issued with an outline of coverage. All of the following will be listed in the outline of coverage EXCEPT: • A: Contractual governing provisions
The agent must provide an outline of coverage to the applicant: • A: Upon application or policy delivery
What governmental agency operates the Fair Credit Reporting Act? • A: Federal Trade Commission.
The tendency for poorer than average risks to seek out insurance is the definition of: • A: Adverse selection.
The New Jersey Insurance Fraud Prevention Act is to prevent and reduce insurance fraud. A person can be guilty of fraud if he/she - • A: All of the above. • 1. Presents any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit knowing that the statement contains any false or misleading information. o 2. Knowingly fails to disclose the occurrence of an event which affects any person's entitlement to (a) any insurance benefit or payment or (b) the amount of any benefit or payment to which the person is entitled. • 3. Knowingly assists, conspires with, or urges any person or practitioner to violate any of the provisions of this act.
The unethical act of persuading a policy-owner to drop a policy solely for the purpose of selling another policy without regard to possible disadvantages to the policy-owner is known as - • A: Twisting
The Medicare Part D coverage gap occurs: • A: When the individual pays 58% of all generic prescription drug costs
To qualify for Medicare based on End Stage Renal Disease (ESDR) an individual must meet all of the following conditions EXCEPT: • A: Be age 65
Mrs. Conroe's policy lapsed. Her agent, Mrs. Acker, accepted her past due premiums and re-instated Mrs. Conroe's policy. This is an example of apparent authority because agents cannot usually reinstate policies. However, in this case, it was allowed. Why? • A: Mrs. Acker was allowed to accept late premiums in the past to reinstate policies.
Which of the following characterizes risk pooling? • spreading risk over a large number of people
Individuals may purchase Long Term Care Benefits from all of the following sources EXCEPT: • A: Medicare Part B
Which of the following is part of the loss of earnings test for disability? - Inability to perform duties of the insured's own occupation for 2-5 years - Inability to perform the duties of any suitable occupation A: Both of the above
Samson is reading his health policy. He is concerned that he may have inadvertently left out something about his health history that the company will use later to deny a claim. He is protected from this by which clause? The time limit for certain defenses is two years and the insurance company is obligated to pay all claims unless the insured intentionally gave fraudulent answers.
Which of the following provisions in one that recognizes rights of ownership in a policy? • A: Change of beneficiary
An insurance company whose main responsibility is to make money for its policyholders is called a: • A: Mutual insurance company
Which of the following terms is defined as the cause of loss and event insured against in an insurance policy? • `Peril.
Kathy is filling out an insurance application. Her broker has explained to her that the statements made in the application are held to a principle of _______________, which means they are not guaranteed to be true. A: Representation
Nathan is insured under a major medical plan that imposes a $500 deductible. His plan pays 80% of the balance until Nathan has incurred an out-of-pocket cost of $2,500. He has a heart by-pass procedure and the hospital bill is $45,000. How much will his insurance carrier pay toward his bill? • A: $42,000
Mr. Johnson has applied for Medicaid. Which of the following is required in order for him to be eligible for Medicaid? -He must sell his home -He must not have any income -He must not have any personal property A: None of the above
A Medicare Supplement plan is written on which of the following bases? • A: Guaranteed renewable
If Alexander buys a Medicare supplemental policy, what is the traditional probationary (waiting) period for coverage to be in effect? A: 30 Days
A condition that qualifies an insured for total disability, whether or not the insured is able to work, is called ______________. • A: Presumptive disability
Which of the following would have the greatest impact the underwriting process for risk on an individual? • A: He/she is grossly overweight
A policy will lapse when: • A: The policyholder fails to pay the premium that is due within the grace period
Medicare Supplement policies may not exclude pre-existing conditions for more than: • 180 days
A health insurer may not exclude which of the following from coverage as a preexisting condition? A newborn child who, as of the end of the 30 days following birth, is covered by creditable coverage A child who is adopted or placed for adoption before age 18 and who, at the end of the 30 days following date of adoption or placement, is coverage by creditable coverage. Pregnancy A: Any of the above
In New Jersey, if an individual has a health insurance policy that provides hospital or medical expense coverage it must also cover inpatient care for at least _________ following a modified radical mastectomy and at least _______ after a simple mastectomy. • A: 72 hours, 48 hours
Rick's grandmother has a long-term care policy (LTC). If she becomes disabled, or has a chronic disease, she can expect that it will provide benefits for nursing home, home-based care and respite care: • A: If services are provided under medical supervision
Matthew has purchased a special risk policy. Which of the following policies will fall into that category? • A: Travel Accident
With an Accidental Death & Dismemberment (AD&D) policy, the payment of a specified amount, usually a percentage of the principal sum, which varies according to the severity of the injury, is called: • A: Capital sum
Herman has been disabled in an accident. His period of disability has lasted for 9 months and he returns to work. After three months, Herman finds that he is unable to work due to complications from the same accident. The claims will most likely be handled on which of the following bases? • A: Herman will resume benefits with no interruption, since this will be considered a continuation of the same disability.
A probationary clause is one way to limit risk for the insurance company. A probationary period differs from an elimination period in which of the following ways? • A: Probationary clause is used between the effective date of policy and date coverage begins and elimination period is used for each benefit period
Susan, a licensed insurance producer in New York, wants to sell insurance in New Jersey. In order to legally sell in New Jersey she must - • A: Apply for a nonresident license and pay applicable fees
A unilateral contract is: • A: A contract that makes a promise or promises in exchange for a performance
Alexander is replacing a Medicare supplemental policy - which he has had for over 1 year - with a new policy. How long before the policy coverage is in effect? A: Immediately
All of the following acts are considered unfair trade practices EXCEPT: • A: replacement.
Insurance companies are prohibited from any of the following actions when settling a claim EXCEPT: • A: Asking the insured for additional information to make a judgment on paying a claim
All of the following are true about a Medical Expense policy EXCEPT: • A: Available on a group basis only
Prospective review for doctors most resembles what procedure for hospitals? • A: Precertification
All of the following features in a health insurance plan are designed to reduce cost and reduce premiums EXCEPT: A: Inpatient treatment
Oliver breaks his leg while on a skiing trip. When he returns home he contacts his agent to purchase a major medical policy. Oliver files a claim for the treatment on his broken leg, and the claim is declined. The claim is denied due to: • A: The pre-existing clause
All of the following provisions are mandatory under the uniform NAIC law EXCEPT: • A: Coinsurance Provision
Marta sees that her new health policy has a guaranteed premium and the company may not terminate her coverage for any reason. This type of policy is know as: • A: Non-cancellable
An exclusion that always appears in a health policy is: • A: Injury in the act of committing a felony
Both spouses are covered by their employer group plans for full family coverage. Based on usual guidelines, how is the order of coverage determined? • A: Primary coverage is usually determined by which parent's birthday comes earliest in the year.
An individual health plan may NOT be renewed under which of the following circumstances? The person is no longer a resident. The policyholder has failed to pay premiums. The policyholder has made an intentional misrepresentation of material fact. A: All of the Above
Shirley is examining her policy and wants to find out what part of the policy sets out the parameters to pay her claims in the event of a loss. Her agent suggests that Shirley should look at which clause? • A: Payment of claims
Jody's agent is explaining non-occupational and occupational policy choices to her. Which of the following is not true about these policies? • A: Social Security benefits do not impact benefit payments on either of these policies
Which of the following is not a requirement for a nonresident license in New Jersey? • A: The license requirements in the producers home state precisely match New Jersey requirements.
John has been disabled for three years. He has been released to come back to work on a part-time basis. His policy contains a partial disability provision. If he qualifies for that benefit, he will receive what percent of his pre-disability wage from disability benefits in addition to his part time salary? • A: 50%, but the total wage may not exceed his pre-disability wage
Agents always represent the insurer, not the insured, and the agents actions are considered to be the actions of the insurer. All of the following statements about agent/insurer relationship are true EXCEPT: • A: An agent can work for multiple insurers simultaneously
Joseph hurt his back and was on disability for an accident he suffered on the manufacturing floor. He was out for two months - and then returned to work. After a few days at work, it was determined that his back had not complete healed. This is known as: • A: A recurrent disability
The practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents is called: • churning.
Martin has received his new health insurance contract from his agent. He asks his agent if he can request a few changes in the contract. The agent advises Mark that this is a "take it as is or leave it" situation. With this in mind, a health insurance contract is know as: • A: Contract of Adhesion
Which of the following acts and practices is NOT considered an unfair, deceptive, misleading, or unreasonably confusing practice on the part of any licensee or insurer? • A: Selling Medicare supplement insurance policies only to people who are eligible for Medicare
Medicare Part A provides benefits for all of the following EXCEPT: • A: Outpatient drug after discharge
An individual health plan may NOT be renewed under which of the following circumstances? The person is no longer a resident. The policyholder has failed to pay premiums. The policyholder has made an intentional misrepresentation of material fact. A: All of the Above
New Jersey has a temporary disability plan available to workers in the state. All of the following are qualifications for benefits EXCEPT: • A: Benefits are payable for disabilities resulting from on or off the job sickness or injury.
A medical expense policy provides benefits for which of the following? Surgery expenses Diagnostic services In-hospital expenses A: All of the above
Not every disability is a total disability. Some disabilities are partial disabilities meaning the insured cannot perform every duty associated with his/her occupation, but can perform some of the duties. Usually accident related, sometimes a heart attack or stroke can also trigger partial disability benefits. What is the typical partial disability benefit? • A: 50% of the monthly indemnity for total disability.
Ken has a medical plan through his employer that provides a schedule of benefits and payment allowances for those benefits in his employee group certificate booklet. Ken most likely in enrolled in a: • A: Basic Surgical Expense Plan
One major concern for disability benefits is "over insurance". That means that the insured may receive more income being disabled than he/she does working full time. To limit over insurance, the insurance company will coordinate with benefits the insured receives from all of the following EXCEPT: • A: Medicaid
Which of the following terms is defined as the cause of loss and event insured against in an insurance policy? • A: Peril.
Peter is reading the terms of his policy. The renewability clauses reads, " The insurer will not refuse to renew the policy and the insurance company cannot cancel the policy. The premiums, however, may be changed by classes of insureds." This type of policy is referred to as: • A: A guaranteed renewable policy
Jeff has a disability income policy. He also has a Medicare supplement policy. How are the premiums for these policies treated on a tax basis? • Medicare supplement premiums are deductible, disability income premiums are not.
Premiums for individual health policies are not usually deductible to the individual taxpayer. However, if the total of the taxpayer's medical expense exceeds 10% of his/her adjusted gross income - all of the following can be deducted EXCEPT: • A: Disability insurance premiums
Under Medicare Part A, a spell of illness begins again and is subject to a new deductible for another admission when: • The patient has been discharged from a prior stay and 60 days have elapsed
Robert has recently celebrated his 65th birthday. He is in the process of enrolling in Medicare. He is in very good health and does not see the need to pay almost $100.00 monthly for Medicare Part B. What should he consider about delaying his enrollment? • There is a 10% per year increase in premium which is permanent
The Commissioner has many duties and responsibilities. Which of the following is not one of the duties of the Commissioner? • A: Determine matters of policy for the State
Solomon Huebner fostered the idea of human life value. In the case of health insurance, the insured is protected against all of the following EXCEPT: • A: Living too long
Joseph has advised his insurance company of a loss under his major medical policy within the 15 days required in the contract. The insurance company has not responded to his request for a claim form. Under the claims payment provision, Joseph may take the following actions: • A: He can submit a claim with a description of the loss with proof of loss in any form he chooses.
The Uniform Provisions Law requires all of the following as mandatory EXCEPT: • A: Waiver of Premium
The Commissioner may issue a temporary insurance producer license for a period not to exceed 180 days without requiring an examination to which of the following individual A: All of the Above o 1. To the surviving spouse or court-appointed personal representative of a licensed insurance producer, upon the death or disability of that producer. • 2. To a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license as responsible for the business entity's compliance with the insurance laws of New Jersey. 3. To the designee of a licensed insurance producer when the producer is entering active service in the armed forces of the United Statesls?
An insurance producer called on one of his best policyholders. The person's policies were up-to-date, the premiums were current, and coverage was sound. Yet he suggested to her that she replace one of her medical policies, indicating that the newer policy actually had broader coverage and that very likely the policy she currently owned was going to be revised by the insurer. This practice in which this producer was engaging is called: • A: churning.
Felicia Smith, an agent, is presenting a life insurance program to a prospective client. In her presentation she may do all of the following EXECPT: • A: Assure the prospect that the State Guaranty Association will make good on the policy if the company is unable to do so.
Any of the following actions will be reasons for denying a license application EXCEPT: • A: Being accused of fraudulent practices.
Group health insurance is a contract between an insurer and a group of some sort - be it an employer, a union, or some other type of group that was established to benefit its members. All of the following are true about group policies EXCEPT: • A: The policyholder is the employee
As evidence of being covered in a group medical plan the employee will receive which of the following: • A: A certificate of insurance which may contain a schedule of benefits.
Susan, a licensed insurance producer in New York, wants to sell insurance in New Jersey. In order to legally sell in New Jersey she must - • A: Apply for a nonresident license and pay applicable fees The only thing she is required to do is apply for the nonresident license and pay applicable fees
Henry has a group plan with his employer. He reads his benefit booklet and it says, "The first $10,000 of medical expenses is covered in full. After the first $10,000 is exhausted, the plan will apply a $500 deductible and additional expenses will be covered at 80%. Henry has what kind of plan? • A: A basic medical plan with a corridor deductible
Seth has a disability policy that will remain in force until age 65. The policy has wording that states "Policy can be renewed beyond age 65 if the insured is actively at work." This is a: • A: Conditionally renewable contract
Herman reads on the face of his policy that his policy is cancellable. He should be aware that: • A: The insurance company may cancel the policy with notice as specified in the policy to conform with regulations governing that transaction.
William has relocated his office. He must notify the Department of Banking and Insurance of this move within: • A: 30 days
Improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business or Intentionally misrepresenting the terms of an actual or proposed insurance contract could result in all of the following EXCEPT: • A: Granting a temporary license
Mr. Blankman intentionally left a prior medical treatment off of his insurance application, because he was embarrassed to talk about it. His failure to mention the treatment was purely embarrassment. He is not guilty of: A: Fraud
In the underwriting of insurance policies, some amount of discrimination is: • present in many cases, because of differing levels of risk.
John Abbott is an agent, and he does not completely explain the features of a health policy he replaces with new coverage. Since John is negligent in this transaction he may be subject to liability under: • Errors and omissions procedures
The producer conducts field underwriting when he/she is face-to-face with the applicant. This face-to-face interaction helps to assure that all paperwork is filled out correctly. Which of the following should a producer attempt to do when going through the application process? • Producer should issue a receipt to the applicant when he/she collects the application and the premium.
The Commissioner has suspended the license of Mr. Barker, a licensed producer. Which of the following would not be grounds for suspending a license in New Jersey? • A: Demonstrating financial responsibility in the conduct of insurance business
The unethical act of persuading a policyowner to drop a policy solely for the purpose of selling another policy without regard to possible disadvantages to the policyowner is known as - • A: Twisting
Licenses to sell insurance are granted in various categories. A _____________ is a producer who represents the insured or purchaser of insurance. • A: Broker
The waiver of premium specifies that in the event of a disability, premiums be waived. When does this rider begin? • A: At the moment of the disability
David has been issued a contract with a probationary period attached. David's agent explains that all of the following are true about the probationary clause EXCEPT: • The probationary clause is one of the 12 mandatory clauses
There are different classes of health insurance. Individual and group are classes that are distinctly different. Which of the following is a difference between individual and group policies? Individual policies are generally more expensive Group policies provide coverage for 2 or more people Group policies cover everyone regardless of risk All of the above
An insurer or agent shall provide a notice of information practices to all applicants or policyholders in connection with insurance transactions. When can this requirement be satisfied? - At the time the collection of personal information is initiated - At the time of the delivery of the insurance policy or certificate A: Both of the above
Underwriters make distinctions in rates and available policies based on applicants' ages, predicted expectation of life, health hazards, and similar principles. They consider the nature of the risk, the expense of conducting business, the propriety of the plan of insurance, and similar principles. If these are not applied equally it is - • A: Unfair discrimination
There are number of clauses in an insurance contract. One of the clauses identifies the contracting parties (the insured and the insurance company) and also the scope and limits of coverage. This clause is referred to as: • A: Insuring Clause
What is the government health insurance program that makes health insurance available to people age 65 and older? • A: Medicare.
A change of occupation provision will allow the insurance company to do any of the following at the time of claim EXCEPT: • A: Increase the premiums for that individual
When Angela submitted a claim to her insurance provider, she was behind in her premium payments. What did they do? • A: Deduct the back premiums from the claim payment
