L&H Chapter 4

Each of the following statements regarding noncontributory plans is correct EXCEPT? Select one: a. Each employee must be given the right to select individual benefit levels. b. All eligible employees are automatically covered. c. The employer pays for the coverage. d. The plan may use a probationary period to determine when the employee is eligible to participate in the group insurance.

A

A Hospital Indemnity Policy: Select one: a. Is an indemnity policy. b. Pays even if other insurance has already paid for the hospital stay.

A Hospital Indemnity Policy Pays even if other insurance has already paid for the hospital stay

A company may provide group insurance for each of the following EXCEPT: a. Employees who are members of a labor union b. Shareholders c. Directors d. Officers

A company cannot provide group insurance for Shareholders because they are not employees

75% of eligible employees must participate for what group plan?

Contributory

What are the Two Reasons Group Insurance is Provided at a Reduced Cost?

Fewer Medical Exams And Reduced Lapse Rate

Paul has a Group Health plan at work. His employer pays the whole premium and Paul does not have to pay anything for the coverage. What is this type of plan called? a. A noncontributory plan. b. A deferred compensation plan. c. A split dollar plan. d. A contributory plan.

Paul has a Noncontributory plan. "No Contribution"

Group Policies share what 3 characteristics?

Reduced Cost Reduced Adverse Selection Fixed Benefits

With group insurance, the Insured receives: Select one: a. An appointment letter. b. A copy of the insurance policy. c. A certificate of insurance. d. A letter of coverage.

With Group Insurance the Insured receives a Certificate of Insurance Insureds under a group policy don't own and don't receive the policy. The employer owns and receives the policy. The workers simply get a certificate of insurance indicating that they are covered. The laws refer to this as a "certificate of insurance" but in reality it is simply a membership card along with a booklet explaining the key coverages.

Which of these provides coverage only if an employee chooses to join the group? a. a contributory group policy b. a non-contributory group policy

With a contributory group, the employee isn't covered until the employee agrees to join the group and contribute at least a share of the premium.

Which of the following statements regarding a single employer group plan for a new business is CORRECT? a. Proof of insurability will not be required and the Insurer will use "community" rating. b. "Experience" rating will be used because of the group's long experience claim's history. c. The plan will always be contributory. d. Proof of insurability is always required for new enrollees

Proof of Insurability will not be required and the insurer will use Community Rating Group plans (large groups or single-employer groups) don't require proof of insurability. The Insurer assumes that workers are in reasonably good medical condition because they are employed. With a new business group, the Insurer uses will use "community" rating because the Insurer lacks the historical information needed to use "experience" rating.

In a noncontributory plan, what percentage of eligible employees will be covered under a Group Health plan? a. 0% b. 50% c. 75% d. 100%

100%

Jeanine has a Group Health plan at work. Her employer pays half of the premium each month and deducts the other half from Jeanine's paycheck. What is this type of plan called? Select one: a. A noncontributory plan. b. A contributory plan. c. A deferred compensation plan. d. A split dollar plan.

A contributory plan

Each of the following groups is eligible for group life or health insurance EXCEPT: a. government worker groups b. family groups c. employee groups d. association groups

Family Groups are not eligible for group life or group health insurance

In a noncontributory plan, what will eligible group members need to do to enroll other than complete an application? Select one: a. Prove insurability. b. Nothing. Enrollment is automatic. c. Submit an application. d. Submit the first premium.

Nothing. Enrollment is Automatic With a "noncontributory" plan, everyone is automatically covered. No need to "opt in" or "opt out" because the boss pays for everything - no money comes out of the employees' pockets.

New point, be sure to read the explanation! A Hospital Indemnity Policy's Elimination Period is applied: a. Monthly b. Every six months c. Once per year d. Once per each hospital stay

Once per each Hospital Visit To prevent Insureds from buying a Hospital Indemnity Plan for a planned hospital stay, such as for child birth, the policies usually have a 2 or 3 day Elimination Period that is applied to each hospital stay. That means that the Policy will only pay for an extended hospital stay and will only begin to pay after the 2 or 3 day Elimination Period has expired.

In a group policy situation, who receives the policy certificate? Select one: a. The Insurer b. The employer c. The employee d. The state insurance regulator

The Employee receives the policy certificate The Insured doesn't receive the master policy but the Insured does receive a certificate of coverage.

Which of the following is correct regarding an association buying group insurance? a. The group cannot be formed for the purpose of buying insurance. b. The members each receive a copy of the policy.

The Group Cannot be formed for the purpose of buying insurance The members receive a certificate, not a copy of the policy.

Who specifies the Requirements the group must meet for group insurance?

The Underwriter

An employee covered under an employer group policy will receive which written document that outlines coverage and provides evidence that group coverage is in effect? Select one: a. A certificate of insurance. b. A policy. c. A rider. d. An extension.

The employee covered under an employee group policy will receive a Certificate of Insurance The employer receives the group policy. The Certificate of Insurance is given to the employees in the group to provide a summary of the policy's coverage. Most employees don't want to read the entire policy - all they want is the summary of coverage provided by the Certificate.

In a contributory plan, at least what percentage of eligible employees must participate in the group plan? a. 0% b. 50% c. 75% d. 100%

A contributory plan requires 75% of eligible employees to participate in the group plan The laws of most states require 75% of the employees to participate in a contributory plan. We don't want all of the younger/healthier workers to "opt out" sticking the older/less healthy workers with high premiums. We need those healthy workers paying premiums but not filing claims so that reasonable premium rates will be there for the older/less healthy workers. If you think this is discrimination against the young, you are exactly right. And insurance laws are very clear that age discrimination is legal in the world of insurance.

The time period one must be employed before becoming eligible for group Disability Income or Health Insurance is known as the: a. Waiting period b. Probationary period

Probationary Period is the time period before an employee becomes eligible to purchase group ins. Waiting period is after the policy becomes effective Unfortunately, "Probationary Period" and "Waiting Period" are used rather interchangeably. Technically, a Probationary Period is the time period before an employee becomes eligible to purchase group insurance. After the policy becomes effective, there may be a further "Waiting Period" before coverage becomes effective or claims will be paid. Think of new employees who are "on probation." They won't be eligible to purchase coverage until the end of the "Probationary Period."