PASS THAT TEST

Which of the following is NOT an exclusion in medical expense insurance policies? A) Chiropractic care B) Well baby care C) Hearing aids D) Routine dental care

A) Chiropractic care

A Health insurance policy lapses but is reinstated within an acceptable time frame. How soon from the reinstatement date will coverage for accidents become effective? A) Immediately B) After 14 days C) After 31 days D) After 31 days

A) Immediately

An insured submitted a notice of claim to the insurer, but never receive 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 insured was in compliance with the policy requirements regarding claims B) The claim most likely will not be paid since the official claims for m was not submitted. C) The insurer will be fined for not providing th claims forms D) the insured must submit proof of loss the Department of Insurance

A) The insured was in compliance with the policy requirements regarding claims

How is emergency care covered for a member of an HMO? A) A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area. B) A member of an HMO may receive care at any emergency facility, at the same cost as if in his or her own service area. C) HMOs have salaried member physicians, but they do not cover emergency care. D) An HMO emergency specialist will cover the patient.

A. A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area. Emergency care must be provided for the member in or out of the HMO's service area. If emergency care is being provided for a member outside the service area, the HMO will be eager to get the member back into the service area so that care can be provided by salaried member physicians.

An insured paya 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 days

B) 10 days

After appointing an agent, how long does an insurer have to file with the Commissioner the form detailing the agent's name, address, and other needed information? A) 15 days B) 30 days C) 45 days D) 60 days

B) 30 days Insurers have 30 days to file, in a form prescribed by the Commissioner, the names, addresses, and other information required by the Commissioner for its newly appointed agents.

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 physicians 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

Sally purchases an individual Health insurance policy on September 1. On September 7 her doctor informs her that she is four month pregnant. Her coverage will most likely pay A) All expenses B) All expenses except those related to the pregnancy C) Only expense related to the pregnancy D) Nothing

B) All expenses except those related to the pregnancy

All of the following are true regarding Key Employee Disability Income insurance EXCEPT A) Premiums are not tax deductible for the employer. B) Benefits are taxable to the employer. C) The employer owns the policy. D) Benefits are paid to the employer to retrain a new person.

B) Benefits are taxable to the employer. Key person disability income premiums are not deductible to the business, but the benefits are received income tax free by the business.

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained inthe 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.

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

B) Policyholder to renew the policy to state age, with the company having the right to increase premiums on the entire class

Which is true regarding the Uniform Individual Accident and Sickness Policy Provision Law? A) There are twelve optional policy provisions. B) Provisions may be reworded by the insurer C) The purpose of the provision is to define the right of the policyholder; there is a separate law outlining the rights of insurers D) There are ten mandatory provisions

B) Provisions may be reworded by the insurer

An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary? A) Irrevocable B) Revocable C) Primary D) Contingent

B) Revocable

Which of the following terms describe the specified dollar amount beyond which the insured no longer participates in the sharing of expenses? A) Maximum Loss B) Stop-Loss Limit C) Out-of-Pocket Limit D) Maximum Loss Threshold

B) Stop-Loss Limit

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 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 atimely manner

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

Which of the following is NOT a feature of a guaranteed renewable provision A) The insured's benefits cannot be reduced B) The insurer can increase the policy premium on an individual basis C) The insured has a unilateral right to renew the policy for the life of the contract. D) Coverage is not renewable beyond the insured's age 65..

B) The insurer can increase the policy premium on an individual basis

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) 80/20 B) 90/10 C) 50/50 D) 75/25

C) 50/50

All of the following are correct about the required provisions of a health insurance policy EXCEPT A) A grace period of 31 days if found in annual pay policy B) The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract C) A reinstated policy provides immediate coverage for an illness. D) Proof-of-loss forms must be sent to the insured within 15 days of notice of claim

C) A reinstated policy provides immediate coverage for an illness.

The provision which states that both the printed contract and a copy of the application for the contract between the policyowner and the insurer is called the A) Aleatory contract B) Complete contract C) Entire contract D) Total contract

C) Entire contract

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

C) Insurer's executive officer

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

C) Is renewable at the insured's option a specified age

Under an individual disability policy, the MINIMUM schedule of time which claim payments must be made to an insured is A) Weekly. B) Biweekly C) Monthly D) Within 45 days

C) Monthly

Marsha pays her Major Medical Insurance annually on March 1, each year. Last Marsh she forgot to mail her premium to the company. On March 19, Marsha had an accident and broke her leg. Her insurance company would A) Deny the claim B) Pay half of her claim because she had an outstanding premium C) Pay the claim D) Hold the claim as pending until the end of the grace period.

C) Pay the claim

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

C) They can be changed only with the written consent of that beneficiary

While a claim is pending, an insurance company may require A) The insured to be examined only within the first 30 days. B) The insured to be examined only once annually C) An independent examination only once every 45 days D) An indpendent examination as often as reasonably required

D) An indpendent examination as often as reasonably required

What is the purpose of coinsurance provisions? A) To have the insured pay premiums to more than one company. B) To let insurance companies share the income from the premiums thy get paid. C) To split liability among different insurance companies D) For the insurance company to prevent overtutilization of the policy

D) For the insurance company to prevent overtutilization of the policy

What provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss? A) Loss Notification B) Claims Initiation C) Consideration D) Notice of Claim

D) Notice of Claim

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

D) Payment of Claims

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

D) The insured is in an accident and incurs a large claim

Which of the following is NOT a feature of a noncacncellable policy? A) The premiums cannot be increased beyond the amount stated in the policy. B) The guarantee to renew coverage usually applies until the insured reaches certain age. C) The insured has the right to renew the policy for the life of the contract D) The insurer may terminate the contract only at renewal for certain conditions

D) The insurer may terminate the contract only at renewal for certain conditions

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

D) The mode of the premium payment

A policy with a 31-day grace period implies A) The policyholder has a 31-day free look B) The policy lapses if premium is not paid 31 days before it is due C) If something happens within 31 days of the policy issue, the insurer will not pay D) The policy continues for 31 days if premiums are not paid

D) The policy continues for 31 days if premiums are not paid

A dentist is off work for 4 months due to a disability. His dental assistant's salary would be covered by? a). Business Overhead Insurance b). Disability Income c). Key Employee Disability d). Partnership Disability

a). Business Overhead Insurance Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It will provide the funds needed to pay the salary of employees other than the owners and their ongoing business expenses, such as rent.

During policy solicitation, an insurer exaggerates the financial condition of one of it's competitors, and makes it sound worse than it is. This is an example of an unfair trade practice of? a). Defamation b). Twisting c). False advertising d). Misrepresentation

a). Defamation

Which of the following best describes a presumptive disability? a). One that is severe enough that the insured automatically qualities for full disability benefits b). One that requires the insured to submit to physical exams periodically c). One that a doctor predicts may reoccur in the future d). One that the insured will fully recover from in the future

a). One that is severe enough that the insured automatically qualities for full disability benefits A presumptive disability is a continuing total disability that is presumed in cases involving loss of sight, hearing, speech or the loss of any two limbs. Under these circumstances, the insurance company does not require the insured to submit to periodic examinations to prove continuing disability.

All of the following would be classified as "limited insurance coverage" EXCEPT a). Supplement Social Security coverage b). Travel insurance policy c). Dread disease policy d). Accidental death and dismemberment policy

a). Supplement Social Security coverage Supplement Social Security coverage is a rider to a disability policy.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within a)90 days of a loss. b)20 days of a loss. c)30 days of a loss. d)60 days of a loss.

a)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.

An insured misstated 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)Adjust the claim benefit to reflect the insured's true age b)Deny any claims and cancel the policy c)Deny paying a claim based on misrepresentation d)Pay the full amount of a claim because the contestable period has ended

a)Adjust the claim benefit to reflect the insured's true age The Misstatement of Age provision says that if a client has misstated her age, whether intentional or unintentional, they will adjust the benefit being paid. It doesn't matter when the mistake was found.

According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level? a)Death of a spouse b)Age 40 c)Marriage d)Birth of a child

a)Death of a spouse The FIO rider allows insureds to increase their benefit levels to certain amounts at specific times without proof of insurability. The following are the typical occasions when an insurer allows for a benefit increase: ages 25, 28, 31, 34, 37 and 40; marriage; and the birth of a child.

Which of the following is NOT true of a major-medical health insurance policy? a)It is designed to pay on a first dollar of expense basis. b)It usually has a maximum benefit amount. c)The benefits are subject to deductibles. d)It is designed to cover hospital and medical expenses of a catastrophic nature.

a)It is designed to pay on a first dollar of expense basis. A major medical policy usually has deductibles and a copayment requirement. Basic medical, but not major medical, expense policies pay on a first dollar basis.

Which of the following are the main factors taken into account when calculating residual disability benefits? a)Present earnings and earnings prior to disability b)Earnings prior to disability and the length of disability c)Employee's full-time status and length of disability d)Present earnings and standard cost of living

a)Present earnings and earnings prior to disability Residual disability will help pay for loss of earnings by making up the difference between the employee's present earnings and what they were earning prior to disability.

Social Security Supplement (SIS) or Social Security Riders would provide for the payment of income benefits in each of the situations below EXCEPT a)When the amount payable under Social Security is more than the amount payable under the rider. b)When used to replace or supplement benefits payable under other social insurance programs. c)When the insured is eligible for Social Security benefits but before the benefits begin. d)If the insured has been denied coverage under Social Security.

a)When the amount payable under Social Security is more than the amount payable under the rider. These riders provide benefits when the amount payable under Social Security is less than the amount payable under the rider (in this case only the difference will be paid).

A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses? a)"Any occupation" - more restrictive than other definitions b)"Own occupation" - less restrictive than other definitions c)"Own occupation" - more restrictive than other definitions d)"Any occupation" - less restrictive than other definitions

b)"Own occupation" - less restrictive than other definitions In theory, the brain surgeon could find other work, but because her disability income policy specifies that she is covered for her own occupation, she would be wholly covered.

The commissioner has refused to issue a candidate's license for failure to fully meet the licensing requirements. If the candidate believes the Commissioner's decision is in error, she make a written demand for a review to determine the reasonableness of the Commissioner's action within how many days of the service of the notification? a). 10 days b). 30 days c). 45 days d). 60 days

b). 30 days Within 30 days after the service of the notification, the applicant may make a written demand for a review

Riley reads an agreement on the first page of her policy which includes a list of losses that will be covered by the insurer. What is the name of this agreement? a). Consideration Clause b). Insuring Clause c). Coverage Provisions d). Statement of Loss Coverage

b). Insuring Clause The Insuring Clause lists the insured, insurance company, what kind of losses are covered, and how much the losses would be compensated.

Insured have the right to do which of the following if they have not received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy? a). Speak with a claims adjuster or another representative from the insurance company b). Submit the description in their own words on a plain sheet of paper. c). Be reimbursed any copayment or deductible on the claim d). Demand full payment immediately for the claim

b). Submit the description in their own words on a plain sheet of paper. Insureds have the right to submit the description in their own words on a plain sheet of paper if a proper form is not supplied. This is a mandatory provision in all individual health insurance policies

An agent who knowing misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as a). Misrepresentation b). Twisting c). Fraud d). Concealment

b). Twisting This is the definition of twisting, which is an unfair trade practice.

Under the mandatory uniform provision "Notice of Claim" written notice of a claim must be submitted to the insurer within what time parameters? a). Within 10 days b). Within 20 days c). Within 30 days d). Within 60 days

b). Within 20 days The mandatory provision requires the insured to give the insurer, or it's agent, written notice of a claim within 20 days of the loss or as soon as reasonably possible. If the nature of disability is such that the insured is legally incapacitated, this requirement is waived

An employee that becomes ineligible for group coverage because of termination of employment or change in status, must exercise extension of benefits under COBRA a). Within 10 days b). Within 60 days c). Within 30 days d). Before termination is complete

b). Within 60 days The terminated employee must exercise extension of benefits under COBRA within 60 days of separation from employment

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 days

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.

A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay? a)10 days b)15 days c)25 days d)45 days

b)15 days A probationary period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days.

Which of the following disability income policies would have the highest premium? a)15-day waiting period / 5-year benefit period b)15-day waiting period / 10-year benefit period c)30-day waiting period / 10-year benefit period d)30-day waiting period / 5-year benefit period

b)15-day waiting period / 10-year benefit period The waiting, or elimination, period is the time from the onset of disability the insured must wait before becoming eligible for benefits. The shorter the waiting period, the higher the premium. After the insured satisfies the waiting period, they will receive benefits from the insurer for a limited benefit period. The longer the benefit period, the higher the premium. A disability income policy that includes the shortest waiting period and the longest benefit period would be most expensive.

What is the maximum age for qualifying for a catastrophic plan? a)26 b)30 c)45 d)62

b)30 Young adults under age 30 and individuals who cannot obtain affordable coverage (have a hardship exemption) may be able to purchase individual catastrophic plans that cover essential benefits.

Which of the following will NOT be considered unfair discrimination by insurers? a)Assigning different risk classifications to applicants based on gender identity b)Discriminating in benefits and coverages based on the insured's habits and lifestyle c)Charging applicants with similar health histories different premiums based on their ethnicity d)Cancelling individual coverage based on the insured's marital status

b)Discriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)An offer to share in commissions generated by the sale. b)Dividends from a mutual insurer. c)An offer of employment. d)Stocks, securities, or bonds.

b)Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of a)Rebating. b)Misrepresentation. c)Concealment. d)Unfair claim practice.

b)Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.

When an individual is covered under two health insurance policies that have duplicate benefits which could make a claim for benefits because of an injury or illness profitable, it is called a)Pro-rata coverage. b)Overinsurance c)Double indemnity coverage. d)Fraternal coverage.

b)Overinsurance Overinsurance is a term used to describe the situation that is created when an individual purchases duplicating coverage with the intent to collect from each policy for a single loss.

All of the following are true regarding key person disability income insurance EXCEPT a)The employee is the insured. b)Premiums are tax deductible as a business expense. c)The employer receives the benefits if the key person is disabled. d)The employer pays the premiums.

b)Premiums are tax deductible as a business expense. In key person disability insurance, the contract is owned by the business, the premium is paid by the business, and the business is the beneficiary. The key person is the insured, and the business must have the key person's consent to be insured in writing.

An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? a)The group plan will pay depending on the employee's recovery. b)The group plan will not pay because the employee was injured at work. c)The group plan will pay. d)The group plan will pay a portion of the employee's expenses.

b)The group plan will not pay because the employee was injured at work. Because the employee's injuries were work related, the group health policy would not respond. The insured would have to rely on worker's compensation for coverage.

In which of the following situations would Social Security Disability benefits NOT cease? a)The individual has undergone therapy and is no longer disabled b)The individual's son gets a part-time job to help support the family c)The individual reaches age 65 d)The individual dies

b)The individual's son gets a part-time job to help support the family Benefits cease when the individual reaches age 65, dies, or is no longer disabled. If a person has been receiving Social Security disability benefits at the time that he or she turns age 65, the disability benefits cease, and are replaced by Social Security retirement benefits. At death, family benefits will continue as survivor benefits. Benefits will continue for an adjustment period of three months if an individual no longer satisfies the definition of disability.

Which of the following is NOT a feature of a noncancellable policy? a)The insured has the right to renew the policy for the life of the contract. b)The insurer may terminate the contract only at renewal for certain conditions. c)The premiums cannot be increased beyond the amount stated in the policy. d)The guarantee to renew coverage usually applies until the insured reaches certain age.

b)The insurer may terminate the contract only at renewal for certain conditions. The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract; however, the guarantee to renew coverage usually only applies until the insured reaches age 65.

When employees are actively at work on the date coverage can be transferred to another insurance carrier, what happens to coinsurance and deductibles? a)Deductibles carry over, but coinsurance is generally higher. b)They carry over from the old plan to the new plan. c)They have to be re-evaluated. d)Coinsurance carries over, but deductibles are generally higher.

b)They carry over from the old plan to the new plan. Coinsurance and deductibles may be carried over from the old plan to the new plan. The purpose of coinsurance and deductible carryover provisions is to credit expenses incurred so as to not penalize the insured.

All of the following identify purposes of the Insurance Information and Privacy Act EXCEPT a)To limit the disclosure of information collected in connection with insurance. b)To establish fair and marketable advertisement procedures. c)To establish standards for collection, use and disclosure of information. d)To minimize intrusiveness of insurance collection practices.

b)To establish fair and marketable advertisement procedures. Advertisements do not fall under the Insurance Information and Privacy Act.

Which characteristic does NOT describe managed care? a)Preventive care b)Unlimited access to providers c)High-quality care d)Shared risk

b)Unlimited access to providers There are five distinguishing features of managed care: controlled access to providers, comprehensive case management, risk sharing, preventive care, and high-quality care.

All of the following could qualify as a group for the purpose of purchasing group health insurance EXCEPT a). Single employer with 14 employees b. An association of 35 people c). Labor union d). Multiple employer trust

b. An association of 35 people Group insurance may be issued to employer. employee, or other groups that are together for a purpose other than purchasing insurance

The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses? a)$10,000 b)$25,000 c)$50,000 d)$75,000

c)$50,000 The proprietors of a business may deduct the cost of a medical expense plan because they are considered to be self-employed individuals instead of employees. The deduction cannot legally exceed the taxpayer's earned income for the year even if the cost of the medical expense plan exceeds this amount (in this scenario, $50,000).

All of the following are features of a health insurance plan purchased on the health insurance marketplace EXCEPT a). Coverage for emergency services b). Coverage for pre-existing conditions c). Dollar limits on essential benefits d). Guaranteed renewability

c). Dollar limits on essential benefits Health plans are restricted from applying a dollar limit on essential benefits, nor can they establish a dollar limit on the amount of benefits paid during the course of an insured's lifetime.

An insured is anxious to get treatment for a health condition, and is convinced that a specialist is needed to cure the condition. If the insured has a PPO plan, which of the following is true? a). The insured visit a specialist in-network without consulting a primary care physician, but the out-of-pocket cost will be greater without the primary care physician's referral b). The insured will have to pay all costs for the specialist out-of-pocket if a primary care physician referral is not obtained c). The insured can select any specialist, but non-network specialist will have higher out-of-pocket costs d). The insured must visit a primary care physician who will provide a referral to a specialist if the condition require one.

c). The insured can select any specialist, but non-network specialist will have higher out-of-pocket costs With a PPO, in network physicians and specialists are preferred. An insured may select a non-network physician or specialist, but the out-of-pocket costs will be greater. To see a specialist, a primary care physician's referral is not required.

An employer responsible for paying part or all of the premium for a group life or group health plan cannot willfully fail to pay the premium without first giving the employees how many days' advance notice? a)15 b)30 c)45 d)60

c)45 Any person, employer, or third-party administrator who is responsible for paying premiums on a group life or health plan cannot willfully fail to pay the premiums without first giving the employees at least 45 days' advance notice. Failure to follow this rule is a felony.

Which of the following must an insurer obtain in order to transact insurance within a given state? a)Business entity license b)Insurer's license c)Certificate of authority d)Producer's certificate

c)Certificate of authority All insurers (domestic, foreign, or alien) must obtain a certificate of authority before transacting insurance within a given state.

Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service? a)Premium b)Cost share c)Copayment d)Deductible

c)Copayment A copayment is a specific dollar amount of the cost of care that must be paid by the member. For example, the member may be required to pay $5 or $10 for each office visit

An insurance institution or agent that discloses information in violation of the information privacy and disclosure statutes of North Carolina will be liable for a)The legal costs incurred by the client. b)Only such damages as can be proven in a court of law. c)Damages sustained by the individual to whom the information relates. d)Any legal action brought by the client within 5 years.

c)Damages sustained by the individual to whom the information relates An insurance institution, agent, or insurance-support organization that discloses information in violation shall be liable for damages sustained by the individual to whom the information relates. No individual, however, shall be entitled to a monetary award that exceeds the actual damages sustained by the individual as a result of a violation.

All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT a)Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent. b)Accidental death and dismemberment insurance is considered to be limited coverage. c)Death benefits are paid only if death occurs within 24 hours of an accident. d)Accidental death benefits are paid only if death results from accidental bodily injury as defined in the policy.

c)Death benefits are paid only if death occurs within 24 hours of an accident. Under an Accidental Death and Dismemberment insurance policy, the death benefit will be paid if the accidental death occurs within 90 days of the accident, not 24 hours.

In disability income insurance, the time between the onset of an injury or sickness and when benefits begin is known as the a)Enrollment period. b)Probationary period. c)Elimination period. d)Qualification period.

c)Elimination period. On disability income insurance, the time between the onset of an injury or sickness and the time benefits begin is known as the waiting or elimination period.

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point? a)Approved the application b)Issued the policy c)Neither approved the application nor issued the policy d)Both approved the application and issued the policy

c)Neither approved the application nor issued the policy When the agent receives the application and issues a conditional receipt, the insurer has not yet approved the application and issued the policy.

What is another name for social security benefits? a)Disability and long-term care insurance b)Survivor benefits c)Old Age, Survivors, and Disability Insurance d)Medicare benefits

c)Old Age, Survivors, and Disability Insurance Social security benefits are also known as Old Age, Survivors, and Disability Insurance (OASDI).

Which of the following is correct regarding the taxation of group medical expense premiums and benefits? a)Premiums are not tax deductible and benefits are not taxed. b)Premiums are tax deductible and benefits are taxed. c)Premiums are tax deductible and benefits are not taxed. d)Premiums are not tax deductible and benefits are taxed.

c)Premiums are tax deductible and benefits are not taxed. Premiums paid by employers for Group Medical Expense insurance are tax deductible for the employer as a business expense. Also, policy benefits paid out to employees are not taxable as income to the employee.

All statements of the insured in any application for a policy of insurance are deemed a)Contractual considerations and must be unilaterally binding for the insured. b)Warranties. c)Representations. d)Either warranties or representations dependent upon the context in which they were written.

c)Representations. All statements or descriptions in any application for a policy of insurance, or in the policy itself, shall be deemed representations and not warranties. A representation, unless material or fraudulent, will NOT prevent a recovery on the policy.

If a licensee fails to notify the Commissioner of insurer insolvency, if known or suspected, and to provide a statement of relevant facts, which of the following is TRUE? a)The person will be subject to a fine. b)There will be no repercussions for that; reporting of insurer insolvencies is voluntary. c)The Commissioner may suspend or revoke the person's license. d)The Commissioner will issue a cease and desist order.

c)The Commissioner may suspend or revoke the person's license. It is the duty of any licensed person, or employee or representative of an insurance company to notify the Commissioner of any violations of the General Statutes of the Insurance Code, or insurer insolvency. The Commissioner may suspend, revoke, or refuse to renew the license of any licensee who willfully fails to comply with this section of the Insurance Code.

Which statement accurately describes group disability income insurance? a)There are no participation requirements for employees. b)Short-term plans provide benefits for up to 1 year. c)The extent of benefits is determined by the insured's income. d)In long-term plans, monthly benefits are limited to 75% of the insured's income.

c)The extent of benefits is determined by the insured's income. Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

Who would be the insured in business disability insurance? a). All employees b). The insurer c). The employer d). Key employees

d). Key employees A business purchases business disability insurance on its key employees to protect it from loss when the employee becomes disabled.

Following a covered loss, the Time Payment of Claims Provision requires that an insurance company pay disability income benefits no less frequently than a). Semi-annually b). Annually c). Weekly d). Monthly

d). Monthly This mandatory provision establishes that disability income benefits be paid no less frequently than monthly

With the respect to the entire contract clause in health policies, who has the authority to make changes to an existing policy? a). Solely the producer b). Solely the policyowner c). Changes cannot be made on the policy d). Only an executive officer of the company

d). Only an executive officer of the company No changes may be made to the policy without the express written agreement of both parties, and any changes must also be made a part of the contract. Only an executive officer of the company, not an agent, has authority to make any changes to the policy

HMO's are known as what type of plans? a). Health saving b). Consumer driven c). Reimbursement d). Service

d). Service The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physicians or hospital

A man is an attorney when he applies for a health policy. He decides to become a professional bungee jumper. He files a claim. What should happen? a). His coverage will be dropped b). The man's workers comp will pay the claim in full c). The insurance company will not pay the claim d). The insurance company will pay the claim according to the benefits available if the correct premium has been paid

d). The insurance company will pay the claim according to the benefits available if the correct premium has been paid If the insured makes a change to a more hazardous occupation, upon claim, benefit will be reduced to what premiums paid would have purchased assuming the more hazardous occupation.

The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last a)6 months. b)12 months. c)18 months. d)24 months.

d)24 months. The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last 24 months.

According to the PPACA rules, what percentage of health care costs will be covered under a bronze plan? a)10% b)30% c)40% d)60%

d)60% Under the bronze plan, the health plan is expected to cover 60% of the cost for an average population, and the participants would cover the remaining 40%

How can a new physician be added to the PPO's approved list? a)Fill out the appropriate paperwork and wait the 12 month pre-certification period. b)Pay an annual fee for being on the PPO list. c)New physicians are only added once a year, and are selected by the PPO's Board of Directors. d)Agree to follow the PPO standards and charge the appropriate fees.

d)Agree to follow the PPO standards and charge the appropriate fees. Any physician or hospital that qualifies for and agrees to follow the PPO's standards and charges the established fees can be added to the PPO's approved list at any time. The providers may withdraw their name from the list at any time, as well.

Which of the following statements regarding Business Overhead Expense policies is NOT true? a)Premiums paid for BOE are tax-deductible. b)Any benefits received are taxable to the business. c)Leased equipment expenses are covered by the plan. d)Benefits are usually limited to six months.

d)Benefits are usually limited to six months. Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.

In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is a)More limited in general. b)More limited in duration. c)Broader in duration. d)Broader in general.

d)Broader in general. A policy that uses the accidental bodily injury definition will provide broader coverage than a policy that uses the accidental means definition.

In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible? a)Full b)Half c)None d)Corridor

d)Corridor The basic expense policy will provide coverage on a first-dollar basis (no deductible). After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits. The corridor deductible derives its name from the fact that it is applied between the basic coverage and the major medical coverage.

An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This would indicate that his policy was written with a 30-day a)Blackout period. b)Probationary period. c)Disability period. d)Elimination period.

d)Elimination period. The elimination period is the time immediately following the start of a disability when benefits are not payable. This is used to reduce the cost of providing coverage and eliminates the filing of many claims.

If an insurer accepts premium payments by credit card, who is responsible for paying the fees charged by a credit card company? a)Policyowners, as part of their premium b)Insured making payment c)Credit card company d)Insurer accepting payment

d)Insurer accepting payment Credit card payment fees are the responsibility of the insurer. In fact, it is one of the conditions for permitting the insurer to accept payments by credit card.

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply? a)No coverage will apply, since disability income policies cover sickness only. b)Coverage will apply since the break was accidental. c)Coverage will apply, but will be reduced by 50%. d)No coverage will apply, since the injury could have been foreseen.

d)No coverage will apply, since the injury could have been foreseen. An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.

Which of the following describes taxation of individual disability income insurance premiums and benefits? a)Premiums are not tax deductible, but benefits are taxable. b)Premiums are tax deductible, but benefits are not taxable. c)Premiums are tax deductible, and benefits are taxable. d)Premiums are not tax deductible, and benefits are not taxable.

d)Premiums are not tax deductible, and benefits are not taxable. In individual disability income, benefits are not taxable, and premiums are not tax deductible

Todd has been informed that he has a hernia which requires repair. When Todd researches the cost, he learns that his insurance plan will cover 200 points worth of surgical expenses. Each point represents $10, which means that $2000 of his surgery will be covered by his insurance plan. What system is Todd's insurance company using? a)Basic Surgical b)Point-based medical c)Conversion factor d)Relative value

d)Relative value In a relative-value approach, a surgical procedure is assigned an amount of points relative to the maximum coverage allowed for a given surgery.

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid? a)Neither plan would pay. b)Each plan will pay in equal shares. c)The insured will have to select a plan from which to collect benefits. d)The benefits will be coordinated.

d)The benefits will be coordinated. Benefits will be coordinated when individuals are covered under two or more health plans.

Which of the following is NOT a feature of a guaranteed renewable provision? a)The insured has a unilateral right to renew the policy for the life of the contract. b)Coverage is not renewable beyond the insured's age 65. c)The insured's benefits cannot be reduced. d)The insurer can increase the policy premium on an individual basis.

d)The insurer can increase the policy premium on an individual basis. Guaranteed renewable provision has all the same features that the noncancellable 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 is NOT true regarding partial disability? a)The insured can still report to work and receive benefits. b)Benefit payments are typically 50% of the total disability benefit. c)An insured would qualify if he couldn't perform some of his normal job duties. d)This is a form of insurance that covers part-time workers.

d)This is a form of insurance that covers part-time workers. Partial disability covers full-time-working insureds who are unable to perform some, but not all, of their regular job duties or can no longer work full-time, which ultimately results in a loss of income. Payment from partial disability is typically 50% of the total disability benefit.

Which of the following is NOT a factor in determining qualifications for Social Security disability benefits? a)Worker's PIA b)Worker's age c)Number of work credits earned d)Worker's occupation

d)Worker's occupation A worker's specific occupation is not a factor in determining benefits, so long as the worker has earned the required amount of work credits.