(7 )- Health Insurance Underwriting

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?

$0 (Disability income benefits that derive from an individual policy which was paid entirely by the policyowner is not subject to federal income tax.)

T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable?

Benefits are taxable to T. (When a disability income insurance plan is paid for entirely by the employer, the premiums are deductible to the employer. The benefits, in turn, are taxable to the recipient.)

Which type of plan normally includes hospice benefits?

Hospice benefits are typically included in managed care plans.

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection report. (An inspection report may include information obtained by a telephone call to the proposed insured.)

Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?

Issue the policy with an altered Time of Payment of Claims provision. (The insurance company may take all of these actions EXCEPT issue the policy with an altered Time of Payment of Claims provision.)

Pre-hospitalization authorization is considered an example of?

Managed care. (Pre-hospitalization authorization is the insurer's approval of an insured entering a hospital. Many health policies require this as part of an effort to manage costs.

Which of the following are NOT managed care organizations?

Medical Information Bureau (MIB) (All of the following entities are managed care organizations EXCEPT MIB (Medical Information Bureau).

Which of the following are managed care organizations?

Point-of-Service plan (POS) Preferred Provider Organization (PPO) Health Maintenance Organization (HMO)

Which of the following statements about the classification of applicants is INCORRECT?

Substandard applicants are never declined by underwriters. (A substandard risk is below the insurer's average risk guidelines. An individual can be rated substandard for a number of reasons and can even be rejected outright.)

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?

Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company.

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take?

Send a notice to the MIB that the applicant was declined. (The MIB does not need to be notified that coverage was denied.)

Which mode of payment is NOT used by health insurance policies?

Single premium. (Single premium is not used when paying for health insurance policies.)

Which of the following BEST describes how pre-admission certifications are used?

Used to prevent nonessential medical costs. (Pre-admission certification is used to prevent unnecessary medical costs.)

A producer takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to determine if the applicant is an acceptable risk by completing standard underwriting procedures?

With a conditional receipt, the insurance company will complete standard underwriting procedures before making a decision about whether to insure the applicant.