7. Health Policy Provisions, Clauses, And Riders

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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? A50/50 B75/25 C80/20 D90/10

A50/50 After the deductible has been paid, the insurance company will pay a specified amount for a physician's visit, while the insured pays the remaining percentage. This is called "coinsurance". Plans will often be listed in a fraction format, with the first number representing the amount that will be paid by the insurer. The less the insurer must pay with coinsurance payments, the lower the premiums will be. Therefore, Ray should choose the 50/50 plan.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within A90 days of a loss. B20 days of a loss. C30 days of a loss. D60 days of a loss.

A90 days of a loss. Under the Uniform Required Provisions, proof of loss under a health insurance policy normally should be filed within 90 days of a loss

Which of the following does the Insuring Clause NOT specify? AA list of available doctors BCovered perils CThe insurance company DThe name of the insured

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

The free-look provision allows for which of the following? AA right to return the policy for a full premium refund BImmediate coverage when the application is submitted CA guarantee that the policy will not lapse if the premium is overdue DA guarantee that the policy will be issued

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

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

AA statement that is sufficiently clear to identify the insured and the nature of the claim. The Insurance Code requires that each policy must include, "Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".

If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following? AAdjust the benefit in accordance with the increased risk BCancel the policy CIncrease the premium DExclude coverage for on-the-job injury

AAdjust the benefit in accordance with the increased risk A part of the premium rating concerns the hazard of occupation

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? AAdjust the claim benefit to reflect the insured's true age BDeny any claims and cancel the policy CDeny paying a claim based on misrepresentation DPay the full amount of a claim because the contestable period has ended

AAdjust 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

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

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

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the AConsideration Clause. BInsuring Clause. CPre-existing Conditions Clause. DEligibility Clause.

AConsideration Clause. The consideration clause specifies that both parties to the contract must give some valuable consideration. The payment of the premium is the consideration given by the applicant. Because the applicant had not paid an initial premium, she is not covered by insurance.

What is the main difference between coinsurance and copayments? ACopayment is a set dollar amount. BWith copayments, the insured pays all of the cost. CWith coinsurance, the insurer pays all of the cost. DCoinsurance is a set dollar amount.

ACopayment is a set dollar amount. With both, copayment and coinsurance provisions, the insured shares part of the cost for services with the insurer. Unlike coinsurance, a copayment has a set dollar amount that the insured will pay each time certain medical services are used.

A waiver of premium provision may be included with which kind of health insurance policy? ADisability income BBasic medical CHospital indemnity DDread disease

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

In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party? AInsurer to the insured BInsured to the insurer CInsurer to the Department of Insurance DInsured to the Department of Insurance

AInsurer to the insured Upon receipt of a notice of claim, the company must supply claims forms to the insured within a specified number of days

A guaranteed renewable disability insurance policy AIs renewable at the insured's option to a specified age. BIs renewable at the option of the insurer to a specified age of the insured. CIs guaranteed to have a level premium for the life of the policy. DCannot be cancelled by the insured before age 65

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

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is AMonthly. BWithin 45 days. CWeekly. DBiweekly.

AMonthly. If a claim involves disability income benefits, the policy must pay those benefits not less frequently than monthly. In all other cases, the company may specify the time period of 45 or 60 days for payment of claims

Which of the following provisions is mandatory for health insurance policies? APhysical examination and autopsy BRecurrent disability CUnpaid premiums DIntoxicants and narcotics

APhysical examination and autopsy Physical examination and autopsy is a mandatory provision required by law. The other answer choices are optional provisions.

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? ARevocable BPrimary CContingent DIrrevocable

ARevocable If her husband is named as the revocable beneficiary, the insured would be the policyowner and could make changes to the contract. Her husband would receive any death benefit.

An insured has endured multiple surgeries and hospitalizations for an illness during the summer months. Her insurer no longer bills her for medical expenses. What term best describes the condition she has met? AStop-Loss Limit BOut-of-Pocket Limit CMaximum Loss Threshold DMaximum Loss

AStop-Loss Limit A "stop-loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses

Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses? AStop-loss limit BOut-of-pocket limit CFirst-dollar coverage DCorridor deductible

AStop-loss limit A "stop-loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses. Question 4 of 15

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

AThe 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

Which of the following will vary the length of the grace period in health insurance policies? AThe mode of the premium payment BThe length of any elimination period CThe length of time the insured has been insured DThe term of the policy

AThe mode of the premium payment The grace period is 7 days on a policy with a weekly premium mode; 10 days if a monthly premium mode; 31 days on other premium modes

Which of the following statements is most correct concerning the changing of an irrevocable beneficiary? AThey can be changed only with the written consent of that beneficiary. BThey may be changed at any time. CThey can never be changed. DThey may be changed only on the anniversary date of the policy.

AThey can be changed only with the written consent of that beneficiary. Once an irrevocable beneficiary is shown for the policy, it requires his or her written consent to change.

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss? ATime of Payment of Claims BIncontestability CPhysical Exam and Autopsy DLegal Actions

ATime of Payment of Claims The Time of Payment of Claims provision specifies that claims are to be paid immediately upon written proof of loss.

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees ATo renew the policy until the insured has reached age 65. BTo charge a lower premium every year the policy is renewed. CNot to change the premium rate for any reason. DTo renew the policy indefinitely.

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

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? AUnlimited BNone at all C1 examination per week of the claim processing period D2 examinations per week of the claim processing period

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

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

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

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? A7 days B10 days C31 days D60 days

B10 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.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within A60 days of a loss. B90 days of a loss. C20 days of a loss. D30 days of a loss.

B90 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.

A Health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective? AImmediately BAfter 14 days CAfter 21 days DAfter 31 days

BAfter 14 days Coverage for accidents is immediate when reinstatement occurs, but coverage for sickness may have a waiting period of about 10 days.

While a claim is pending, an insurance company may require AAn independent examination only once every 45 days. BAn independent examination as often as reasonably required. CThe insured to be examined only within the first 30 days. DThe insured to be examined only once annually

BAn independent examination as often as reasonably required. While a claim is pending, an insurance company may require an independent exam as often as reasonably required.

Which of the following is NOT an exclusion in medical expense insurance policies? ARoutine dental care BCoverage for dependents CMilitary duty DSelf-inflicted injuries

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

The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the AMaster policy. BEntire contract. CCertificate of insurance. DAleatory contract.

BEntire contract. The policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence other than the contract and the attached application in a test of the contract's validity. This is a mandatory provision in life insurance.

Items stipulated in the contract that the insurer will not provide coverage for are found in the AConsideration clause. BExclusions. CInsuring clause. DBenefit Payment clause

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

Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it? AProbationary Period BFree Look Period CGrace Period DElimination Period

BFree Look Period The Free Look provision allows a policyholder 10 days after the policy is delivered in which to decide whether or not he/she wants the policy. If the policyholder decides to return the policy within this period, he/she receives a full refund of all premiums paid.

Which of the following entities has the authority to make changes to an insurance policy? AProducer BInsurer's executive officer CDepartment of Insurance DBroker

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

Which of the following entities has the authority to make changes to an insurance policy? AProducer BInsurer's executive officer CDepartment of Insurance DBroker

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost ACounts toward coinsurance. BIs not covered. CMust be covered by the insurer. DCounts toward deductible.

BIs not covered. An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure

A guaranteed renewable disability insurance policy ACannot be cancelled by the insured before age 65. BIs renewable at the insured's option to a specified age. CIs renewable at the option of the insurer to a specified age of the insured. DIs guaranteed to have a level premium for the life of the policy.

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

An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would APay half of her claim because the insured had an outstanding premium. BPay the claim. CHold the claim as pending until the end of the grace period. DDeny the claim.

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

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? AProof of Loss BPayment of Claims CChange of beneficiary DEntire Contract Clause

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

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

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

The expense for an autopsy covered under the physical exam and autopsy provision is paid by AThe estate of the insured. BThe insurer. CThe state's autopsy fund. DThe limits of coverage under the health insurance policy.

BThe insurer. Where not forbidden by state law, the insurer, at its own expense, may cause an autopsy to be performed on a deceased insured.

Which of the following is true regarding elimination periods and the cost of coverage? AElimination periods have no effect on the cost of coverage. BThe longer the elimination period, the lower the cost of coverage CThe shorter the elimination period, the lower the cost of coverage DThe longer the elimination period, the higher the cost of coverage

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

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss? ALegal Actions BTime of Payment of Claims CIncontestability DPhysical Exam and Autopsy

BTime of Payment of Claims The Time of Payment of Claims provision specifies that claims are to be paid immediately upon written proof of loss

What is the purpose of coinsurance provisions? ATo share liability among different insurance companies BTo help the insurance company to prevent overutilization of the policy CTo have the insured pay premiums to more than one company. DTo ensure payment to the doctors and hospitals

BTo help the insurance company to prevent overutilization of the policy The purpose of the coinsurance provision is for the insurance company to control costs and discourage overutilization of the policy

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as AGatekeepers. BUsual, customary and reasonable. CRelative-value schedule. DBenefit schedule.

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

Manny has been injured in an accident. Although she is still receiving benefits from her policy, she does not have to pay premiums. Her policy includes AWaiver of Benefit rider. BWaiver of Premium rider. CReturn of Premium rider. DBenefit of Payment clause

BWaiver of Premium rider. The Waiver of Premium rider causes the insurer to waive future premiums when an accident or disease causes a disability lasting at least six months

An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would APay the claim. BHold the claim as pending until the end of the grace period. CDeny the claim. DPay half of her claim because the insured had an outstanding premium.

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

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

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

Which of the following does the Insuring Clause NOT specify? AThe insurance company BThe name of the insured CA list of available doctors DCovered perils

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

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

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

When the insured purchased his health policy he was a window washer. He has since changed occupations and now manages a library. If the insurer is notified of the insured's change of occupation, the insurer should AReturn any unearned premium. BIncrease the premium. CAdjust the benefit in accordance with the decreased risk. DReplace the policy with a new one.

CAdjust the benefit in accordance with the decreased risk. ! Incorrect! Change of occupation provision allows the insurer to adjust benefits if the insured changes occupations.

A man is injured while robbing a convenience store. How does his major medical policy handle the payment of his claim? AIf the man is not convicted, he will get 75% of his claim paid. BThe claim is paid in full. CClaim is denied if his policy contains the Illegal Occupation provision. D50% of claim will be paid.

CClaim is denied if his policy contains the Illegal Occupation provision. This optional provision specifically excludes coverage for injuries incurred while performing an illegal act. The insurer will not be liable for any loss to which a contributing cause was the insured's commission of or attempt to commit a felony or to which a contributing cause was the insured's being engaged in an illegal occupation

The provision that provides for the sharing of expenses between the insured and the insurance company is ADeductible. BDivided cost. CCoinsurance. DStop-loss

CCoinsurance. The larger the percentage that is paid by the insured, the lower the required premium will be.

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the AIncontestability clause. BLegal action against us clause. CEntire contract clause. DTime limit on certain defenses clause.

CEntire contract clause. contract is a mandatory provision that is required by law.

Which of the following riders would NOT increase the premium for a policyowner? AWaiver of premium rider BMultiple indemnity rider CImpairment rider DPayor benefit rider

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

In a group health policy, a probationary period is intended for people who AHave additional coverage through a spouse. BWant lower premiums. CJoin the group after the effective date. DHave a pre-existing condition at the time they join the group.

CJoin the group after the effective date. The probationary period is the waiting period new employees must satisfy before becoming eligible for benefits

The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as APayment of claims. BProof of loss. CLegal actions. DTime limit on certain defenses.

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

With respect to the Consideration Clause, which of the following would be considered consideration on the part of the applicant for insurance? AProviding warranties on the application BNotice of policy cancellation CPayment of premium DPromise to renew the policy at the end of the policy period

CPayment of premium The two types of consideration on the part of an insurance applicant are payment of premiums and representations on the application.

In respect to the consideration clause, which of the following is consideration on the part of the insurer? AOffering an unconditional contract BExplaining policy revisions to the applicant CPromising to pay in accordance with the contract terms DOffering a secondary policy to the applicant

CPromising to pay in accordance with the contract terms The consideration clause requires the insurer to promise to pay in accordance to the terms stated in the contract

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

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

An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true? AThe insurer will be fined for not providing the claims forms. BThe insured must submit proof of loss to the Department of Insurance. CThe insured was in compliance with the policy requirements regarding claims. DThe claim most likely will not be paid since the official claims form was not submitted

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

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

CThe 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.

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? AThe insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner. BThe insurer may deny the claim since it was not notified within the required 20-day time frame. CThe insurer is considered to be notified since the notification to agent equals notification to the insurer. DThe insurer may delay the payment of this claim for up to 6 months

CThe insurer is considered to be notified since the notification to agent equals notification to the insurer. Notice to the agent equals notice to the insurer. The agent is the insurer's representative

AThe smaller the percentage that is paid by the insured, the lower the required premium will be. BThe smaller the percentage that is paid by the insured, the more consistent the required premium will be. CThe larger the percentage that is paid by the insured, the lower the required premium will be. DThe larger the percentage that is paid by the insured, the higher the required premium will be.

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

The insuring clause of a disability policy usually states all of the following EXCEPT AThat insurance against loss is provided. BThe types of losses covered. CThe method of premium payment. DThe identities of the insurance company and the insured

CThe method of premium payment. The insuring clause, usually on the first page of the policy, is the general statement that defines the insurance agreement and identifies the insured and the insurance company and states what kind of loss (peril) is covered

A policy with a 31-day grace period implies AThe policy is incontestable after 31 days of delivery. BThe policy benefits must be paid within 31 days after a claim is submitted. CThe policy will not lapse for 31 days if the premium is not paid when due. DThe policyholder may return the policy for a full refund within 31 days

CThe policy will not lapse for 31 days if the premium is not paid when due. A mandatory provision of life insurance policies requires that a grace period be provided. The grace period is the period of time after the premium due date in which premiums may still be paid before the policy lapses for nonpayment of the premium

Which provision states that the insurance company must pay Medical Expense claims immediately? ALegal Actions BRelation of Earnings to Insurance CTime of Payment of Claims DPayment of Claims

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

Which provision states that the insurance company must pay Medical Expense claims immediately? ALegal Actions BRelation of Earnings to Insurance CTime of Payment of Claims DPayment of Claims

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 A6 months. B12 months. C18 months. D24 months.

D24 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

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 A6 months. B12 months. C18 months. D24 months.

D24 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. Question 3 of 15

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

DA reinstated policy provides immediate coverage for an illness. Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date

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

DA statement that is sufficiently clear to identify the insured and the nature of the claim. The Insurance Code requires that each policy must include, "Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? A90 days after the effective policy date B6 months after the effective policy date C1 year after the effective policy date DAs long as the policy is in force

DAs long as the policy is in force An insurer can contest a fraudulent misstatement as long as the policy is in force. No other statement or misstatement made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years

The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's AAssumed age. BAverage age. CIssue age. DAttained age.

DAttained age. The premium charged for the increase will be based upon the attained age of the insured

What is the main difference between coinsurance and copayments? AWith copayments, the insured pays all of the cost. BWith coinsurance, the insurer pays all of the cost. CCoinsurance is a set dollar amount. DCopayment is a set dollar amount.

DCopayment is a set dollar amount. With both, copayment and coinsurance provisions, the insured shares part of the cost for services with the insurer. Unlike coinsurance, a copayment has a set dollar amount that the insured will pay each time certain medical services are used.

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 indicates that his policy is written with a 30-day ABlackout period. BProbationary period. CWaiver of benefits period. DElimination period.

DElimination 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.

Which of the following riders would NOT increase the premium for a policyowner? APayor benefit rider BWaiver of premium rider CMultiple indemnity rider DImpairment rider

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

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the AIncontestability clause. BConsideration clause. CProbationary period. DInsuring clause

DInsuring clause. The insuring clause is a provision on the first page of the policy that states the coverage and when it applies

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost AMust be covered by the insurer. BCounts toward deductible. CCounts toward coinsurance. DIs not covered.

DIs not covered. An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure

A guaranteed renewable disability insurance policy AIs renewable at the option of the insurer to a specified age of the insured. BIs guaranteed to have a level premium for the life of the policy. CCannot be cancelled by the insured before age 65. DIs renewable at the insured's option to a specified age.

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

What statement best describes the free look provision? AIt allows the proposed insured to carefully look over the application prior to filling it out. BIt allows the company to obtain an inspection and medical examination on the proposed insured prior to issuing the policy. CIt allows for the proposed insured to carefully look over the policy before applying for it. DIt allows the insured to return the policy within 10 days for a full refund of premiums if dissatisfied for any reason

DIt allows the insured to return the policy within 10 days for a full refund of premiums if dissatisfied for any reason. Free look is a mandatory provision found in all life/health policies that allows the insured to return the policy within a specified number of days and receive a full refund of premium if dissatisfied with the policy for any reason.

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is AWithin 45 days. BWeekly. CBiweekly. DMonthly.

DMonthly. If a claim involves disability income benefits, the policy must pay those benefits not less frequently than monthly. In all other cases, the company may specify the time period of 45 or 60 days for payment of claims.

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

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

In respect to the consideration clause, which of the following is consideration on the part of the insurer? AOffering a secondary policy to the applicant BOffering an unconditional contract CExplaining policy revisions to the applicant DPromising to pay in accordance with the contract terms

DPromising to pay in accordance with the contract terms The consideration clause requires the insurer to promise to pay in accordance to the terms stated in the contract

Insurers may change which of the following on a guaranteed renewable health insurance policy? ACoverage BIndividual rates CNo changes are permitted. DRates by class

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

An insured has endured multiple surgeries and hospitalizations for an illness during the summer months. Her insurer no longer bills her for medical expenses. What term best describes the condition she has met? AOut-of-Pocket Limit BMaximum Loss Threshold CMaximum Loss DStop-Loss Limit

DStop-Loss Limit A "stop-loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses.

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

DThe 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

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? AThe insurer may delay the payment of this claim for up to 6 months. BThe insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner. CThe insurer may deny the claim since it was not notified within the required 20-day time frame. DThe insurer is considered to be notified since the notification to agent equals notification to the insurer.

DThe insurer is considered to be notified since the notification to agent equals notification to the insurer. Notice to the agent equals notice to the insurer. The agent is the insurer's representative.

Which of the following statements is true regarding coinsurance? AThe larger the percentage that is paid by the insured, the higher the required premium will be. BThe smaller the percentage that is paid by the insured, the lower the required premium will be. CThe smaller the percentage that is paid by the insured, the more consistent the required premium will be. DThe larger the percentage that is paid by the insured, the lower the required premium will be.

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

According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT AThe insurer must provide the insured a written notice of the cancellation. BClaims incurred before cancellation must be honored. CAn insurance company may cancel the policy at any time. DUnearned premiums are retained by the insurance company

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

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? AAs soon as possible BWithin 20 days CWithin 60 days DWithin 90 days or as soon as reasonably possible, but not to exceed 1 year

DWithin 90 days or as soon as reasonably possible, but not to exceed 1 year The "proof of loss" provision states the claimant must submit a proof of loss within 90 days; however, if it is not possible to comply, the time parameter is extended to 1 year. The one-year limit does not apply if the claimant is not legally competent to comply with this provision.

The Time of Payment of Claims provision specifies that claims are to be paid immediately upon written proof of loss.

7. Health Policy Provisions, Clauses, And Riders

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