Ch.8 - Intro to health insurance

Which of the following documents used for underwriting can be completed by talking to the proposed insured over the phone?

Inspection Report

Statements made on the application are considered true to the best of the applicant's knowledge and belief are considered to be:

Representations are statements made and believed to be true to the best of a person's knowledge. Warranties are statements of absolute truth.

If a premium is not paid at the time of application, the producer will obtain which of the following at the time of policy delivery?

Signed statement of good health If premium is not paid at the time of application, the producer will collect the premium when delivering the policy and obtain a signed statement of good health from the insured stating that there have been no changes to the insured's health since the time of application.

During the underwriting process, an underwriter was alerted that the applicant previously failed a medical exam by testing positive for marijuana while applying for a disability income policy 2 years ago. Which of the following sources provides this type of information to assist member companies when determining the eligibility of an individual risk?

The MIB acts as an information exchange by alerting underwriters to previous claim information, adverse medical information, fraud, errors, omissions, or misrepresentations made on insurance applications. A consumer credit report provides financial information, the Attending Physician's Statement provides information specific to a current medical condition, and a nurse does not report information to other insurance companies.

If an incomplete application is accepted by the underwriter and a policy is issued without requesting the missing information, which of the following statements applies?

The insurer waives its right to contest a claim based on the incomplete application

The agent's primary underwriting role is:

To make sure the application provides the proper information

Accident and Health Insurance provides coverage for two major categories of perils. They are:

Accidental injury and sickness

If an application is submitted with a question left unanswered, which of the following should occur?

Any unanswered questions need to be answered before the policy is issued.

An application for health insurance is completed by a producer and signed by the applicant. The applicant remembers information that needs to be added to the application before being submitted to the insurer and contacts the producer, who has returned to the office. Which of the following statements is correct?

Changes can only be made to an application with written consent of the applicant by initialing the changes or updates.

An application for health insurance was submitted on May 1 without a premium payment. The underwriter ordered a medical exam, which was completed on May 15. The company issued and mailed the policy to the agent on May 30. The agent delivered the policy and collected the first premium, along with the Statement of Good Health, on June 3. Coverage became effective on:

Coverage becomes effective once the premium is paid and the policy is delivered. Since the premium was not paid until June 3, coverage is not effective until that date.

All of the following are potential risks of replacement of an individual health or disability insurance policy, except:

Coverage due to an accident will be restricted for 30 days after the effective date of the policy. Replacement of a policy may result in higher premiums, exclusions due to pre-existing conditions, or a probationary period limiting when losses due to a sickness are covered. Losses due to an accident are not affected by pre-existing conditions or probationary periods.

____________ is the initial step of the total process of insuring a health risk.

Field underwriting is the initial step of the total process of insuring a health risk.

sickness

Illness or disease that occurs after the policy is issued

If a premium is paid at the time of application and the policy is issued as applied, legal delivery can occur at the time of:

Issuance of the policy. Legal delivery occurs when the policy is issued or accepted by the insurer only if the initial premium has been paid and the policy was issued as applied. It is at this point that a legal contract exists since the issued policy is the acceptance of the offer.

Which one of the following is not a factor when an insurer underwrites a policy?

Marital status is not a factor in the underwriting process. It is not a risk factor that is taken into consideration such as age, gender, occupation, hobbies, height and weight, and health history.

Accidental bodily injury

spontaneous, unforeseen, and unintended event resulting in injury

A medical condition that was treated prior to the effective date of a policy is a:

A pre-existing condition is one in which medical treatment was obtained or should have been obtained by the applicant prior to the effective date of the policy.

All of the following are individual underwriting factors, EXCEPT:

Marital status is not considered an underwriting factor. Individual underwriting factors include age, gender, tobacco use, occupations and hobbies, physical condition, moral hazard, health history, and the plan applied for.

All of the following statements regarding an insurance application are correct, except:

NOT included as part of the contract. If attached to the policy, a copy of the application becomes part of the entire contract.

Which party to a health insurance contract is responsible for making the premium payments?

Policyowner- By definition, the policyowner is responsible for making all decisions regarding the policy and maintaining the policy by paying the premiums. The insured may also be the owner, but it is not a requirement.

Edward applies for a disability insurance policy. He pays the initial premium at the time of application and receives a conditional receipt. Three days after the insurance company conducts a medical examination, but before it issues a policy, Edward suffers a stroke. Upon reviewing the results of his medical exam, the company discovers that Edward has been diagnosed with high blood pressure and atherosclerosis. Under the terms of the conditional receipt, the insurance company:

The insurer will deny the claim because they cannot issue the policy as written. If the insurer chooses to issue a policy, it will either be a rated/substandard policy or a standard policy with an exclusion for Edward's medical condition.

Which of the following is not an underwriting factor for health insurance?

The underwriters do not take into consideration where the applicant was born.

Consumers must be made aware of all of the following in a replacement sale, except:

Upon issue of a new policy, there may be a new waiting period (probationary period) for pre-existing conditions or the policy may be issued with lower benefits, or with more limitations or exclusions compared to the old policy. Premiums may also be higher in the new policy.

An applicant for accident and health insurance works two jobs. Which of the applicant's jobs will be used to underwrite the policy?

When one has two occupations, the most hazardous is used for rating, regardless of hours worked or experience in each.

The Medical Information Bureau provides information to the insurer regarding the individual risk of an applicant and does not include:

The MIB is used to alert underwriters if there is an inconsistency in the applicant's information provided on the application based on previous underwriting. It does not include financial information or credit scores.

Which one of the following is the primary source of underwriting information?

The application is the initial source of underwriting and insurability. It is the first thing submitted to the underwriter and may include all information necessary to issue a policy or additional information may be requested.

What is the primary source of underwriting information for an individual health insurance policy?

The application is the primary source of underwriting information. All other sources are supplementary.

If a premium is submitted with the application and a conditional receipt is issued, coverage is effective:

The date of application, or date of a completed medical exam if required, whichever is later, as long as the policy would have been issued as applied for

An application for health insurance was submitted on November 1 with the initial premium and a conditional receipt was provided. Due to an existing medical condition, the underwriter requested an Attending Physician Statement, medical exam, and MIB report. After reviewing all sources of insurability, the insurer issued the policy as substandard with a surcharge. The policy was delivered by the producer on December 1 after explaining the coverage and surcharge, obtaining the statement of good health, and collecting the premium. Coverage became effective as of the date the:

Agent explained the policy coverage, surcharge, and collected the additional premium. Although the initial premium was paid and a conditional receipt was provided, the policy was not issued as applied for; therefore coverage is not effective until the insured accepts to counteroffer and pays the additional premium.

When Harry completed his insurance application, the agent discovered that he was under treatment for a chronic condition. In order to gather the necessary information, Harry's agent ordered a/an:

An attending physician's statement is ordered when the application reveals the presence of a chronic or other condition for which additional information regarding treatment and prognosis is required. A medical exam is ordered based on a variety of factors including the age, and condition of the applicant as well as the amount of coverage requested. A Medical Information Bureau report will be ordered on all applicants as a matter of course.

Which of the following sources of insurability alerts members about an insurance applicant's previous claim information?

The MIB, Medical Information Bureau, Report acts as an information exchange regarding an applicant's previous claims, representations, possible fraud, pre-existing conditions, hazardous hobbies or occupation, and other information that may make the applicant a higher risk.