Chapter exam 2: intro to health insurance

Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business? Company becoming insolvent Death of the business owner Business owner becoming disabled Key employee becoming disabled

Business owner becoming disabled

The federal income tax treatment of employer-provided group Medical Expense insurance can be accurately described as Employee's coverage paid for by the employer is considered taxable income to the employee Employee's premiums paid by the employer is tax-deductible to the employer as a business expenditure Employer is given tax credits for contributions made to an employer-provided group health plan Benefits are taxable to the employee

Employee's premiums paid by the employer is tax-deductible to the employer as a business expenditure

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? Primary beneficiary's estate Primary beneficiary's next of kin Insured's estate Insured's contingent beneficiary

Insured's contingent beneficiary

A policyowner's rights are limited under which beneficiary designation? Revocable Tertiary Contingent Irrevocable

Irrevocable

What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary requires his/her consent when a change of beneficiary is made? Irrevocable beneficiary Tertiary beneficiary Primary beneficiary Revocable beneficiary

Irrevocable beneficiary

Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition? Double indemnity Benefits are taxable More restrictive Less restrictive

Less restrictive

All students attending a large university could be covered by a blanket policy a franchise policy a jumbo group policy a commercial insurance policy

a blanket policy

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? $1,000,000 $500,000 $250,000 $0

$0

B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary? $100,000 $200,000 $300,000 $400,000 $400,000

$300,000

Question 24Select the appropriate response S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations? 36 18 15 6

36

Under which of the following circumstances will the benefits under COBRA continuation coverage end? Employee has become uninsurable All group health plans are terminated by the employer Employer moves headquarters to another state Employee becomes permanently disabled

All group health plans are terminated by the employer

All of the following statements regarding group health insurance is true EXCEPT Premiums are usually determined by the claims experience of the group A master contract is issued for the group An individual policy is given to each member Group health insurance premiums are typically lower than individual health insurance premiums

An individual policy is given to each member

Question 23Select the appropriate response Which contract permits the remaining partners to buy-out the interest of a disabled business partner? Group Disability Business Continuation Disability Buy-Sell Key Person Disability

Disability Buy-Sell

Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance? Disability income policy premiums are NOT tax-deductible Disability income policy premiums are tax-deductible Major medical policy benefits are normally not taxed Disability income policy benefits are normally not taxed

Disability income policy premiums are tax-deductible

Question 19Select the appropriate response Which statement is true regarding a minor beneficiary? Normally, the death proceeds are required to be held in trust until the beneficiary reaches the age of 21 Normally, a guardian is required to be appointed in the Beneficiary clause of the contract The minor must pay the debts of the insured's estate before receiving any of the proceeds The minor is entitled to receive the death proceeds immediately

Normally, a guardian is required to be appointed in the Beneficiary clause of the contract

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? Tertiary Irrevocable Revocable Contingent

Revocable

P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE? She DOES need to provide evidence of insurability She does NOT need to provide evidence of insurability She will have up to 6 months to convert to an individual policy She will be paying exactly the same premium for the individual plan as she did the group plan

She does NOT need to provide evidence of insurability

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to continue group health benefits take out an individual health policy transfer their coverage to another insurer convert to disability coverage

continue group health benefits

The Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for insolvency health information financial information overinsurance

health information

The benefits under a Disability Buy-Out policy are normally paid in installments taxable to the beneficiary payable to the company or another shareholder normally paid after a short elimination period

payable to the company or another shareholder

Which of the following statements is correct regarding an employer/employee group health plan? each employee receives a duplicate policy from the insurer the employer receives a master policy and the employees receive certificates the employer and the employees both receive actual policies the employer receives the master policy and the employees receive a summary of benefits

the employer receives a master policy and the employees receive certificate

A Business Disability Buyout plan policy is designed as an incurred expense plan with a very short Elimination period to pay benefits to the Corporation or other shareholders to pay benefits to the insured's spouse

to pay benefits to the Corporation or other shareholders