Exam Questions

Who is the beneficiary in a credit disability income policy?a)The Federal Governmentb)The lending institutionc)The insurerd)The estate of the borrower

b)The lending institution

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

d)The extent of benefits is determined by the insured's income.

what is the time requirement for terminated employees to convert the group health insurance coverage to an individual plan without evidence of insurability

31 days after termination of the employment

most health policies will pay the accidental death benefit if the death is caused by an accident and occurs within how many days

90 days

in which medicare supplemental plans are the core benefits found

All plans (A-N)

How is Medicare Part B funded?

By monthly premiums and from the general revenues of the federal government

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to asa)Utmost good faith.b)Reasonable expectations.c)A warranty.d)Implied warranty.

a)Utmost good faith.

Legal actions to recover on a policy can begin how many days after written proof of loss is furnished?a)30 daysb)45 daysc)60 daysd)90 days

c)60 days

What is a penalty tax for nonqualified distributions from a health savings account?a)8%b)10%c)12%d)20%

d)20%

What is the number of credits required for fully insured status for Social Security disability benefits?a)4b)10c)30d)40

d)40

Which of the following services would be covered by endodontics?a)Tooth extractionb)Treatment of gum diseasec)Replacement of missing teethd)Root canal

d)Root canal

Under a fully Contributory Health Plan, how are benefits received by an employee

income tax free

what report is used to acess risk associated with a health insurance applicant's lifestyle and character

investigative consumer report

which term decribes the specific dollar amount beyond which the insured no longer participates in the sharing of expenses

stop-loss

how do insurers determine the cost for a group health policy

the ratio of men and women in the group and average age group

In which of the following situations is it legal to limit coverage based on marital status?a)It is never legal to limit coverage based on marital status.b)Excessive number of divorces, as defined by the insurance codec)Legal separation during the application processd)Divorce within the last six months of applying for insurance

a)It is never legal to limit coverage based on marital status.

Which of the following options would allow an insured to receive full or partial benefits after a long-term care policy lapses due to nonpayment of premium?a)Nonforfeitureb)Incontestabilityc)Multiple indemnityd)Guaranteed insurability

a)Nonforfeiture

If an insurer accepts applications from a nonappointed producer, the insurer must either reject the applications or appoint the producer within how many days?a)7 daysb)10 daysc)30 daysd)60 days

c)30 days

All of the following are examples of risk retention EXCEPTa)Copayments.b)Self-insurance.c)Premiums.d)Deductibles.

c)Premiums.

All health policies issued in this state must provide all of the following benefits related to adopted children EXCEPTa)Coverage for adopted children may be excluded at the discretion of the insurer.b)Cover delivery and obstetrical expenses for the birth mother.c)Coverage is provided to the same extent as for any natural children of the insured.d)Coverage may begin on the date the petition for adoption is filed.

a)Coverage for adopted children may be excluded at the discretion of the insurer.

Which of the following is NOT a characteristic of HMOs, as defined by the state of Maryland?a)In-network physicians must be either employees or partners of the HMO.b)An HMO may only be compensated on a predetermined periodic rate.c)An HMO must operate in the state.d)Physician, hospitalization, and out-of-area services must be covered.

a)In-network physicians must be either employees or partners of the HMO.

In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received?a)No taxb)Tax deductiblec)State income taxd)Federal income tax

a)No tax

Which of the following is the most common time for errors and omissions to occur on the part of an insurer?a)Policy deliveryb)Policy renewalc)Underwritingd)Application process

a)Policy delivery

All of the following are considered to be supplemental benefits under an HMO plan EXCEPTa)Preventive services.b)Long-term care.c)Mental health care.d)Prescription drugs.

a)Preventive services.

How can accidental death and dismemberment coverage be written

as a rider to a health insurance policy or as a seperate policy

If an underwriter requires extensive information about the applicant's medical history, what report will best serve this purpose?

attending physicians statement

Fraud would be considered a felony if the monetary amount isa)$200 or greater.b)$300 or greater.c)Any amount.d)$100 or greater.

b)$300 or greater.

Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account?a)Joe is 40 and is not covered by any other health insuranceb)Amanda is 67 and is covered by a basic medical expense policyc)Andy is 55 and is covered under a dental care policyd)Jenny is 60 and also has a long-term care insurance plan

b)Amanda is 67 and is covered by a basic medical expense policy

If during the underwriting process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information practices?a)At the time the insurer first collects the informationb)At the time of policy deliveryc)Never, since the information was obtained from the applicantd)At the time of application

b)At the time of policy delivery

Which of the following is NOT a cost-saving service in a medical plan?a)Risk sharingb)Denial of coveragec)Preventive cared)Second surgical opinions

b)Denial of coverage

Which of the following coverages is NOT monitored by the Employee Retirement Income Security Act (ERISA)?a)Welfare benefit plansb)Golden parachutesc)Pension plansd)Profit-sharing stock bonus

b)Golden parachutes

Which of the following is true regarding a term health policy?a)It is nonrenewable.b)It is conditionally renewable.c)It is guaranteed renewable.d)It is noncancellable.

b)It is conditionally renewable.

What is the maximum allowed retail value of a gift or a promotional item a producer may give to an applicant or an insured NOT to be considered rebating?a)$10b)$20c)$50d)$100

c)$50

An insurer or producer may NOT knowingly employ an individual to act in a fiduciary capacity if that individual has been convicted of a felony or crime of moral turpitude within the pasta)Year only.b)5 years only.c)10 years.d)15 years.

c)10 years.

Which of the following would be required to be licensed as an insurance producer?a)A salaried full-time employee who furnishes information for group insuranceb)An insurance company director who performs executive, administrative and managerial dutiesc)A salaried employee who advertises and solicits insuranced)A person whose activities are limited to producing insurance advertisements

c)A salaried employee who advertises and solicits insurance

All of the following statements concerning workers compensation are correct EXCEPTa)All states have workers compensation.b)Benefits include medical, disability income, and rehabilitation coverage.c)A worker receives benefits only if the work related injury was not his/her fault.d)Workers compensation laws are established by each state.

c)A worker receives benefits only if the work related injury was not his/her fault.

In disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability?a)Statutoryb)Own occupationc)Any occupationd)Typical

c)Any occupation

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?a)Impliedb)Assumedc)Apparentd)Express

c)Apparent

When must an insurance producer provide a consumer with a notice of privacy policies and practices?a)Every two years from the signing of the applicationb)There is no requirement for issuing privacy policy notices.c)During the application process and every year afterd)After an application has been accepted and coverage is issued

c)During the application process and every year after

Which of the following is an example of an unfair claims settlement practice?a)Making claims payments which clearly indicate under which coverage payment has been madeb)Using arbitration when the insured and insurer cannot reach agreementc)Failure to promptly settle a claim when liability has been clearly establishedd)Denying coverage after a reasonable investigation has been conducted

c)Failure to promptly settle a claim when liability has been clearly established

In health underwriting, it would be inappropriate to decline a risk using any of the following factors EXCEPTa)Marital status.b)Blindness.c)Mental illness.d)Genetic characteristics.

c)Mental illness.

An applicant for health insurance has not had a medical claim in 5 years. He exercises daily and does not smoke or drink. What classification do you assume the applicant would receive from his insurer?a)Standardb)Superiorc)Preferredd)Low-risk

c)Preferred

For Maryland residents insured under a long-term care policy, the one-time long-term care insurance tax credit pays what amount?a)The lesser of the deductibles paid or $270b)The greater of the deductibles paid or $270c)The lesser of the premiums paid or $500d)The greater of the premiums paid or $500

c)The lesser of the premiums paid or $500

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?a)10 daysb)25 daysc)30 daysd)45 days

d)45 days

The Commissioner discovers that a certain insurance company has been using defamation in its advertisements. The Commissioner will most likely issue a(n)a)Writ of noncompliance.b)Arrest warrant.c)Violation statement.d)Cease and desist order.

d)Cease and desist order.

Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs?a)Guaranteed and nonguaranteedb)Grandfathered and nongrandfatheredc)Risk classificationd)Metal level classification

d)Metal level classification

When an employee covered under a health reimbursement account changes employers, the HRAa)Follows the employee.b)Returns to the insurer.c)Is split between the employee and employer.d)Stays with the employer.

d)Stays with the employer.

what is the purpose of the coinsurance provision in health insurance policies

to prevent overutilization of the policy benefits

An individual purchased a Medicare supplement policy in March and decided to replace it 2 months later. His history of coronary artery disease is considered a pre-existing condition. Which of the following is true?a)The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy, the new one picking up where the old one left off.b)Coronary artery disease coverage will be permanently excluded from the new policy.c)In replacement, pre-existing conditions must be waived, so sickness relating to coronary artery disease will be covered upon the policy's effective date.d)Because this is a new policy, the pre-existing condition waiting period starts over.

a)The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy, the new one picking up where the old one left off.

An HSA holder who is 65 years old decides to use the money in the account for a nonhealth expense. Which of the following is true?a)There will be a tax.b)There will be no taxes and no penalties.c)There will be a tax and a 20% penalty.d)There will be a 20% penalty.

a)There will be a tax.

It is an unfair claim settlement practice and a violation of the Insurance Code for an insurer or nonprofit health service plan to do the following EXCEPTa)Fail to promptly provide, on request, a reasonable explanation of the basis for a denial of a claim.b)Pay a lower, adjusted, claim due to the accidental misrepresentation of the proposed insured's date of birth by the agent.c)Misrepresent pertinent facts or policy provisions that relate to the claim or coverage at issue.d)Refuse to pay a claim for an arbitrary or capricious reason based on all available information.

b)Pay a lower, adjusted, claim due to the accidental misrepresentation of the proposed insured's date of birth by the agent.

what is the purpose of managed care health insurance plans

to control health insurance claims expense