Final Exam Review
On April 9, an application is submitted without the initial premium. The insurer requires a medical exam, and it is completed on April 14. On April 18, the insurer issued the policy, and the producer delivers it on April 21. When is coverage effective?
a. April 9 b. April 14 c. April 18 d. April 21, after the statement of good health is signed, and the initial premium is paid.*
How often may the Commissioner examine an authorized insurer?
a. As often as he wants* b. No more than once a month c. No more than once every 6 months d. No more than once a year
Which of the following policies would pay for a company's rent, utilities, and other operating expenses if the owner becomes disabled?
a. Business overhead expense * b. Business buy-out c. Key employee d. Workers' Compensation
What license is given to insurance companies providing authorization to do business in a particular state?
a. Certificate of Authority* b. Appointment of Authority c. Credit of Authority d. License of Authority
What must an organization obtain from the Commissioner in order to function as an HMO in Minnesota?
a. Certificate of Insurance b. Certificate of Authority* c. Producer's License d. License of Authority
When an insured completed his health policy application, his producer did not take a premium when he submitted it to the insurer. When the producer delivers the policy to the applicant, he needs to do all of the following EXCEPT:
a. Collect the initial premium from the applicant. b. Explain the policy and provisions to the applicant. c. Issue the applicant a conditional receipt.* d. Ask the applicant to complete a statement of continued good health.
What has been established in Minnesota to promote the public health and welfare of the state?
a. Comprehensive Health Insurance Act (CHIA)* b. Complete Health Insurance Association (CHIA) c. Comprehensive Health Insurance Association (CHIA) d. Complete Health Individuality Act (CHIA)
What part of the policy directs the insurer on the recipients of benefits?
a. Conditions provision b. Payment of Claims provision* c. Entire contract d. Insuring agreement
When an agent or insurer does not truthfully explain the terms, benefits, limitations, or exclusions of an insurance policy, or makes untrue statements of fact or law, or fails to state material facts or other disclosures as required by law, this is:
a. Defamation b. Misrepresentation* c. Disparagements d. False financial statements
Which of the following would NOT be considered unfair discrimination?
a. Discrimination based on sex b. Discrimination based on race c. Discrimination based on occupation* d. Discrimination based on blindness
Paul has a basic medical policy. It will pay for:
a. Doctor visits* b. Hospital visits c. Outpatient care d. Prescription drugs
Comprehensive major medical health policies typically have an Eligible Expenses provision that specifies coverage for all but:
a. Experimental services.* b. Services of nurses. c. Semi-private room and board. d. Services of doctors.
It is unfair and a violation to tell a prospective consumer that by purchasing an annuity they will receive benefits in the form of:
a. Favored treatment in payment of dividends* b. Contractual advantages c. Special bonuses as provided in the contract d. Coverage available to a select group of individuals
Barbara allows her comprehensive major medical plan to lapse. If her policy is reinstated on March 20th and she contracts mononucleosis on March 29th, what benefits will she receive?
a. Full b. Only hospitalization coverage c. Partial d. None*
Martha decides she does not want the new policy she purchased. She is within her free look period, so she returns the policy. She should receive which of the following?
a. Full refund of all premiums paid* b. Full refund less an administrative charge for the paperwork c. Full refund less the basic cost of insurance for the period Martha held the policy d. Full refund less a pro-rata charge for the agent commission
Fred has purchased a cancellable policy. He should understand that:
a. He can keep the policy as long as he makes required premiums. b. The policy may be cancelled by the insured only on the anniversary date.* c. The insurance company may cancel the policy at any time with proper notice and refund of all unearned premium. d. The insured can cancel for any reason.
Jeff and Mike own an architect firm with 20 employees and worry about the company if one of them becomes permanently disabled. What type of policy should they buy?
a. Individual disability b. Business overhead expense c. Disability buy-out* d. Key employee
Sally is a self-employed software programmer that works from home. If she becomes unable to work due to a disability, which type of policy would pay her rent?
a. Individual disability income policy* b. Group disability income policy c. Business overhead expense policy d. Workers' Compensation
With a Guaranteed Insurability rider on a Disability Income policy, the:
a. Insured is allowed to assign the policy to a family member. b. The insured can buy additional disability income coverage without proving evidence of insurability.* c. The insurer is not allowed to cancel the policy. d. The insurer will not require a medical examination in order to issue the policy.
The cheapest premium payment mode would be on a policy that is paid:
a. Monthly b. Quarterly c. Semiannually d. Annually*
Anderson bought a policy that allows the insurer to cancel the policy at any date specified in the contract, and it also allows them to raise her premiums. Which type policy does she own?
a. Noncancelable b. Cancelable c. Conditionally renewable d. Optionally renewable*
Donald's policy allows the insurer to cancel if he changes jobs. They can also increase his premiums. It is:
a. Noncancelable b. Cancelable c. Conditionally renewable* d. Optionally renewable
Nick has a policy that the insurer can cancel when he turns 65. Which type of policy is it?
a. Noncancelable b. Cancelable c. Conditionally renewable* d. Optionally renewable
What right of renewability does not guarantee insurability if certain circumstances happen and allows the insurer to increase premiums?
a. Noncancelable b. Cancelable c. Conditionally renewable* d. Optionally renewable
What type of policy allows an insurer to cancel a policy if certain circumstances stated in the contract happen?
a. Noncancelable b. Cancelable c. Conditionally renewable* d. Optionally renewable
What right of renewability guarantees insurability, but does not guarantee premiums?
a. Noncancelable b. Optionally renewable c. Guaranteed renewable* d. Guaranteed insurability
In Minnesota, a Blue Plan (Blue Cross Blue Shield) is considered what type of plan?
a. Nonprofit Health Service Plan Corporation* b. Health Maintenance Corporations (HMO) c. Preferred Provider Organizations (PPO) d. Point of Service Plans (POS)
Long-term care plans are written as:
a. Optionally renewable b. Guaranteed renewable* c. Conditional renewable d. Cancellable
HSAs are frequently used with:
a. POSs b. PPOs c. HMOs d. HDHPs *
Which of the following offers the broadest service area and broadest selection of providers?
a. PPO* b. POS c. HMO d. FSA
If an applicant misstates their age on an insurance application, what does the insurer do when it is discovered at claim time?
a. Pay the claim in full because it is no longer contestable. b. Cancel the policy. c. Adjust the claim benefits to reflect what he would have been entitled to if his real age had been given.* d. Deny the claim because he fraudulently misrepresented his age on the application.
An insured became disabled in February of 2014. She had bought a disability income policy in October of 2012. Her disability was due to a condition that existed prior to October 2012 but was not excluded from her policy. The insurer will:
a. Pay the claim in full.* b. Pay 50% of the claim. c. Deny the claim because it is the result of a pre-existing condition. d. Deny the claim based on fraudulent misrepresentation
Which of the following may be an optional provision under the Uniform Provisions Law?
a. Physical exam b. Change in occupation* c. Entire contract d. Time limit to file claims
All of the following are considered home care services, EXCEPT:
a. Physical, speech, respiratory, and occupational therapy b. Medical social services c. Homemaker services and meal preparation d. Private skilled nursing*
Information obtained by a phone call to an applicant, may be included in which of the following reports?
a. Producer's report b. Physician's report c. Medical Information Bureau (MIB ) report d. Inspection report*
Mr. Johnson is looking at Medicare Supplement policies. These policies are designed primarily to:
a. Provide benefits not covered by Medicare.* b. Provide supplement retirement benefits. c. Provide additional disability coverage. d. Offset Medicare costs.
Carson was injured and has been on disability for 8 months, which provision is designed to encourage him try to return to work?
a. Residual disability b. Waiver of premium c. Recurrent disability* d. COLA
The benefit that encourages the disabled policy owner to try to return to work is:
a. Residual disability b. Waiver of premium c. Recurrent disability* d. COLA
A health policy will usually exclude losses related to all of the following, EXCEPT:
a. Self-inflicted injuries b. Losses incurred while committing a felony c. Losses incurred while engaging in an illegal occupation d. Losses from an auto accident when the insured was at fault*
Shane and Casey both have health plans from work that covers their son Cash. Which plan is primary?
a. Shane since he is the father. b. Casey since she works for a bigger company. c. The plans split the cost. d. The parent with the earliest birthday in the year is primary.*
Which of the following statements is correct when pertaining to coordination of benefits by a group long-term disability plan with Social Security?
a. Social Security only pays after group benefits have been exhausted. b. Group and Social Security benefits pay a combined maximum limit.* c. Group only pays after Social Security benefits are depleted. d. After group benefits are exhausted, half of the allowable Social Security benefits are paid.
Which of the following phrases that states or implies that payment of dividends is guaranteed is prohibited?
a. Stocks b. Profits c. Surplus* d. Interest
An Accident and Health policy contains a Consideration clause which states:
a. That the applicant pays the initial premium.* b. That insurable interest must exist between the parties of the contract. c. That the entire contract includes any attachments made to the policy. d. Details of certain claims that may be excluded under the policy.
The Acme Brick Company wants to provide additional benefits to certain classes of employees under a group health plan. They can do this as long as the classes are not based on:
a. The category of their job. b. The gender of the employee.* c. How long the employee has been with the company. d. How much money they make.
How does the IRS treat disability income benefits when the employer pays the policy premiums?
a. The first 3 months are taxable. b. The first 6 months are taxable. c. The are not taxable. d. They are fully taxable.*
Illustrations or projections of future dividends on any policy or contract must be based on which of the following?
a. The following year's dividends b. A state mandated scale for calculating dividends c. Industry-wide trends and averages d. The experience used by the company*
A Waiver of Premium provision in a Disability Income policy allows:
a. The insured to maintain a policy in force while unable to pay premiums when disabled.* b. The insured to extend the Grace Period. c. The insurer to increase the premium because of the disability. d. The insurer to subtract the premium payments from the insured's benefit payments.
If an individual has a chronic medical condition, how is the insurer likely to handle this situation when issuing an individual health policy?
a. The insurer will issue a Waiver of Premium rider. b. The insurer will exclude the condition with an Impairment rider.* c. The insurer will include a Double Indemnity rider. d. The insurer will include a Disability Income rider.
An individual has a disability income policy with a Change of Occupation clause when he changes to a new more hazardous job. He neglects to inform the insurer. What happens if one year later he files a claim when he becomes disabled?
a. The insurer will write a new policy b. The insurer will pay one-half of the claim. c. The insurer will pay the claim based on what the premiums would have purchased had the hazardous occupation been known.* d. Cancel his policy and refund one year's premium payments.
When does health insurance coverage begin for a newborn?
a. The moment of birth* b. When they leave the hospital c. When they arrive at their home d. 3 days after they arrive at their home
Which of the following is an improper form of policy replacement?
a. Twisting* b. Defamation c. Rebating d. Discrimination
What type of insurance contract is prepared by the insurer and not negotiated?
a. Unilateral b. Conditional c. Aleatory d. Adhesion*
To determine the coverage and benefits to pay for a surgery based on what is considered fair and common for an area is:
a. Usual, reasonable, and customary* b. Concurrent review c. Subrogation d. Relative value scale
Sue's hospital bill is $4,500. Her major medical policy has a $500 deductible and then it pays 80% of the remaining bill. The policy also has a maximum out-of-pocket of $2,000. How much of the total bill will the insurance company pay?
a. $3,200* b. $3,600 c. $3,800 d. $4,000
An extended basic Medicare Supplement plan pays 100% of usual and customary fees after spending how much in out-of-pocket costs in a calendar year?
a. $500 b. $1,000* c. $2,000 d. $2,500
How many hours of a study program do applicants for life, variable life and annuity, accident and health producer licenses need to complete?
a. 20 hours b. 40 hours* c. 45 hours d. 60 hours
There are how many Medicare supplement plan with high deductibles in Minnesota?
a. 3 b. 4 c. 5* d. 6
A basic Medicare supplement plan must cover the cost of how many pints of blood?
a. 3* b. 4 c. 5 d. 6
In order to sell long term care insurance producers must complete an initial training course of how many hours?
a. 4 hours b. 6 hours c. 8 hours* d. 12 hours
How many hours of initial training are required for a licensed insurance producer to sell long-term care insurance?
a. 4 hours b. 8 hours* c. 10 hours d. 12 hours
John has been in the hospital for five days. How long does he have to file a claim form and show proof of loss with his insurance company?
a. 45 days b. 90 days* c. 20 days d. 60 days
Within how many months from the due date of the renewal fee does an individual insurance producer have to reinstate their lapsed license without passing a written examination?
a. 6 b. 12* c. 15 d. 24
The Commissioner can issue a temporary insurance producer's license to a surviving spouse for up to how many days?
a. 60 days b. 90 days c. 180 days* d. 365 days
How many days does an insurer have to provide claims forms after a notice of claim?
a. 7 days b. 14 days c. 15 days* d. 30 days
The insurer has a maximum of how many days after receiving notice of a claim to provide claims forms?
a. 7 days b. 15 days* c. 45 days d. 60 days
Which of the following is not considered a rebate?
a. A coffee mug with an insurance agency's logo that cost $7.50* b. An insurance agent gives 50% of a client's paid premium back c. An insurance agent gives a client a cruise to the Bahamas as a gift d. A gift card for a dinner for 2 in the amount of $100
What is an incorporated insurer with its capital divided into shares and owned by its stockholders?
a. A mutual insurer b. A fraternal c. A stock insurer* d. A beneficiary
The name and or existence of the Minnesota Life and Health Insurance Guaranty Association MAY be used by an insurer in which of the following ways?
a. A pamphlet available to the public about coverage and benefits b. Explaining coverage to a potential applicant during the application process* c. A radio commercial about the covered provided d. A magazine advertisement teaching about the benefits of the Association
Tina has a policy that only covers cancer-related medical expenses. What kind of policy does she have?
a. Accident only b. Stop-loss c. AD&D d. Dread disease*
What contract term means only one party to a contract's promises are legally enforceable?
a. Adhesion b. Unilateral* c. Conditional d. Aleatory
Which of the following is NOT a duty of the Commissioner?
a. Appointing a chief deputy insurance Commissioner b. Controlling and supervising the insurance department c. Administering the insurance department to the best interests of consumers d. Creating new insurance statutes*
A POS (Point od Service) plan is a combination of:
a. HMO and PPO* b. POS and PPO c. HSA and HMO d. PPO and HSA
Capitation is used in:
a. HMOs* b. PPOs c. HRAs d. HSAs
The services are provided on a prepaid per person basis called capitation in:
a. HMOs* b. PPOs c. POSs d. HSAs
An insured has returned to work after a disability, but is unable to perform all of his previous duties. Which of the following definitions would cover his permanent partial disability?
a. Residual disability* b. Any occupation c. Own occupation d. Long-term disability
All of the following are duties of a producer when delivering a policy to an applicant EXCEPT:
a. Review of the benefits and conditions. b. Explanation of all riders and exclusions. c. Collection of any premiums due. d. Arranging to keep the policy in his office for safe-keeping.*
Samson has a policy that allows the insurer to cancel the policy at any date specified in the contract, and to raise his premiums. Which type of policy is it?
Noncancelable b. Cancelable c. Conditionally renewable d. Optionally renewable*
What is the lifetime maximum benefit for all plans offered by the Minnesota Comprehensive Health Association (MCHA)?
a. $3 million b. $5 million* c. $6 million d. $7 million
Tyler owns a major medical policy with 70/30 coinsurance and a $3,000 deductible. If he submits a claim for $20,000, how much will he pay?
a. $3,000 b. $5,100 c. $8,100* d. $20,000
Writing another person's signature is:
a. Forgery* b. Larceny c. Burglary d. Twisting
After receiving notice of a claim, the insurer has a maximum of how many days to provide claims forms?
a. 10 days b. 15 days* c. 30 days d. 60 days
Joan asked her agent when will she have benefits if she reinstates a lapsed health policy. Her agent would be correct if he told her:
a. 10 days for accidents and 30 days for sickness b. Immediately for accidents and 10 days for sickness* c. 30 days for either sickness or accident, but there would be a new pre-existing condition period d. 30 days for accidents and 60 days for sickness
The licensee shall inform the Commissioner of an address change within how many days?
a. 10 days* b. 30 days c. 60 days d. 90 days
To appoint a producer as its agent, an insurer will file a notice of appointment with the Commissioner within how many days?
a. 15 Days* b. 30 Days c. 60 Days d. 90 Days
How many days does an insured have to provide proof of loss?
a. 15 days b. 20 days c. 60 days d. 90 days *
How many days does an insured have to file a notice of claim?
a. 15 days b. 20 days* c. 45 days d. 90 days
What should the insured do if the insurer fails to send the correct forms, under the Claims Forms provision of a health policy?
a. Ask their producer for a form. b. Wait for the claims forms. c. Ask the Department of Insurance to intervene. d. Create their own form on which to submit the claim.*
Which of the following is not one of the elements required to make a contract legal?
a. Competent parties b. Offer and acceptance c. Legal purpose d. Ambiguities*
Matilda goes motocross racing over the Memorial Day weekend and suffers a broken leg. She contacts her agent to purchase a major medical policy and files a claim when the policy is issued. The company declines the claim. The grounds for declination is which of the following?
a. Insuring clause does not cover this event b. The premium was not paid until the policy was issued c. The transaction did not meet the consideration requirement d. The broken leg was a preexisting condition*
Co-insurance is designed to control which of the following situations?
a. Make deductibles higher b. Allow the insurance company to charge higher premiums c. Raise premiums more frequently d. Make the insured responsible for some of the charges to hold down claims payments*
If Dan pays his health insurance premium quarterly and fails to make payment on April 1, his grace period will expire:
a. May 1* b. June 1 c. June 30 d. July 1
Cindy has a new medical plan that provides both health care services and health care insurance. She is covered by:
a. Medicare b. A Multiple Employer Trust (MET) c. An HMO (Health Maintenance Organization)* d. Medicaid
Making, publishing, or circulating any statement which is false regarding the financial condition of an insurer is known as:
a. Misrepresentation b. Defamation* c. Rebating d. Discrimination
The most common plan used with an HSA is:
a. POS b. PPO c. HMO d. HDHP*
According to the Physical Examination and Autopsy provision, who is responsible for paying the cost of examining the insured?
a. The policyowner b. The insured c. The insurer* d. The medical provider
All premiums or other money received by a producer from an insured or applicant for insurance must be promptly deposited directly in a business checking, savings, or other similar account maintained by the producer or agency, unless:
a. The producer has been given a personal account b. The money is forwarded directly to the designated insurer* c. The insured or applicant has paid in cash d. The insurer has a different policy for deposits
What is the main purpose of the MIB?
a. The sharing of medical information and data among its member companies.* b. To provide data for the purpose of rating large group health plans using experience rating. c. To accumulate and provide data on dread diseases to members. d. Make recommendations on premiums rates for substandard risks.
In most Disability Income policies, the Elimination Period applies:
a. To claims for accidents only. b. To each disability separately.* c. Only to the first time an insured becomes disabled. d. During the first 10 days of the contract.
Sam works for large corporation and is eligible for both his company's health plan and Medicare. Which plan would be primary?
a. Work* b. Medicare c. He can pick. d. They will split the cost.
A program that includes prehospitalization authorization is an example of:
a. Workers' Compensation b. Major medical c. Managed care* d. Social Security disability