Health Insurance

An employee may generally convert her group health insurance to an individual policy within a maximum of how many days after her employment is terminated? A. 20 B. 31 C. 45 D. 90

31

Daniel Webster's disability income policy defines total disability as "the insured's inability to perform the duties of any occupation for which he or she is reasonably qualified by education, training or experience." This definition is known as the: A. "own occupation" definition and is more restrictive than other definitions. B. "any occupation" definition and is more restrictive than other definitions. C. "own occupation" definition and is less restrictive than other definitions. D. "any occupation" definition and is less restrictive than other definitions

"any occupation" definition and is more restrictive than other definitions. Yes, the "any occupation" and it is more restrictive than "own occupation." Think about this for a minute (well, 30 seconds anyway)... it says more restrictive and you need to understand that although it is opening the door to ALL occupations, this is MORE restrictive for the client because he/she will then have to prove unable to function at ANY job which restricts them from getting the benefit payments.

Nanette has a major medical policy with a $500 deductible and 80/20 co-insurance, she has a hospital bill totaling $5,500. How much out of pocket expenses does she have to pay? A. $500 B. $1,100 C. $1,500 D. $6,000

$1,500 $5,500 - $500 = $5,000 x .20 = $1,000 + add the deductible back in = $1,500.

Roberta has a basic hospital expense policy with a $10,000 limit for benefits, coordinated with a major medical policy with a $500 corridor deductible and 80/20 coinsurance provision. If she incurs a loss of $20,000, how much will the insurer pay? A. $16,000 B. $15,600 C. $ 7,600 D. $17,600

$17,600 Ok, here's how: $20,000 - $10,000 (basic) = $10,000 - $500 (deductible) = $9,500 x .80 = $7,600 and then add back in what the company paid on the Basic portion = $17,600.

Wilbur's major medical policy requires a flat $1,000 deductible and an 80/20 co-insurance with a stop loss of $2,000. What is his out of pocket expense when the medical bill is $6,000? A. $1,000 B. $2,000 C. $3,000 D. $5,000

$2,000 This one is right, and you may think it's right for two reasons, but that is not the case. I'll explain: $6,000 - $1,000 (flat) = $5,000 x 20% = $1,000 + $1,000 (add the deductible back in) = $2,000. That's right.... and you might think that it's also the stop loss point. No, not true, because the stop loss point doesn't count the deductible. So... we are only at half the stop loss point this time. OK... time to talk about another subject: math. If you are not able to follow through these last two questions with math notations, don't worry about it. Some folks who come into this field have a strong background in math and this is simple stuff. Others who are equally valuable people in this industry are not able to comprehend these math problems and think of themselves as inadequately prepared for this field. Don't. If math isn't your strong suit, work harder on the other areas. There probably won't be more than about three or four math questions on the test....(I'm told).

Orville has a major medical policy with a $500 deductable, 80/20 co-insurance, and a stop loss of $5,000. He has hospital bills of $9,500. What will his out of pocket expense be? A. $1,000 B. $1,800 C. $2,300 D. $7,300

$2,300 Yes... 9,500 - $500 = $9,000 x 20% = $1,800 + $500 (add it back in) = $2,300. You don't need to use the stop loss on this one because the "out of pocket" doesn't go high enough. Remember when you were in the 9th grade and you had word problems in math? They always seemed to give you information in the problem you didn't need to know. Same here. Watch out for that.

Randall has a major medical policy with a flat $500 deductible and an 80/20 co-insurance with a stop loss of $2,000. What would Randall's total out of pocket expense be if he was to go to the hospital and was charged $25,000 for medical expenses, his surgeon charged $10,500, and he had not yet met his deductible? A. $2,000 B. $2,500 C. $7,500 D. $10,500

$2,500 $2500 is right. $500 deductable and 20% of the remainder, except the stop loss keeps the out of pocket at $2000. NOTE: The initial deductable is not included in the stop loss amount! If you are not good at math, don't get overly worried about it. You will probably not have more than three questions on the test which actually require you to do a math problem. You can guess, or you can use the suggestions in the test-taking-skills area of the "Other" section.

Mickey McDonald owns a Hospital Expense policy and a Surgical Expense policy. The Hospital policy pays $100 a day for hospital room and board and a maximum of $1,000 for miscellaneous hospital charges. The Surgical policy pays a maximum of $500 for any one operation. If Mickey was hospitalized for 10 days and had charges of $200 a day for hospital room and board, $1,500 for miscellaneous expenses, and $2,000 for the surgical expense (a maximum procedure under the policy), what would the two policies pay? A. $1,000 B. $2,500 C. $3,500 D. $5,500

$2,500 Yes, $100 x 10 days = $1000 + $1000 Misc + $500 for the surgery = $2500. Basically, we are looking at two maximums + the per-day amount for 10 days.

Charlie owns a hospital expense policy and a surgical expense policy. The hospital policy pays $100 a day for room and board and a maximum of $1000 for miscellaneous hospital charges. The surgical policy pays a maximum of $500 for any one operation. If Charlie was hospitalized for 10 days and had charges of $200 per day for room and board, $1500 for miscellaneous expenses, and $2000 for surgical expense. What will the policies pay? A. $1000 B. $2500 C. $3500 D $5500

$2,500 Yes. $500 for the surgical side and $1000 + $1000 for the hospital policy = $2500.

Assume an insurer will issue a maximum monthly disability income benefit of $5,000, provided the total of such benefits payable by all companies does not exceed 60% of the insured's regular monthly income. Ted earns $4,500 per month and has no existing disability income policy. The maximum monthly disability income benefit this insurer would issue to Ted is A. $2,500 B. $2,700 C. $4,500 D. $5,000

$2,700 This is a math problem where there is more information than you need. The $5000 is nice to know because Ted's income is less than their maximum. Otherwise you don't need to know what the maximum is. We take the 5000 and multiply it times 60%. That gives an answer of $2700. The company will not sell any more than that to Ted because they have found over the years that if an insured receives more of a tax-free benefit than 60% of their AGI, they tend to want to stay disabled.

Arthur incurs total hospital expenses of $9,500, all of which are covered by his major medical policy. The policy includes a $500 deductible and a 75/25 coinsurance feature. Of the total expense, how much will Arthur have to pay? A. $2,250 B. $2,750 C. $2,875 D. $6,750

$2,750 $9,500 then remove the $500 deductible, multiply by .25, add the $500 deductible back in, and you get $2,750.

Wild Bill Buffalo has a major medical policy that has a $500 deductible and an 80/20 co-insurance provision with a stop loss of $1,500. He incurs a hospital bill of $4,500. What will the insurer pay? A. $1,600 B. $2,000 C. $3,200 D. $3,700

$2000 Right. $4,500 - $500 = $4,000 x .80 = $3,200. There it is. The reason I don't explain these math ones any more than this is that if you see the numbers and you have to figure out how I did it, you will remember much longer.

Williston goes into the hospital for 5 days and accrues bills totalling $4,500. He is covered under a major medical policy that offers a $500 deductible, 80/20 coinsurance, and a stop-loss of $2,000. What will the company pay? A. $4,000 B. $3,600 C. $3,200 D. $3,800

$3,200 Right on target. We actually have more information in the question than we need: we don't need to know the stop loss on this one because we never get there. Watch for too much information in the questions. You don't necessarily have to worry if you don't use all the data they provide.

In a $60,000 accidental death and dismemberment policy, the amount payable for the loss of one hand is equal to A. $30,000 B. $60,000 C. $120,000 D. nothing

$30,000 This is also known as the Capital sum. The Principal sum is for death. I hate to be a little gross here, but note that it is half payment for the loss of a hand or foot, but 2/3 payment for the loss of an arm or a leg. If the principal sum is $80,000, and the insured loses two hands, the capital sum becomes $80,000, but it is still known as the capital sum for the loss of parts. The principal sum is paid only for death.

Wilbur's basic medical expense policy limits the miscellaneous expense benefit to 20 times the $90 daily room and board benefit. During his recent hospital stay, miscellaneous expenses totaled $2,100. How much, if any, of this amount will Wilbur have to pay? A. $0 B. $210 C. $300 D. $2,100

$300 20 times the $90 daily room and board equals $1800. Expenses totaled $2100. The difference is $300. That's what Wilber pays.

Florence receives a hospital bill for $19,500 after being released from the hospital. Her Major Medical policy has a $500 deductible and an 80/20 coinsurance feature. Of the total expense, how much will she have to pay? A. $3,800 B. $500 C. $4,300 D. $1,950

$4,300 Yes. $19,500 - $500 (deductible) = $19,000 x .20 = $3,800 + $500 (putting the deductible back in) = $4,300. OK

Evander earns $2,000 a month and buys a disability policy that pays $1,000 a month for total disability and a residual rider. He goes back to work after being totally disabled for 1 year. The first month back he earns 60% of pre-disability income, his policy will pay: A. $400 B. $600 C. $1,200 D. $800

$400 Very good. This is not an easy problem. Besides that, I made it worse by using a 60% figure which has nothing to do with the 60% maximum you also have to be concerned about in disability benefits. Here's how it is done. His insurance policy covers him for up to $1000 a month. Is that OK? Yes, because $1000 is under the 60% rule of his salary which says that he can't get a policy that pays benefits of more than 60% of his current income. So the $1000 is ok. Then we forget about any benefits he was receiving when fully disabled... because that wasn't part of the question. Next we look at what he earned the first month back to work. That just happened to be 60% of his previous income level which is $1200 that month. He is missing 40% of his salary. The disability insurance coverage will pay him 40% of the full amount when totally disabled.... $1000 x .40 = $400.

Mr. Clean was hospitalized for 2 weeks and received a bill for $2,100. He has a Major Medical policy with a $100 deductible. His Coinsurance is 80/20, figured after reducing the bill by the deductible amount. Mr. Clean is expected to pay a total of: A. $400 B. $500 C. $520 D .$1,600

$500 Right. $2100 - $100 x 20% and then add back in the amount for the deductible = $500.

Katrina's health policy has a $200 deductible and 80/20 coinsurance with a stop loss of $5,000. Accrued hospital bills totaled $9,200. What will the company pay? A. $9,000 B. $7,200 C. $8,000 D. $6,000

$7,200 Yes. $9,200 - $200 = $9,000 x .80 = $7,200. The stop-loss doesn't need to be considered. The amount of the bill wasn't high enough for it to take effect.

Heinrich suffers an injury from an accident and accrued bills of $4000. He filed a claim under his major medical. The company was ready to send the check and discovered alcohol had caused the accident, what will they pay? A. -0- B. $4000 C. They will return the premium paid D. $1000

-0- The insurance company is not liable for losses attributed to the insured's commission of a felony, or if the insured participated in any illegal occupation at the time of the claim. This is according to the provision called: Intoxicants and Narcotics. You might argue that this is an optional provision and therefore it might not be in the policy. Assume that it will be for the sake of the test! Remember that the Mandatory ones are there because the state is protecting the client... and the Optional ones are GOING TO BE THERE because the state says they're optional and the companies put them in to protect themselves.

Eduardo has a $5,000 basic hospital expense policy, he also has a supplemental major medical with a $500 deductible, he incurs $4,000 worth of expenses, how much will he have to pay? A. 0 B. $3,500 C. $4,000 D. $500

0 Right... the basic policy is also known as "first dollar." That means it will cover from the first dollar to the end of it's coverage, which in this case is $5,000. If you are worrying about whether or not some of the expenses he incurred will all be covered under the basic policy, room and board, tv, telephone, you are worrying too much. These questions are not that deep.

What is the length of the elimination period for an LTC policy? A. 90 days B. 1 day C. 10 days D. 0-365 days

0-365 days The elimination period in the LTC policy is the same concept as the elimination period in a disability insurance policy, and the numbers of days as choices are the same. It is like a deductible where the policy owner covers for themselves for a certain period of time and thus the premium is lower for the policy. Self insuring for a while to reduce the premium. Of course, the policy owner could pick zero days and the policy would go into effect immediately, but the premium would be the highest with that option.

What is the penalty in Medicare Part D if the Medicare covered individual does not choose Medicare Part D when it is first offered and then wishes to add it into the benefits later? A. $250 penalty for each year that option was not selected. B. There is no penalty. C. A probationary period of six months. D. 1% per month for each month of delayed enrollment.

1% per month for each month of delayed enrollment.

When a person is covered by an HMO, the contract, certificate or member's handbook must be delivered within how many days after approval of the enrollment by the HMO? A. 5 days B. 10 days C. 20 days D. 60 days

10 days Normally, "insurance" policies should be delivered as soon as they arrive in the hands of the agent, but it doesn't mention anywhere about a "days" requirement. HMOs are different. Delivery within 10 days.

On a reinstated health policy, how long after the policy is reinstated will coverage for sickness become effective? A. immediately B. 10 days C. 30 days D. 60 days

10 days Right... for sickness, it's 10 days. For accidents, it's immediate. The reason is the same as driving in to buy car insurance after having an accident. A friend who is a P&C agent tells me it happens all the time that people drive in to get car insurance right after they have an accident! What are people thinking?

The number of Medicare Supplement Plans available to seniors is A. 10 plans designated A through N B. 14 plans designated A through N C. 12 mandatory plans D. 11 optional plans

10 plans designated A through N Yes, there are 10 plans and the letters are A through N. N is not the 10th letter of the alphabet and that makes this answer misleading. It's because originally, there were 10 plans and they were designated A through J. Now some of the plans have changed, letters are missing, and there are still 10 plans ending in N.

A small employer carrier may make an adjustment to a small employer's renewal premium due to factors of claims experience, health status, or duration of coverage for up to what percentage annually? A. 2% B. 3% C. 5% D. 10%

10%

What is the limitation imposed on number of days in posthospital skilled nursing care under Medicare? A. 7 days B. 10 days C. 100 days D. 365 days

100 days Yes... it is 20 days (100% coverage) + 80 days (co-pay).

In noncontributory group plans, how many eligible employees must be covered by the plan? A. At least 50% B. Usually 75% C. At least 90% D. 100%

100%

Once an insured has paid a specified amount of his covered expenses, usually $1,000 to $2,000, under the stop-loss feature of health insurance, the insurance company pays: A. 75% B. 90% C. 100% D. None of these

100%

Non-contributory group health plans generally require what percent of participation by eligible members? A. 75% B. 80% C. 90% D. 100%

100% Right... why would any employee not want free insurance? In addition, if someone was left out from the company's policy if they were paying all the premium, it would be discriminatory.

According to the NAIC model law, health insurance contracts have what number of mandatory provisions? A. 5 B. 11 C. 12 D. 15

12

Health policies contain how many required Uniform Provisions? A. 23 B. 12 C. 10 D. 11

12 Yes, 12 it is. How many optional? 11. This is the same as a previous question except the numbers are different to try and throw you off. Didn't work... you got this right.

The NAIC developed a model Uniform Individual Accident and Sickness Policy Provisions Law with A. 11 mandatory and 12 optional provisions B. 10 mandatory and 11 optional provisions C. 12 mandatory and 11 optional provisions D. 12 mandatory and 12 optional provisions

12 mandatory and 11 optional provisions

How long is the waiting period before a person may file a claim for Social Security Disability benefits? A. 12 months B. 150 days C. 90 days D. 6 months

150 days

If a worker qualifies for social security disability benefits after becoming totally disabled, how long before he/she can file a claim? A. 60 days B. 90 days C. 120 days D. 150 days

150 days

Cobra is a federal law which provides for extension of health benefits for what length of time after employment is terminated? A. 15 minutes B. 6 months C. 12 months D. 18 months

18 months Yes, it's 18 months after termination. It would also be advisable for you to remember what the letters COBRA stand for. Also be aware that there are four reasons why it can be extended to 36 months. 1. Employee dies 2. Dependent child becomes too old 3. Employee becomes eligible for Medicare 4. Employee divorces or separates.

In what year was the Social Security Act amended to add health insurance protection for the aged and disabled? A. 1910 B. 1939 C. 1965 D. 1990

1965 And it took effect in 1966.

The Affordable Health Care Act requires that children of the insured are eligible for health insurance benefits until they attain age: A. 20 B. 21 C. 26 D. 23

26

Three partners enter into an entity disability buy-out. Their company is worth $300,000. They would buy how many policies and at what face value? A. 3 @ $50,000 B. 6 @ $50,000 C. 3 @ $100,000 D. 6 @ $100,000

3 @ $100,000 Yes... when the entity (corporation, partnership...) is buying the policies, there are the same number of policies purchased as there are partners, and the face values equal the total value of the company.

In a disability income policy, the waiver of premium rider will exempt the insured from paying the policy premiums once the insured has been totally disabled for a period of: A. 10 or 20 days. B. 2 to 4 weeks. C. 3 or 6 months. D. None of the above

3 or 6 months

Dependent children can be covered in health policies until age: A. 18 B. 23 C. 26 D. 30

30 Yes, but this question has two answers. You will see where the age 26 is the right answer. You will also see where the state of Florida requires coverage until age 30. On the state test, choose the highest number. If they offer 26 on the test, choose it. If they offer 30 on the test, choose it.

The "open enrollment" period allows each eligible member to enroll in an HMO during every 18-month period regardless of his/her health history. This open enrollment period is not less than: A. 10 days. B. 20 days. C. 30 days. D. 60 days.

30 days

Medicare Supplement policies require a free look. How long is it? A. 10 days B. 30 days C. 45 days D. 60 days

30 days Yes, it is 30 days! Also true of Long-Term Care policies.

If an application is filed for the Reinstatement of a health insurance policy but the company takes no action on such reinstatement, the policy is automatically reinstated after how many days? A. 30 B. 45 C. 60 D. 120

45

When a reinstatement application has been received, if the company fails to act, the policy is reinstated automatically after ______. A. immediately B. 20 days C. 45 days D. 60 days

45 days

An individual health insurance policy may be cancelled after the company has given the insured how many days notice? A. 5 days B. 20 days C. 30 days D. 45 days

45 days Yes... 45 days, but from when.... it depends on which renewability provision is used in the contract.

Required Provision 4 addresses reinstatement of a lapsed policy. According to this provision, when an insured applies for reinstatement and receives a conditional receipt, how long does the insurer have to approve or deny reinstatement before the policy will be automatically reinstated? A. 180 days from the date the unpaid premium was due. B. 30 days from the date the insurer receives the application for reinstatement. C. 45 days from the date of the conditional receipt. D. There is no such automatic reinstatement.

45 days from the date of the conditional receipt.

All of the following statements concerning the taxation of health insurance benefits are true except: A. personal medical expense policy benefits are not subject to taxation. B. 5% of disability income benefits are taxable income. C. benefits paid for expenses deducted in a prior year are taxable. D. benefits received from hospital indemnity policies are not taxable.

5% of disability income benefits are taxable income

Partial Disability benefits generally represent what percentage of the maximum monthly benefits under Disability Income Policies? A. 70% B. 50% C. 60% D. 30%

50%

Under Medicare Part A, a benefit period starts when a patient enters the hospital and ends when a patient has been out of the hospital for: A. 30 days B. 45 days C. 60 days D. 90 days

60 days Yes, it is 60 days.... and then a new benefit period starts even if it is the original illness.

What is the typical maximum coverage provided on an individual disability insurance policy? A. 50% of pre-disability gross earnings B. 60% of pre-disability gross earnings C. 75% of pre-disability gross earnings D. 100% of pre-disability gross earnings

60% of pre-disability gross earnings Yes, 60% of a person's before-tax salary is the typical maximum coverage available. Reason: 60% of salary is pretty close to the same as 100% of a persons after-tax take home pay since the benefits of disability insurance come tax free.

The claimant has how many days in which to submit proof of loss to the insurance company for health insurance benefits after receiving the forms from the insurer: A. 30 days. B. 60 days. C. 90 days. D. No stated period of time

90 days

In a health policy, an individual has how many days in which to file proof of loss on the forms provided by the company? A. 20 days B. 299 days C. 90 days D. 45 days

90 days Yes... proof of loss is not the same as alerting the company. That's the first thing that happens. This is the third, where the client fills out the forms, attaches the receipts, and sends it back to the company.

The term "first dollar" often is used to describe benefits payable by which type of policy? A. A Basic Medical Expense plan B. A Disability Income policy C. A Business Overhead Expense policy D. A Major Medical policy

A Basic Medical Expense plan

Grouping small businesses together to obtain group insurance as one large group is characteristic of which of the following? A. A Health Maintenance Organization (HMO) B. A Franchise Health plan C. A Multiple Employer Trust (MET) D. A Fictitious group

A Multiple Employer Trust (MET)

A chef who is receiving Disability Income benefits is unable to return to work full time but continues his occupation on a part-time basis. Which of the following would allow the chef to continue to receive benefits long-term? A. A Residual Disability Benefit clause B. A Contingent Disability Benefit clause C. A Partial Disability Benefit clause D. A Guaranteed Insurability clause

A Residual Disability Benefit clause Yes, residual benefits are paid long term, when it is obvious that the worker cannot return to full time employment.

Which of the following statements regarding Blanket health insurance is true? A. Benefits change as the group changes B. Persons insured are named in the policy C. Each policy covers a specific number of insureds D. A blanket policy covers a changing group of people

A blanket policy covers a changing group of people

When an employer establishes a group health insurance plan, what does each participating employee receive? A. An insurance notice B. A certificate of insurance C. A letter of confirmation D. A coverage form

A certificate of insurance

Which of the following qualifies as a compensable injury under Workers Compensation coverage? A. A factory worker fractures an elbow while working overtime. B. An employee is struck by a car and seriously injured while walking back to work following a lunch break. C. A worker is involved in an auto accident while driving to work. D. All of the above qualify.

A factory worker fractures an elbow while working overtime.

An Open-Panel HMO is: A. A group of physicians who are salaried employees of an HMO. B. A network of physicians who work out of their own offices and participate in the HMO on a part-time basis. C. an HMO which is affiliated with the Federal government. D. None of the above.

A network of physicians who work out of their own offices and participate in the HMO on a part-time basis. Yes... this is the definition of an open panel HMO where the providers have their own offices, their own practices, and contract with the HMO on a part-time basis. Why is this question in the PMReview when it is not in the book? Because this question has been in the state exam even after they removed it from the book! We are looking out for you!

What is a cancelable policy? A. A policy that only the insured may cancel. B. A policy the insurer may choose not to renew only on the premium due date. C. A policy the insurer may cancel at any time by returning the unearned premium. D. A policy the insurer may not cancel unless the insured has failed to pay the premium.

A policy the insurer may cancel at any time by returning the unearned premium.

Which of the following describes a representation? A. An insurance company guarantee that policy benefits will be paid promptly on receipt of a Proof of Loss. B. An insurance company guarantee that premiums paid will be refunded within 30 days after the policy's effective date if an insured is dissatisfied with the policy. C. A prospect's statement on an application that is held to be substantially true. D. A prospect's statement on an application that is held to be absolutely true.

A prospect's statement on an application that is held to be substantially true.

Which of the following most accurately and completely describes an application? A. A form furnished by the insurer requesting certain information to become part of the insurance policy B. A written request from an applicant to an insurer requesting the insurer to issue a policy on the basis of the information in the application C. An oral request from an agent to an insurer to issue an insurance policy D. A form sent by the agent to bind insurance coverage on the applicant.

A written request from an applicant to an insurer requesting the insurer to issue a policy on the basis of the information in the application Yes, this is exactly the function of the application. Notice that it is from the applicant to the insurer. The agent is ONLY the conduit in the process. I don't make light of the job of the agent, but want you to know that the agent, legally, is assisting in the process of sending the offer to the company. There are two parties to the contract, the insured and the insurer. The agent is assisting.

Persons over 65 can be entitled to: A. Medicare Part A B. Medicare Part B C. Medicaid D. All of the above.

All of the above

If an employer is self-insured, and uses an insurance company to administer a health insurance plan, the insurance company is known as a(n) _______. A. ASO B. TPA C. PPO D. HMO

ASO ASO. Administrative Services Only. That's because the question asked about an insurance company. If the question said non-insurance company to administer the plan, it would be TPA.

When an insurance company administers a self-insured plan and is paid a fee, it is called a(n): A. ASO. B. TPA. C. EPO. D. SEC.

ASO Yes, Administrative Services Only. Notice: AN INSURANCE COMPANY. If it was a non-insurance company, it would be a TPA (Third Party Administrator).

Which policy described below pays a death benefit? A. Disability income B. Accident & health C. Accidental death & dismemberment D. Hospital indemnity

Accidental death & dismemberment Yes... AD&D. Therefore, you need to put in a beneficiary when doing the application.

If an Agent knows the client did not put in an application certain information about an illness that the client sustained, what should the agent do? A. This is not the agent's responsibility. B. Nothing and hope nothing happens for 2 years. C. Nothing at all. The company will catch the error from the MIB report. D. Advise the client he may not have a valid claim later on.

Advise the client he may not have a valid claim later on. Yes, the client needs to know that if the information is not valid, the claim can be rejected.

Which of the following services is provided under Medicare: I. In-patient hospital services II. Physicians and surgeons services in a hospital or clinic. III. Hospice benefits IV. Home health care A. I & II B. I, II, III C. all D. none

All Numbers I, III, and IV are in Part A and II is in Part B.

Besides individual health insurance and group insurance, which of the following government plans also provide health insurance: A. Medicaid B. Medicare C. OASDI disability D. All of the above

All of the above

Health insurance can be purchased through A. individual policies B. group policies C. Medicare Part B, if qualified D. All of the above

All of the above

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA) law, which of the following would qualify for extension of medical coverage? A. An employee's hours are reduced, resulting in termination from the group health plan B. An employee is terminated C. An employee becomes eligible for Medicare D. All of the above

All of the above

Under the typical HMO contract, the provider could be: A. a physician. B. a hospital. C. a registered physical therapist. D. All of the above

All of the above

Which of the following benefits may Social Security provide? A. Survivor income B. Retirement income C. Disability income D. All of the above

All of the above

Which of the following information is required on the first page of an application for health insurance? A. The name of the agent B. The name of the insurance company C. The agent's identification number D. All of the above

All of the above

Which of the following is a requirement for payment of Social Security disability benefits? A. Total disability for at least five months B. Fully insured and disability insured C. Expected disability of 12 months or longer or ending in death D. All of the above

All of the above

Which of the following is an example of how disability insurance is used for business continuation? A. Business overhead expense insurance B. Business health insurance C. Disability buy-sell agreements D. All of the above

All of the above

Which of the following is considered a moral hazard? A. Dishonest business practices B. Poor credit rating C. Excessive drinking habits D. All of the above

All of the above

Which of the following is/are health insurance risk factor(s): A. Family health history B. Sex C. Age D. All of the above

All of the above

Which of the following losses is generally excluded in a health insurance policy? A. Self-inflicted injuries B. Losses caused by drug usage. C. Losses sustained while committing a felony. D. All of the above

All of the above

Which of the following statements about deductibles in health insurance contracts is correct? A. A higher deductible will help limit claims. B. The average deductible has increased in recent years. C. Deductibles for individuals are generally in the $400 to $800 range today. D. All of the above

All of the above

Which of the following statements about group health insurance is correct? A. More Americans are covered by group health plans than by individual health plans. B. The cost of a group plan is less than a comparable individual health plan. C. Most group plans have conversion privileges. D. All of the above

All of the above

Which of the following benefits can be included in a group health plan? A. Medical insurance B. Disability insurance C. Accidental death and dismemberment insurance D. All of the above

All of the above All of the three categories can be included in a group health plan.

Which of the following statements about HMOs (Health Maintenance Organization) is correct? A. HMOs stress preventive care. B. HMOs rarely assess deductibles. C. HMOs provide coverage for routine doctor visits and hospital care. D. All of the above.

All of the above It's all three, and remember the three because they are likely to be on your test.

Which of the following is included in an Outline of Coverage? A. A brief description of the benefits and coverages B. A summary of the renewal and cancellation provisions C. A summary of the exclusions D. All of the above

All of the above Yes, all of those things are in the Outline Of Coverage.

Which of the following statements about Blue Cross and Blue Shield is correct? A. Blue Cross & Blue Shield are voluntary not-for-profit organizations. B. Blue Cross is designed to cover hospital expenses. C. Blue Shield is designed to cover doctor expenses. D. All of the above.

All of the above Yes, it's all three. Remember all of them.

Which of the following is an example of a limited risk policy? A. Travel accident policy B. Aviation policy C. Automobile policy D. All of the above

All of the above Yes... all three of these. Limited risk means a category of insurance. Special risk is one person at a time, like Lloyds of London.

Delayed disability will usually provide income if the disability appears within: A. 30 days. B. 60 days. C. 90 days. D. All of the above depending on the policy.

All of the above depending on the policy

Which of the following statements is CORRECT about the Department of Financial Services' right to examine an agent's records? A. An examination can be conducted at any time to discover any unfair trade practices. B. An agent's records involving a premium transaction are confidential and not subject to examination C. The statutes do not give the Department an absolute right to examine the affairs of insurance licensees to discover unfair trade practices. D. All investigations are done by the Department of Commerce

An examination can be conducted at any time to discover any unfair trade practices.

All of the following are true of Medicaid except: A. Medicaid is operated by the states and subsidized by the Federal Government B. Covers the total cost of visiting nurses to the home C. Medical assistance is provided to the aged, blind, disabled and families with dependent children who are financially poor D. Anyone who cannot get Health Insurance coverage due to poor health can quality for Medicaid

Anyone who cannot get Health Insurance coverage due to poor health can quality for Medicaid This is not true. It is for needy people and those who receive Medicaid have to prove they are "needy" financially.

A health insurance company may refuse coverage or require a higher premium solely based on: A. the applicant's sex. B. the applicant's marital status. C. if the applicant has the sickle cell trait. D. Applicant's past medical history.

Applicant's past medical history.

In order to comply with the Fair Credit Reporting Act, at which of the following times must an agent notify an applicant that a credit report may be requested? A. At the initial interview B. At the time of application C. When the applicant's credit is actually checked D. When the policy is delivered

At the time of application

Which of the following is a factor when considering an applicant's physical condition? A. Being overweight B. Excess credit activity C. Occupation D. All of the above

Being overweight

All of the following statements are true about the tax treatment of premiums and benefits for individually owned health insurance, except: A. Benefits from individual Disability Income policies are not taxed as ordinary income. B. Benefits received from Hospital & Surgical Expense policies are taxed to the extent that the benefits exceed the premiums paid. C. Premiums paid for Accidental Death & Dismemberment (AD&D) policies are not tax deductible. D. Premiums paid for Individual Disability Income policies are not tax deductible

Benefits received from Hospital & Surgical Expense policies are taxed to the extent that the benefits exceed the premiums paid. Benefits are not taxed.

Noncancelable health policies prevent the company from: A. canceling policies. B. increasing premiums. C. Both A & B D. Neither A or B

Both A & B

Which of the following requirements generally must be met before an individual is eligible to participate in a group health plan? A. Minimum of one to three months of employment service B. Full-time employment status C. Both A & B D. Neither A or B

Both A & B Yes, both of these are commonly used. Now that's an important way that the test builders seem to think. If they get the idea that something is "common," the test question assumes that it's always that way. I don't guarantee that they will think in that direction for every question, but they tend to think that way! This is a good test question example though, because I know of companies where this rule doesn't apply, and yet you had better answer the question as though all companies function this way. Notice that I'm trying to get into the thinking of the test builders. You need to be aware of how they are asking the questions, and not get in too deep on looking for exceptions (like this question for example). Understand?

Major medical will not pay which of the following claims? A. An illness that is work related B. Non-occupational accident injuries C. Experimental drugs or treatments D. Both A and C

Both A and C Yes, the Major Medical does not pay on work related illnesses, worker's comp pays, and Major Medical does not pay for experimental drugs or treatments.

Which of the following statements about the differences between PPOs (Preferred Provider Organization) and HMOs is incorrect? A. HMOs operate on a prepaid basis, PPOs operate on a fee-for-service-rendered basis. B. Unlike physicians in HMOs, PPO health care providers are normally in private practice. C. Both HMOs and PPOs rarely have deductibles. D. The goal of both is to keep costs under control.

Both HMOs and PPOs rarely have deductibles. This is the right answer because it is an incorrect statement. HMOs rarely have deductibles, but PPOs normally function with deductibles. That's a difference between HMOs and PPOs.

Which of the following statements about disability insurance is correct? A. Disability insurance is designed to provide income when wages are lost due to disability. B. Disability insurance can also cover medical expenses associated with disability. C. Both a & b D. Neither a or b

Both a & b Yes, it's both of these. Take note of this. In the heat of the state exam, you can find right answers, like (a), and choose it, only to miss the point because it wasn't the only right answer. Make sure you consider all answers.

Health insurance may be _______. A. Participating B. Nonparticipating C. Both a & b D. Neither a or b

Both a& b

Under a typical HMO plan, each member pays: A. a premium based on the size of the deductible. B. a premium based on how often he/she uses the health plan. C. a fixed premium whether or not he/she uses the health plan. D. None of the above

C. a fixed premium whether or not he/she uses the health plan. Yes... a fixed premium. Fixed.

Select the correct statement below: A. COBRA permits companies who have terminated employees to stop their group coverage as of the date of termination. B. When employers discontinue group coverage, employees must prove they are insurable in order to convert to individual coverage. C. COBRA protects dependents of employees by mandating for them the same extension and conversion privileges available to employees covered by group plans. D. All of the above are correct.

COBRA protects dependents of employees by mandating for them the same extension and conversion privileges available to employees covered by group plans Right. No more than 102% of the original cost.

Which of the following provisions establishes one of a health insurance policyowner's rights of ownership? A. Change of Beneficiary B. Legal Actions C. Entire Contract D. Payment of Claims

Change of Beneficiary Yes, it is a legal right to change the beneficiary any time the owner wishes to do so. We are assuming a revocable beneficiary unless it is stated otherwise. The question is asking about health insurance, and yet this applies because some health insurance policies have to do with death. At such times, it is necessary to have a beneficiary listed. AD&D policies are an example. Otherwise, on a medical expense policy, the beneficiary is the owner (who returns from the hospital and pays the bill).

Under the Uniform Provisions Law, which of the following provisions is optional for a health policy? A. Change of Occupation B. Entire Contract C. Physical Examination and Autopsy D. Time Limit on Certain Defenses

Change of Occupation

Which of the following is an Optional provision of health insurance policies? A. Entire contract provision B. Change of occupation provision C. Change of Beneficiary provision D. Proof of Loss provision

Change of occupation provision Remember, these optional ones are for the benefit of the companies. Change in occupation protects the company from changes which could be very costly in insurance benefits.

In a group health policy, coverage is required to be provided to the employee for which of the following? A. Chiropractic care B. Alcoholism C. Drug dependency D. All of the above

Chiropractic care Only two are required to be passed through the employer who is making all the decisions on the plan, to the employee. Chiropractic care and maternity.

Which of the following is not a mandatory health insurance provision? A. Grace Period Provision B. Reinstatement Provision C. Time of Payment of Claims Provision D. Co-insurance Provision

Co-insurance Provision This not a mandatory OR an optional provision!

What term describes the concept that the insurer and the insured share in the cost of medical expenses, with the insurer bearing the greater share? A. Deductible amounts B. Stop-loss limit C. Coinsurance D. Benefit restoration

Coinsurance

Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures? A. Administrative-services-only plan B. Commercial insurer C. Preferred provider organization D. Health maintenance organization

Commercial insurer Insurance companies pay on what is known as the concept of reimbursement, which is covering for the loss occurred.

An agent completes an application for accident and health insurance at the home of a proposed insured, collects the initial premium, and returns to her office. Before transmitting the applications and premium to her home office, she should do which of the following? A. Correct any mistakes on the application B. Complete and sign the agent's report C. Send a copy of the application to the Medical Information Bureau (MIB) D. Deposit the premium in her personal checking account

Complete and sign the agent's report

Which of the following types of insurance policies combines several types of benefits and provides more coverage than any of the others? A. Hospital Expense B. Surgical Expense C. Comprehensive Major Medical D. Hospital Fixed Rate policy

Comprehensive Major Medical Comprehensive Major Medical is like a basic plan combined with a Major Medical Supplementary policy. It provides more coverage than any of the others.

An applicant for insurance may pay the initial premium and receive a document from the agent indicating that if the policy is issued as requested, coverage usually begins on the date of the document. What is this document called? A. Executing agreement B. Conditional receipt C. Warranty D. Notice of inspection

Conditional receipt Yes, exactly. Conditional upon some things happening, particularly all the medical requirements... when the paramedic comes out to obtain specimens from the prospective insured. And then it is conditional on all the results being positive and within the normal ranges of the company's requirements. Things to note: 1. There is NO coverage (even conditionally) until the medical report (parameds come and do their thing) if a paramed exam is required. 2. Then there is coverage after that ONLY if all the questions and medical tests fall within the normal (standard) ranges. 3. Then, coverage will be truly effective when the policy is issued. 4. And the policy "effective date" will be the date of the conditional receipt.

If a policy is renewable to age 65 but also provides that it may be continued beyond the age limit if certain requirements are met, it is said to be: A. Noncancellable B. Guaranteed Renewable C. Conditionally Renewable D. Optionally Renewable

Conditionally Renewable

Which of the following statements applies to the rights of a surviving spouse under a group insurance policy? A. Coverage continues at the same rate and premium. B. Conversion privileges must be provided for dependents. C. Conversion privileges extend to the spouse but not to the children. D. Conversion rights of the surviving spouse are less than those which the insured employee possessed.

Conversion privileges must be provided for dependents.

he right of an employee to exchange his group insurance for an individual policy within 31 days from termination of employment is provided by the: A. Insuring clause. B. Conversion provision. C. Reinstatement provision. D. Renewability provision.

Conversion provision

Which of the following is considered a "cost containment" measure of health policies? A. Coordination of Benefits B. Duplication of Benefits C. Full coverage for inpatient treatment D. Elimination of all deductibles

Coordination of Benefits Yes, coordination of benefits functions so that no more than 100% of the invoice is paid. Insurance companies don't care how many policies you have. They coordinate the benefits so that the insured does not make money on their illness.

What type of disability policy covers a fixed period of time and provides funds for long-term commitments if an owner or key employee of a business is disabled? A. Decreasing term disability coverage B. Key person disability coverage C. Business overhead expense coverage D. Disability buy-out coverage

Decreasing term disability coverage Does this one sound unusual? This is a decreasing amount of disability insurance as time goes on until the protection is not needed further.

Which of the following statements about the taxation of personal disability income insurance is correct? A. Premiums paid for personal disability income insurance are tax deductible. B. Disability benefits are tax free to the recipient C. Both A & B D. Neither A or B

Disability benefits are tax free to the recipient Yes, because the premiums are not deductible. The important word in this question is "personal" meaning the person is paying for the coverage with after tax dollars out of their pocket.

Which one of the following does not fall into the general insurance area of coverage for medical costs? A. Accident and sickness policies B. Hospital expense policies C. Major medical policies D. Disability income policies

Disability income policies Yes, disability income policies fall into their own category. The other three are intended to cover for medical costs. (And there is even an exception to this one: even disability policies can possibly have wording in the policy which says they will pay for the cost of medical treatment for a non-disabling injury... so if you knew that much, it could have made this question more difficult.) Usually, when the state asks a question without supplying room for an exception, forget about the exception if you know about it.

A Guaranteed Insurability clause can be attached to which of the following type of health policies? A. A hospital indemnity policy B. Disability income policy C. Major medical policy D. Cancer Policy

Disability income policy Yes, the ability to buy more coverage at a later date without proving insurability. It's the only health policy on which this is true.

What is the period of time called that a disability must last before benefits begin? A. Flat deductible period B. Corridor deductible period C. Coinsurance period D. Elimination period

Elimination period

Who pays the taxes that finance Social Security benefits? A. Employers and employees, in equal contributions B. Employers and employees, with the employer paying the larger share C. Employers and employees, with the employee paying the larger share D. Employees only

Employers and employees, in equal contributions

The policy provision that prevents an insurance company from altering its agreement with a policyowner by referring to documents or other items not contained in the policy is called the: A. Incontestable provision B. Benefits provision C. Entire Contract provision D. Legal Actions provision

Entire Contract provision

Which of the following limits coverage under an insurance contract? A. Waiver of Premium B. Conditions C. Exclusions D. Declarations

Exclusions

Medicaid provides: A. Federal funds to states for medical care to the aged. B. Federal funds to qualified charitable organizations that provide benefits to poor people. C. Federal funds to those 65 and older who have medical issues. D. Federal funds to states to aid in their public assistance programs.

Federal funds to states to aid in their public assistance programs. Yes, The wording here causes the answer to be a bit disguised. Medicaid is for needy people of any age. Notice that A and C are both about the same, and neither are right. This is a good way to throw out two bad answers... if two answers are stating the same thing, ignore them.

Basic medical expense insurance is also called: A. Medicare Supplement insurance B. Last Dollar insurance. C. First Dollar insurance. D. Major Medical insurance.

First dollar insurance Yes... because the Basic plan pays from the very first dollar of expense without any deductible being paid.

Gabby is injured on the job through no fault of the company. Under state worker's compensation laws, we can assume: A. his employer will not be liable because it wasn't their fault. B. Gabby will probably receive worker's compensation benefits, either on a weekly or monthly basis. C. Gabby must sue his employer to get compensation. D. Gabby is just out of luck.

Gabby will probably receive worker's compensation benefits, either on a weekly or monthly basis. Yes, that's the likely outcome.

Which of the following primary factors is not used in underwriting individual health insurance policies? A. Moral hazard B. Occupation C. Geographical location D. Physical hazard

Geographical location

Greta Garbo is named as the insured in an AD&D policy. Gilbert Garbo is the first in line to receive the death benefit provided by Greta's accident policy. Their daughter Gretchen is named as second in line to receive the benefit. Which statement is correct? A. Greta is the primary beneficiary and Gretchen is the contingent beneficiary. B. Greta is the contingent beneficiary and Gretchen is the primary beneficiary. C. Gilbert is the primary beneficiary and Gretchen is the contingent beneficiary. D. Both Gilbert and Gretchen are primary beneficiaries.

Gilbert is the primary beneficiary and Gretchen is the contingent beneficiary.

An agent takes an application for health insurance on Ward and Lulu Cleaver and their family. When the agent returns to her office she discovers two unanswered questions on the application. Of the following, which actions should she take? A. Call the Cleavers and get the information over the telephone. B. Reconstruct the sales interview and answer the questions based on the information she can remember. C. Submit the application to her company as is. D. Go back to the Cleavers and have them complete the unanswered questions.

Go back to the Cleavers and have them complete the unanswered questions. Yes, go back and finish the job in person. They are signing the application with the understanding that what is on it is what they are attesting with their signature, nothing more, nothing less.

Which of the following policy provisions defines a specific period in which an insured who has not paid the premium due remains covered by the policy? A. Right of ownership B. Grace period C. Consideration clause D. Waiver of Premium

Grace period

Does the state law require maternity coverage in individual or group policies? A. Individual B. Group C. Both D. Neither

Group Yes, it's group plans. Not individual plans. Here's something real important: if you look at all the various options available on group plans, you will discover that many are required to be offered to the EMPLOYER, but only two are required to be passed through from the employer to the EMPLOYEE.... those two are maternity and Chiropractic care. Read the requirements carefully... although I just gave you the summary of all of them. You know, it takes a lot of reading to figure out things like this. I think that may be why the state requires that you sit through a course to get comparisons like this. There are more, and interesting ones, coming. Keep reading.

The type of health care provider that provides both the health care services and the health care coverage is a: A. Preferred Provider Organization. B. Health Maintenance Organization. C. Blue cross/Blue shield organization. D. Traditional health insurance company.

Health Maintenance Organization.

Jon Smith is involved in a 2-car accident in which he is disabled and Mr. Smith's passenger and the other driver are injured. Which of the following would most likely be covered by his Disability income policy? A. His lost income B. The disability of the other driver C. Jon's medical expenses D. The dismemberment of an arm of the passenger

His lost income

Medicare Part B includes all of the following except: I. hospitalization. II. ambulance service. III. x-rays. IV. medical equipment rental. A. I B. I, III C. II, III, IV D. I, II, III, IV

I Hospitalization is Part A

Define an association group: I. Usually a group of professionals II. Must have been in existence for 2 years III. Can be formed to purchase insurance A. I only B. II only C. III only D. I & II

I & II

Which statements about surgical expense benefits is true? I. The amount on the benefit schedule is typically expressed in terms of the maximum benefit payable. II. Often will contain a conversion factor A. I only B. II only C. I & II D. Neither I nor II

I & II

Co-insurance may be defined as: I. sharing of expenses by the insured and the insurer. II. a form of risk retention III. insurance covering two people. A. I & II B. III C. None D. All

I & II "I" is obvious. "II" is not, but after thinking about it, you will come to the conclusion that this is what is happening. The insured person "self-insures" for the part of the expense that he/she "co-pays".

Medicare supplement policies are offered by: I. private insurers. II Blue Cross and Blue Shield. III. the United States government. IV. the State. A. All of the above B. III & IV C. I & II D. None of the above

I & II Yes, private companies do these including private insurers and Blue Cross & Blue Shield. The government does not. Medicare is a government program. Medicaid is a government program. Medicare Supplement policies which are also known as Medigap policies are sold by private industry, and they cover the "GAPS" in Part A and Part B. Those gaps are deductibles, co-pay, and excesses over and above. Travel is also thrown in as an option.

A difference between life & health policies is: I. life is a valued contract, health policies can be indemnity contracts II. life is an indemnity contract, health is a valued contract III. life is a valued contract, health policies can be reimbursement contracts A. I only B. II only C. III only D. I & III

I & III Life is a valued contract because we always know what the amount is going to be for the proceeds: the face value. A health insurance policy can be reimbursement because we don't find out the cost of the care until after it occurs, and then the amount paid by the insurance company will be reimbursing for the actual cost (or less in the case of deductibles and co-pay), or it can be an indemnity contract such as the "hospital indemnity" policy which supplies a set dollar amount for every day the insured is in the hospital. We won't know ahead of time what the amount will be until after the illness....but it is an indemnity contract because the policy will be paying a set figure per day whether it is used or not. Long-term care contracts are sold in one of two versions: indemnity or reimbursement, but usually indemnity.

Mattie was in a car accident. AD&D insurance covers _______ as a result of the accident. I. death II. the loss of use of a limb III. the loss of sight IV. a broken arm A. I & III B. I, II, & III C. I & IV D. I, II, III, & IV

I & III Right... I'm sorry to say this... but the limb has to be severed to count. Or death. Loss of the use of an attached limb doesn't count. Another problem. I'm telling you that loss of use doesn't count, and I suggest that you believe that for the test. Go with the severance definition.

How do HMOs emphasize preventive care? I. encouraging routine physical exams II. use curative care instead of preventive care III. diagnostic screening IV. give choice of doctors A. I & II B. I & III C. II & III D. I, II, III & IV

I & III Yes, the companies suggest that subscribers attend to potential problems early and thus avoid later, much costlier, curative care.

Self inflicted injuries are excluded from which of the following? I. Medical Expense policies II. Disability Income policies A. I only B. II only C. I and II D. Neither I nor II

I and II

Which of the following statements about Medicare is true? I. Payments are made directly to the hospital not to the Medicare recipient. II. Home Health Care benefits and Skilled Nursing Facility Care are provided under Part A. A. I only B. II only C. I and II D. Neither I nor II

I and II

Which of the following statements about the role of the agent in completing health insurance applications is true? I. The agent must understand the importance of Moral Risk. II. Problems with claims will probably occur if the agent fails to include all pertinent facts and medical history on the forms provided. A. I only B. II only C. I and II D. Neither I nor II

I and II

Which of the statements below about Medicare Part B is (are) true? I There is an annual deductible II. There is Coinsurance of 80%-20% after the deductible is met A. I only B. II only C. I and II D. Neither I nor II

I and II

A Cancelable health insurance policy allows the insurer to: I. change premium rates to the policyowner. II. cancel the policy due to health reasons. III. change the mandatory policy provisions during the time the policy is in force A. I, II and III B. II and III only C. I and II only D. I only

I and II only

On the delivery of an insurance policy that contains an exclusion rider for a past health condition, an agent must do which of the following? I. Explain, to the best of his/her ability, the rider and the specific exclusions. II. Obtain the insured's signature on the amendment form. III. Change any statement on the application that he/she thinks may be incorrect. A. I only B. II only C. I and II only D. I, II and III

I and II only

An agent has just taken an application for an individual Disability Income policy and has received the initial premium. He has given the prospect a conditional receipt. At this time it would be appropriate for him to tell the prospect which of the following? I. A medical examination may be required. II. An investigative report may be required. III. The Medical Information Bureau (MIB) will send its report directly to the prospect. A. I and II only B. I and III only C. II and III only D. I, II and III

I and II only The MIB never sends it's report to the prospect/insured.

In health insurance, the length of the Grace Period varies according to which of the following? I. The mode of premium payment II. The length of the benefit period III. The length of the Elimination (Waiting) Period A. I only B. I and II only C. II and III only D. I, II, and III

I only

The basic hospital insurance (Part A) of Medicare covers: I. Hospital expenses II. Physician's fees and services A. I only B. II only C. I and II D. Neither I nor II

I only Physician's fees and services are covered in Part B.

Health insurance provides protection against: I. Illness II. Accident & injury III. Disability IV. Dying too soon V. Living too long A. I, II & V B. I, II, IV C. II & III D. I, II & III

I, II & III Yes, this is the way it would be on the state test. Dying too soon is covered with life insurance, and living too long is covered by the life insurance industry with annuities.

Which of the following are categories of health care policies: I. medical expense II. accidental death III. major medical IV. disability income A. I & II B. II & III C. I, III & IV D. I, II & IV

I, II & IV Yes, all three ...This is not the greatest question in the list. What makes it more difficult is that they all seem to be health insurance. It is a little like looking for something in a picture where the goal is to find what doesn't fit. Major Medical coverage is included in the category called Medical Expense Insurance. This one hinges on the use of the word, "category." When you have a question like this, and the state has plenty like it (you won't like a lot of their unusually worded questions), sometimes it is better to approach it from the other side... Which of these doesn't go with the rest of the group. It isn't easy to know all these things and keep them in perspective, but do the best you can.

Under a Major Medical policy, the cost of which of the following would usually be considered a covered medical expense? I. Heart surgery II. An emergency appendectomy III. Plastic surgery for scars received in an auto accident A. I only B. III only C. I and II only D. I, II and III

I, II and III Yes... all three would be covered. The hard one is the plastic or cosmetic surgery. It is covered because the need for the procedure was a result of an accident.

Which of the following is generally covered under basic medical expense insurance? I. Hospital daily room and board II. Visits to physicians' offices III. Private duty nursing IV. Monthly disability income A. I & IV B. III C. I, II & III D. All

I, II, & III Not disability.

With a disability buy-out, which of the following are included in this agreement? I. The length of time before buy-out is required II. The proper definition of disability III. Whether the benefits are paid lump sum or in installments IV. Define how business will continue without the key person A. I only B. I & IV C. I, II, & III D. I, II, III, & IV

I, II, & III Right.... it's the first three, but does not include how the business will continue.

Time limit on certain defenses must be included in which policies? I. HMO II. Medical expense policies III. Disability policies A. I only B. II only C. I & II D. I, II, & III

I, II, & III Yes, the time limit on certain defenses which is rather similar to the contestability period in life insurance, is included in all health policies and contracts

A business overhead expense policy covers which of the following? I. Office rent. II. The employee's salaries III. The owner's salary IV. The mortgage A. I & II B. I, III, & IV C. I, II, & IV D. All

I, II, & IV Right ... it covers a lot of things, three of which are mentioned in these answers, but it DOES NOT cover the salary of the owner. Great question for the state test. This policy is also known by it's "initials" BOE.

Riders or endorsements may do which of the following to a health insurance policy? I. Add benefits II. Restrict benefits III. Limit coverage IV. Increase premiums A. I and IV only B. II and III only C. I, II and III only D. I, II, III and IV

I, II, III and IV Yes, all of these can occur with riders or endorsements.

Which deductible(s) is/are included in supplemental major medical? I. Flat II. Corridor III. Integrated A. I only B. I & II C. II & III D. I, II, & III

II & III Right... both of these are between the Basic Plan and the Major Medical. The basic plan pays from the first dollar and then the deductible is used before the major medical kicks in.

An HMO found guilty of unfair trade practices act could be charged a penalty of: I. up to $2,500 II. up to $50,000 III. if the violation is criminal, it can result in imprisonment IV. $10,000 A. I & III B. III & IV C. II & III D. II only

II & III The first thing I want to say is that Florida has taken out the roman numeral questions like this one, but I have these in because they are more challenging. You won't find any like this on the state test. The answer to this question is: up to $50,000 and potential imprisonment. Pretty serious stuff. The state means business and companies are aware of that.

A recurrent Disability is normally considered: I. to be a problem that the insurance company cannot be expected to cover repeatedly II. for repeat coverage if the insured has worked a specified period after completing a previous elimination period A. I only B. II only C. I and II D. Neither I nor II

II only

John Johnson purchased group Credit Disability Insurance to cover a loan. He was injured and disabled for 7 months. What benefits were paid under his policy? I. The insured received Disability Income benefits II. The insured's creditor received the equivalent of the monthly payment owed by the insured A. I only B. II only C. I and II D. Neither I nor II

II only

Which of the following statements about Medicaid is/are true? I. It is one of the major parts of Medicare II. It is intended to provide medical assistance for certain categories of people who are needy III. It supplements Medicare for those over age 65 IV. It is funded entirely by state Government A. II, III, and IV B. I and II only C. II only D. IV only

II only This answer is valuable for a variety of reasons. First, the content. I is wrong. II is correct. IV is wrong (it's almost 50/50 with the feds). III isn't right because Medicaid is not a Medicare supplement (Medigap) policy... but in a sense, for a needy person, Medicare comes first and then when that runs out, Medicaid fills in. The second reason this is a good question is that you can look at what you know for sure and eliminate all the bad answers. You know which are bad and that eliminates all but (c). And even if you thought that III was a possibility, that choice isn't available except on an answer you already know is wrong. The last reason to talk about here is that the answer you like is II (#2), but the correct answer is not the second choice in the list below, but is the third choice (c.). The location of the right answer is not the same below as the right one above it (II.). Watch out for that since the computer will put the answers to all the questions in random order.

Which is true about Part A of Medicare? I. the insured must pay a premium II. The insured must pay a deductible A. I only B. II only C. I and II D. Neither I nor II

II only With Part A there is a deductible , but no premium to be paid. Part B has the premium required.

Which of the following policies can be written on a noncancelable basis? I. A Medicare supplement II. A Disability Income policy A. I only B. II only C. I and II D. neither I nor II

II only Yes, because the policy is based on a specific dollar amount which doesn't increase (for the moment, forget about any COLA enhancements to the policy). Therefore, the company sees the policy as being under control, and can issue it noncancelable which means the premium will never go up and the policy can't be cancelled.

Which of the following about group health insurance is (are) true? I. Insurance company underwriting practices are generally less liberal for groups than for individuals. II. Claims experience is often utilized in large groups. A. I only B. II only C. I and II D. Neither I nor II

II only Yes, that is a major factor when determining premiums for a group. It's past claims experience of the group.

Which of the following policies can be written on a noncancelable and guaranteed renewable basis? I. A Dental Care Policy II. A Disability Income Policy III. Comprehensive Medical Expense Policy IV. A Major Medical Expense Policy A. I only B. II only C. III and IV only D. None of the above

II only Yes... and here's why: a disability policy has a value stated in dollars which is set at the start of the policy. It is not reimbursing the client, it pays a set amount which doesn't go up (assume no rider is on it). Therefore, since the company knows their cost isn't going to go up, they can make a policy non-cancellable and guaranteed renewable without worrying about any major rising costs.

Which of the following may normally be used as a definition of total disability? I. House confined II. Inability to perform the duties of any occupation III. Inability to perform the duties of the insured's own occupation A. I only B. I and II only C. II or III only D. I and III only

II or III only

An employer who fails to comply with COBRA can be subject to: I. fines II. prison III. lose tax deduction A. I & II B. I & III C. III only D. I, II, III

III Only

Which of the following statements is/are true about a Medicare Supplement policy? I. Only insurance companies affiliated with Medicare can provide Medicare Supplement policies. II. These policies may be issued to anyone 59 1/2 or older without evidence of insurability. III. Anyone who qualifies for Medicaid benefits may be issued these policies. IV. These policies are designed to cover the deductibles and coinsurance that Medicare patients have to pay. A. III and IV only B. I only C. II and III only D. IV only

IV only

Which of the following statements is true about the conditional receipt issued to an applicant for an individual Disability Income policy? A. coverage begins immediately as of the date of the conditional receipt. B. An agent should give an applicant the conditional receipt after taking an application, even if the applicant has not been paid the premium. C. If an applicant is an acceptable risk, the conditional receipt binds the insurance company as of either the date of the receipt or the date of the medical examination, whichever is later. D. If unfavorable information is discovered during the underwriting process, the conditional receipt guarantees standard coverage.

If an applicant is an acceptable risk, the conditional receipt binds the insurance company as of either the date of the receipt or the date of the medical examination, whichever is later.

Which of the following statements regarding claims payments is not included in Time Payment of Claims, and Payment of Claims? A. Claims for payment of periodic indemnities must be made no less often than once a month. B. In order to facilitate payment, the insurer may pay an indemnity up to $1,000 to certain people who appear to be entitled to it. C. If there is no beneficiary designated for any death benefits payable, the insurer will pay the benefit to any relative of the insured by blood or marriage who appears to be entitled to it. D. The insurer may pay benefits directly to hospitals and/or medical practitioners unless the insured has specifically stated otherwise.

If there is no beneficiary designated for any death benefits payable, the insurer will pay the benefit to any relative of the insured by blood or marriage who appears to be entitled to it. This is not included. The company will not pay the benefit to anyone who appears to be entitled to it. It goes to the deceased insured's estate.

Under group health insurance, coverage for a newborn child of the insured begins how soon after birth? A. Immediately B. 24 hours C. 48 hours D. 72 hours

Immediately It was once described to me as "first breath"... and that just means that it was a live birth.

A Hospital Expense policy that pays a flat amount per day for hospital room and board pays benefits on what basis? A. Billing B. Reimbursement C. Automatic D. Indemnity

Indemnity Yes, it is a hospital indemnity policy. I call this one a "dog food/cat food" policy, because it is often intended to replace the income which is lost due to being in the hospital and not at work. It is to cover on-going home expenses. Sometimes ads for this type of policy come in your Sunday paper. $100 for every day you are in the hospital.

Which statement in the policy says: benefits are subject to all the provisions, conditions, and exclusions of the policy. A. Entire Contract Clause B. Insuring Clause C. Consideration Clause D. Owner's Rights

Insuring Clause Yes, the insuring clause spells out what the company is going to do for the client in return for the premium. In it will be a statement that the benefits are subject to all the provisions, conditions, and exclusions of the policy. Now you know.

The primary beneficiary designation in an Accidental Death & Dismemberment policy may be: A. Irreconcilable B. Irrevocable C. Secondary D. Contingent

Irrevocable The other possible answer is revocable, but it is not one of the choices.

What is the function of an impairment rider attached to a health insurance policy? A. It increases the premium rate charged. B. It excludes coverage from losses resulting from specified conditions. C. It decreases the amount of benefits provided. D. It increases the policy's probationary period.

It excludes coverage from losses resulting from specified conditions. A specific condition will not be covered. Otherwise, the company won't take the insured because the risk on that one impairment is too great.

Which of the following is true about coinsurance? A. Coinsurance applies to the deductible as well as to claim payments. B. Premiums are higher for a policy that contains a coinsurance provision than for one that does not. C. It helps control over-utilization of benefits. D. Insurance companies can change the coinsurance ratio after the policy has been issued.

It helps control over-utilization of benefits. And it works fine. People don't rush off to the doctor's office every time they sniff if there is a co-pay involved, and they don't have things done without thinking about it, if they are responsible for some of the cost.

Which of the following statements about a conditional receipt is true? A. It becomes part of the policy. B. It is an interim Insuring Agreement. C. It guarantees that the applicant is acceptable to the insurance company. D. It is used to purchase temporary insurance that terminates in 6 months.

It is an interim Insuring Agreement.

Which of the following statements about waiver of premium in health insurance policies is NOT correct? A. It exempts an insured from paying premiums during periods of permanent and total disability. B. It may apply retroactively. C. It generally drops off after the insured reaches age 60 or 65. D. It normally applies to both medical expense and disability income policies.

It may apply retroactively.

Which of the following statements is usually true about a Medical Expense policy? A. It is available on a group basis only. B. It covers accidental injuries only. C. It pays benefits on a cost-incurred basis only. D. It covers hospital expenses only.

It pays benefits on a cost-incurred basis only. Yes, it is a reimbursement policy. It pays to cover the costs as they are incurred.

Which of the following statements about a conditional receipt is true? A. It is given as a receipt for an initial premium payment in cash, but not by check. B. It describes the physical condition of the applicant at the time the application is taken. C. It lists the conditions of the insurance policy at the time of issue. D. It specifies the timing and the terms of insurance coverage.

It specifies the timing and the terms of insurance coverage. Yes. The timing has to do with the medical report (medical exam) if required and the amount of coverage, and when it applies.

Mr. Finklestein has an accident and goes on disability income. After 9 months, he goes back to work. After 3 more months, he finds he returned to work too soon and must go back on disability. How will the company handle this claim? A. It will be classified as a new disability with a new elimination period B. It will be considered a continuation of the same disability C. The company will require Finklestein to wait 6 months before benefits can begin D. It will be a new disability but the elimination period will be waived

It will be considered a continuation of the same disability Right... it is considered a continuation of the same disability.

Which of the following is not used when determining total disability? A. Training B. Experience C. Education D. Job satisfaction

Job satisfaction

Business health insurance will provide benefits for which of the following? A. Medical expense coverage B. Key person disability C. Overhead expenses D. Disability buy-out

Key person disability Yes... this is a little bit of a strange way to look at things in a health insurance area, but we are talking about the "health" of the business! Therefore, this is the right answer... it deals with key person disability and helping the business to overcome the temporary loss of a key person.

Matilda is insured under a $500 per month disability income policy that contains a change of occupation provision. After her policy was issued, she changed her occupation from bank teller to farmer without notifying the insurance company and recently became injured. She would most likely receive which of the following from the company? A. No benefits B. Less than $500 per month C. $500 per month D. More that $500 per month

Less than $500 per month Yes, because the company will adjust the benefits lower because for the premium that has been paid in a more risky occupation, the benefits will be less.

Which of the following is not a service provider? A. HMO B. Lloyd's of London C. PPO D. EPO

Lloyd's of London It ought to be a fairly easy question. I'm not sure the state exam will be this nice to you. It's the one answer that really stands out from the rest. Lloyd's of London isn't a service provider or an insurance company either.

What is the type of health plan which contains a deductible and has a co-insurance requirement? A. Basic B. Major medical C. HMO D. PPO

Major medical Yes... The deductible comes first and then after the deductible, it shifts to a co-pay arrangement until the stop-loss point arrives.

To ensure coordination and non-duplication of benefits, an insurance company may integrate long-term Disability Income benefits with all of the following except: A. Workers Compensation B. Medicaid C. Wage continuation plans D. Social Security

Medicaid

Which of the following health policies would provide reimbursement for expenses incurred as the result of a broken leg? A. Accidental Death and Dismemberment policy B. Disability Income policy C. Endowment policy D. Medical Expense policy

Medical Expense policy

Which of the following statements regarding health insurance is CORRECT? A. Once issued, health insurance policies cannot be cancelled by the insurer B. There are more premium-payment options available with health than with life insurance policies. C. Medical expense policies reimburse the insured for the costs of medical care. D. Disability income policies are designed to pay hospital expenses associated with a disability.

Medical expense policies reimburse the insured for the costs of medical care

Which of the following methods is not used for marketing long-term-care coverage? A. Medicare. B. An individual policy. C. A group policy. D. A rider to a life insurance policy.

Medicare Medicare is a government program. LTC insurance is done by insurance companies.

Which of the following is made up of two parts, and for one of the two, the insured helps to pay the cost? A. Blue Shield B. Blue Cross C. Medicare D. Medicaid

Medicare Medicare is two main parts. Part A is mandatory and is does not have a cost associated with it (the insured had to "earn" it by qualifying in the Social Security system). Part B has a cost associated with it, but the payment does not pay for all of the potential benefits. We now have two other parts to Medicare: Part C and Part D. Part C are optional plans and Part D is a drug benefit for which there is a cost. When the question is which part of Medicare is the one that is voluntary, the answer is actually Part B and Part D. The other thing that makes this question fun is that Blue Cross and Blue Shield are the only "company" names, and are thought of as two parts. However, if you think about it, you will realize that taken individually as answers, as stated in this question, neither by itself is two parts of anything. The second reason that Blue Cross and Blue Shield are not the right answers, even if they both appeared in the same single answer, is that the insured is paying for all of the cost.

Which of the following would be considered an unfair claim practice? A. Implementing standards for proper investigation B. Denying a claim after reasonable investigation of the facts. C. Misrepresenting insurance policy provisions affecting a loss D. Acting promptly on claims communication

Misrepresenting insurance policy provisions affecting a loss

Which of the following premium payment modes will result in the highest total out of pocket cost? A. Monthly B. Quarterly C. Semi-annually D. Annually

Monthly Yes, because the administrative costs are the greatest.

What are the three primary factors that are used to determine health insurance premiums? A. Mortality, morbidity and interest B. Morbidity, interest and expenses C. Interest, expenses and mortality D. None of the above

Morbidity, interest and expenses Yes, and it conforms with the "formula" MIX. M is for morbidity, I is for interest, and X is for eXpenses. Those are the big three. There are others and those others are the ones the test will throw in as possible alternate answers (which are wrong). The study material doesn't talk abut MIX.

Which of the following statements regarding utmost good faith in insurance contracts is CORRECT? A. The concept of utmost good faith--that there is no attempt to conceal, disguise, or deceive--applies only to the insurer. B. Although a warranty is a statement, it is not technically part of the contract. C. A representation is a statement that the applicant guarantees to be true. D. Most state insurance laws consider statements made in an application for an insurance policy to be representations, not warranties.

Most state insurance laws consider statements made in an application for an insurance policy to be representations, not warranties.

The N.A.I.C. refers to the: A. National Accounting Independent Chapters. B. National Association of Insurance Companies. C. National Association of Insurance Commissioners. D. Networking Association of Internet Connections.

National Association of Insurance Commissioners. Yes... the NAIC is formed from all the commissioners of all the states together.

Gene Autrey's individual health insurance policy was reinstated effective June 1. On June 8, Gene became ill, was hospitalized, and returned to work June 15. His policy would provide which of the following? A. No benefits B. Full benefits C. Benefits from June 11 through June 15 D. Partial benefits from June 8 through June 15

No benefits Gene gets nothing because his illness began 8 days after the policy was reinstated. The Reinstatement provision (one of the 12 mandatory policy provisions) states that in order to protect the company from adverse selection, there is a 10 day probationary period for sickness, not for accidents.

Willie Sutton purchased a health insurance policy and was told that the insurance company cannot raise the premium or terminate the coverage. Which of the following types of renewability clauses does this policy contain? A. Optionally Renewable B. Conditionally Renewable C. Provisionally Renewable D. Noncancelable

Noncancelable Yes, and this is only used with a disability policy (which is a health insurance policy).

Which of the following types of health insurance policies prevents the company from changing the premium rate or modifying the coverage in any way? A. optionally renewable B. Noncancellable C. Guaranteed renewable D. Cancellable

Noncancellable

Which of the following renewability provisions prevents the company from changing the premium or altering the policy in any way? A. Cancellable B. Optionally renewable C. Noncancellable D. Guaranteed renewable

Noncancellable Can't cancel the policy; can't raise the premium.

Which of the following statements about the benefit period in a disability income policy is correct? A. The shorter the benefit period, the higher the premium. B. The longer the benefit period, the lower the premium. C. The benefit period will not begin until the 1 to 2 year waiting period is over. D. None of the above.

None of the above. the shorter the benefit period, the lower the premium, or the longer the benefit period, the higher the premium. You knew that anyway.

Which of the following statements about Worker's Compensation laws is incorrect? A. Worker's Compensation provides benefits for work-related injuries, illness or death. B. Not all states have Worker's Compensation laws. C.Employers can purchase Worker's Compensation coverage through state programs and private insurers, or they can self-insure. D. None of the above

Not all states have Worker's Compensation laws. ALL states do.

Which of the following provisions in a health policy protects an insurance company against pre-existing conditions? A. Recurrent Disability B. Optional Probationary Period C. Elimination Period D. Residual Disability

Optional Probationary Period Yes, and it is optional because it is a provision which the insurer may include in the policy to provide a guide to eliminate pre-existing sickness. It is usually included in group and disability insurance policies.

In which of the following does the policyowner have no guarantee of renewal and the insurance company may refuse to renew the policy at the next premium due date? A. Noncancellable B. Guaranteed Renewable C. Conditionally Renewable D. Optionally Renewable

Optionally Renewable This is the next to the "weakest" category. There is no guarantee of renewal and the company may refuse to renew at the next premium due date.

What plan has a prearranged (discounted) cost to the insured? A. HMO B. ASO C. PPO D. DPO

PPO

With Medicare coverage, the part that is compulsory and provides coverage for hospitalization is known as _____________. A. Part A B. Part B

Part A Yes. Compulsory. Mandatory. Hospitalization.

Which part of Medicare requires premium payment by eligible participants? A. Part A, basic hospital insurance B. Part B, supplementary medical insurance C. Respite care D. All of the above

Part B, supplementary medical insurance Yes, this is paid for by the insureds. On a monthly basis (it is taken out of their social security check).

The optional provisions covering changes of occupation and misstatement of age, permit the insurer to do which of the following? A. Cancel the policy B. request the insured to fill out a new application to correct previous misstatements or alter information that has changed since the application was originally submitted C. Charge a "back-end" premium to make up for the premium the insurer would have charged had the true situation been known D. Pay benefits equal to what would have been purchased at the premium paid, had the insurer known the facts when the premium was established

Pay benefits equal to what would have been purchased at the premium paid, had the insurer known the facts when the premium was established

Which of the following statements is true about Partial disability benefits? A. Payments may be based on loss of time, income, or function. B. An insured is entitled to a principal sum benefit for the partial loss of a limb. C. Payments may be based on termination of employment. D. Payments are reduced when an insured is not under a doctor's care.

Payments may be based on loss of time, income, or function. "Partial" benefits are intended for a short period of time to allow the worker a chance to get back to work on a part time basis.

Which of the following are not eligible for Medicare coverage? A. People age 65 and older who are eligible for Social Security B. People age 65 and older not eligible for Social Security, but willing to pay a monthly premium C. People of any age who have been entitled to disability benefits D. People with any life-threatening condition

People with any life-threatening condition

What will the insurer do if its Disability Income policy contains a Change of Occupation provision, and the insured changes to a more hazardous job and then is subsequently injured? A. The insurer can do nothing as long as the policyowner pays the premiums B. Policy benefits will be reduced to an amount the premium would have purchased originally based on the more hazardous occupation C. The policyowner will have to pay an additional premium to cover the higher risk D. A premium penalty will be charged against the benefits when a claim is filed

Policy benefits will be reduced to an amount the premium would have purchased originally based on the more hazardous occupation

Which of the following statements about long-term care insurance policies is NOT correct? A. Maximum coverage periods generally extend from 2 to 6 years B. Long-term care policies sold today must be guaranteed renewable. C. A long-term care policy with a long elimination period will have a lower premium than one with a shorter elimination period. D. Premiums for a long-term care policy are based solely on the insured's age, health, and the length of time of benefits.

Premiums for a long-term care policy are based solely on the insured's age, health, and the length of time of benefits.

HMOs are known for stressing: A. Preventive medicine and early treatment. B. State-sponsored health care plans. C. In-hospital care and services. D. Health care services for government employees.

Preventive medicine and early treatment. This is the definition of an HMO. One of the reasons for an HMO's existence is that they stress preventive care because everyone benefits: the subscriber for health and dollar reasons, the company to keep the costs to a minimum by handling little problems before they become big problems.

What is the initial period of time specified in a disability income policy that must occur when the policy begins coverage before a loss due to sickness will be covered? A. Benefit period B. Elimination period C. Probationary period D. Inclusionary period

Probationary period This is a period of time in all policies to protect the company from someone that is faking being well, long enough to get the policy and then goes to the doctor the next day and claims on the policy. It is only true with sickness. Accidents are always covered immediately.

In a disability income policy, what is the period of time called which must elapse following the effective date of the policy before benefits are payable? A. Pre-existing period B. Probationary period C. Temporary coverge period D. Elimination period

Probationary period This is true with illness but not true with accidents! Often 15 or 30 days.

Which of the following correctly describes Medicaid? A. Supplements Medicare before age 65 B. Provides medical benefits for certain low-income people, for the disabled, and for families with dependent children C. Is usually totally funded by the states with little or no federal reimbursement D. All of the above

Provides medical benefits for certain low-income people, for the disabled, and for families with dependent children That says it. You may hear something to the effect that the longest answer may well be right. That's true in this case. But as I look back through the last 20 questions, it's true about 1/4 of the time. Now that doesn't say much.

When an insured returns a policy to the insurance company within the Free Look Period, the insurance company must do which of the following? A. Refund all premiums paid B. Refund the premiums paid, less issue-expense charges C. Refund the premiums paid, less the agent's commissions D. Refund the premiums paid in excess of the cost of coverage for the time the insured had the policy

Refund all premiums paid

When benefits are paid to a policyowner covered under a Hospital Expense policy, the policy is considered to be which of the following? A. Service B. Limited Accident C. Reimbursement D. Special Risk

Reimbursement

Which disability option is described as a long term situation with possible eventual recovery? A. Total B. Partial C. Residual D. Acute

Residual

A policyowner has which of the following rights under a health policy? A. Refusal of cancellation B. Return of premium refund C. Extension of renewal period D. Selection of beneficiaries

Selection of beneficiaries

What is the Health Insurance Coverage Continuation Act? A. When group members of large companies were prohibited from coverage B. When members of a plan were recently on medicaid C. When members of a plan were with an HMO D. Setting requirements for insurers selling plans to employers under 20 employees

Setting requirements for insurers selling plans to employers under 20 employees Right. This legislation is for small employers with 20 or fewer employees to function like COBRA does for larger employers. It allows leaving employees to continue to be able to pay premiums to stay inside the company's plan for as long as 18 months.

Which of the following is a type of benefit payment under a partial disability policy? A. Short term proportional benefit B. Probationary benefit. C. Both A & B D. Neither A or B

Short term proportional benefit The partial benefit is a proportional one. It's is proportional to the amount of income lost due to the insured being "partially" back to work. The benefit fills in part of the difference.

Which mode of premium payment is found in life insurance but not in health policies? A. Monthly B. Semi-annually C. Single premium D. Quarterly

Single premium

Primary support for Medicare Part A comes from: A. general tax revenues. B. Social Security payroll taxes. C. private funding. D. a combination of the above.

Social Security payroll taxes. Yes, it comes from the Medicare portion of the Social Security payroll taxes.

Which of the following is NOT one of the deductibles used in health policies? A. Corridor B. Flat C. Stop Loss D. Integrated

Stop loss

A "blanket health plan" would be issued to cover which of the following groups? A. Students at a school B. Any group of individuals formed for the sole purpose of obtaining insurance C. An association or professional society D. None of the above

Students at a school Yes... and the reason it is a blanket plan is because the members of the group are constantly changing, day by day, and it isn't possible to keep track of the medical differences of everyone on a daily basis.

When the company selects a "non-insurance" company to administer their self-insured plan, the company is called a(n) __________. A. HMO B. TPA C. PPO D. ASO

TPA Yes... the clue is "non-insurance company." TPA stands for Third Party Administrator . Also have a look at d. in case you went straight to this answer. d-Incorrect. Now I'll bet I get a lot of takers on this answer. Many times, what a company will do is hire an insurance company to come and administer the company's plan. That administrator is an ASO. However, they are an insurance company who is already well qualified to do it without taking on any financial liability (since the company is doing that - they are self insured). We are looking for the other possibility... a non-insurance company to do the same thing.

Under a credit health policy, what is the maximum amount of any accidental death benefit included? A$20,000 B. The amount of the original indebtedness C. The amount of outstanding indebtedness at any given time D. A specified multiple of the monthly loan payment

The amount of outstanding indebtedness at any given time Yes... the death benefit part is a decreasing term policy which pays only the amount of outstanding debt

If an insurance company has rejected an applicant for coverage on the basis of a Medical Information Bureau (MIB) report, the MIB will release medical information contained in the report to which of the following, if any? A. The applicant B. The applicant's physician C. The agent of record D. None of the above; the report is strictly confidential

The applicant's physician

Select the correct statement about long-term care policies from the following: A. ADLs are not generally a consideration under these policies. B. Most LTC policies are guaranteed renewable up to age 70, after which they revert to optionally renewable policies. C. The best such policies are those that will pay benefits regardless of the level of care required by the insured. D. Virtually all LTC policies require prior hospitalization before benefits will be paid.

The best such policies are those that will pay benefits regardless of the level of care required by the insured.

All of the following statements are applicable to the Insuring Clause except: A. The clause identifies the insured and the insurer B. The clause defines losses not covered by the policy C. The clause usually specifies that benefits are subject to all provisions and terms specified in the policy D. It states the insurers promise to pay benefits for specific losses

The clause defines losses not covered by the policy The clause covers losses which ARE covered by the policy.

On which element of the contract are the application and premium payment based? A. The entire contract provision B. The insuring clause C. The consideration D. The rights of ownership

The consideration

Wilbur is hospitalized with a back injury when he fell off his roof. His disability policy which he purchased six months ago will not be starting the benefits for 30 days. Why? A. The accumulation period is 30 days. B. The probationary period is 30 days. C. The benefit period is 30 days. D. The elimination period is 30 days.

The elimination period is 30 days.

What is the income tax consequence if Marie's employer pays for her group disability income coverage? A. Marie must pay taxes on the premium payments. B. Marie can deduct the premium payments. C. The employer receives the disability income benefits tax free. D. The employer can deduct the premium payments.

The employer can deduct the premium payments.

The core policy (Plan A) developed by the NAIC as a standard Medicare supplemental policy includes all of the following EXCEPT A. the Medicare Part A deductible B. Part A coinsurance amounts C. The first 3 pints of blood each year D. the 20% Part B coinsurance amounts for Medicare-approved services

The first 3 pints of blood each year

Which of the following statements most accurately describes a Guaranteed Renewable Disability policy? A. The insurance company may not refuse to renew the policy before a specified age, but may increase the premiums on all policies in the same class. B. The insurance company agrees not to cancel the policy before a specified age, or to ever raise the premium. C. The Guaranteed Renewable policy is usually renewable for the life of the insured. D. The Guaranteed Renewable policy is renewable but can be cancelled at any time with a 45 day notice from the company.

The insurance company may not refuse to renew the policy before a specified age, but may increase the premiums on all policies in the same class.

Under the optional "Illegal Occupation" Provision, which of the following applies if a loss occurs while the insured is participating in a felony or an illegal occupation? A. The insured's policy is automatically cancelled B. The insurer is not liable for the loss C. The benefits are reduced by 80% D. The insurer has the right to immediately increase the premiums

The insurer is not liable for the loss

All of the following relate to the Rights of Ownership except: A. The reinstatement provision B. The listed exclusions C. The free look provision D. The incontestable provision

The listed exclusions

In group insurance, who has the responsibility to apply for coverage, provide information about the group, maintain the policy, and pay premiums? A. The agent that wrote the group coverage. B. The insurer that provides the group coverage. C. The individuals that make up the group. D. The master contract owner

The master contract owner

Which of the following would be found in the insuring clause of a health policy? A. The parties to the contract B. The premium mode C. The benefits D. The exclusions

The parties to the contract

The "Time Limit on Certain Defenses" provision refers to which of the following? A. The period of time the policy must be in force before an insurance company can defend itself against a loss. B. The period of time, after a policy is issued, that an insurance company may deny the payment of a claim and void the policy because of a material misstatement. C. It indicates that the insurance company may void the policy at any time after issue for any misrepresentations in the application. D. The period of time the insured must wait before beginning legal action against an insurance company for the denial of a payment for loses covered by the policy.

The period of time, after a policy is issued, that an insurance company may deny the payment of a claim and void the policy because of a material misstatement.

What is the only item not covered in a business overhead expense (BOE) policy? A. The telephone bill B. The water bill C. The salaries of the office workers D. The salary of the disabled owner

The salary of the disabled owner

Which of the following factors is used to underwrite group health insurance? A. The stability of the group B. The sexual makeup of the group C. The health conditions of individual members D. All of the above

The stability of the group

Which of the following statements about long-term care health policies is correct? A. They provide a daily indemnity benefit B. They are not issued to people over 70 years of age C. They have benefit periods of less than 12 months D. All of the above

They provide a daily indemnity benefit Yes they do. The client picks the figure, usually in $10 increments... like $80 per day, or $110 per day... etc. It's indemnity because we don't know what the total is going to be, but we do know what the amount is for each day.

Which of the following statements about health service organizations is true? A. They provide Loss of Income benefits to policyowners. B. They provide benefit payments directly to the hospitals and physicians providing service. C. They reimburse policyowners directly for physicians' fees. D. They reimburse policyowners directly for all medical expenses.

They provide benefit payments directly to the hospitals and physicians providing service.

Which of the following statements is true about basic hospital, medical, and surgical expense policies? A. They contain high deductibles. B. The benefits provided are usually equal to the actual expenses incurred. C. They usually have a stated limit for specific expenses. D. Benefits are provided for loss of income.

They usually have a stated limit for specific expenses. Yes, that's right. There are limits for various things stated in the policy. Remember that Basic policies are known as first dollar.... they pay from the start of the expenses, but that doesn't mean they pay all of the expenses... just to the limits stated in the policy. Now the problem... when they talk about a Basic policy coverage. On the test, you can "assume" that the Basic policy is going to cover 100% and then the deductible and Major Medical will fall into line after that.

Pre-existing Conditions are referred to in which of the following required health policy provisions? A. Claims Forms B. Payment of Claims C. Time Limit on Certain Defenses D. Legal Actions

Time Limit on Certain Defenses Yes... after the time limit which is usually 2 years, the pre-existing conditions are not contested.

Premiums for industrial policies are somewhat higher than ordinary policies that have the same face amount. A. True B. False

True What are known as industrial policies are more expensive than ordinary policies mainly for marketing and administrative reasons.

When applying for a health policy, Charles Windsor stated that he had never had heart trouble (even though he had suffered a heart attack). Two months after the policy's effective date, Charles suffered a second heart attack and died. The insurance company will probably take which of the following actions? A. Void the policy and refund the premiums paid B. Pay him reduced benefits according to the policy's recurrent disability provision C. Pay the claim D. Pay the claim but subtract a 10% penalty for concealment

Void the policy and refund the premiums paid

A health insurance policy includes an endorsement indicating the insurer will allow the policy to continue in force without further premiums if the insured is totally and permanently disabled. What endorsement is attached to this policy? A. Guaranteed insurability B. Impairment C. Multiple indemnity D. Waiver of premium

Waiver of premium Yes, the waiver of premium requires the insurer to take over the premium payments if the insured is permanently disabled.

When does a company generally engage in "individual underwriting" under a group health plan? A. Never, this is prohibited by law. B. When an eligible employee tries to join the plan after initially electing not to participate C. On an annual review D. All of the above

When an eligible employee tries to join the plan after initially electing not to participate

When are disability income benefits received as nontaxable income to the recipient? A. Always B. Never C. When the employer has paid the premium D. When the employee has paid the premium

When the employee has paid the premium

If Lenora Lena is not entirely satisfied with the policy issued to her, she may return it to the insurance company for voiding and receive a refund of premium at which of the following times? A. Within a specified period after the first renewal premium falls due B. Within a specified period from the date she receives the contract C. Within a specified period from the date the agent receives the contract D. Within a specified period from the date the insurance company issues the policy

Within a specified period from the date she receives the contract

When completing an application for medical insurance, an agent should do which of the following? A. Review the applicant's statement and bind the coverage. B. Complete the Medical Information Bureau report. C. Witness the applicant's signature. D. Sign the applicant's name if the applicant lives out-of-state.

Witness the applicant's signature. Yes, agents witness the applicant's signature. That's why it is necessary for the agent to be present for all signatures.

Is coverage for chiropractic care required to be offered to the employees in a group plan? A. Yes B. No, it can be offered but it is not required.

Yes Yes, chiropractic coverage and maternity coverage are the only two categories which MUST be passed on to the employees in a group plan. Other options are offered to the employer who then determines if that particular coverage will be passed on to the employees as a benefit.

Are coverages in health insurance policies required to pay for services performed in an ambulatory surgical center? A. Yes B. No

Yes Yes... because it is better for all concerned. If the procedure can be done in an ambulatory surgical center rather than a hospital, the costs are typically lower, for the client and for the insurance company.

The type of health insurance policy most likely used to cover all students attending a large school is: A. a blanket policy. B. a franchise policy. C. an ASO. D. a self-insured plan.

a blanket policy

When an HMO chooses a limited number of health care providers who only work for the HMO to provide services to its subscribers, this is known as: A. an open panel. B. a closed panel. C. a gatekeeper system. D. a capitation system.

a closed panel.

Disabilities for women under age 55 have: A. a shorter duration than disabilities for men. B. a greater frequency and longer duration than among men. C. generally been excluded in health insurance contracts. D. None of the above

a greater frequency and longer duration than among men.

A insurance policy with XYZ Insurance states that the insurer will not refuse to renew the policy and furthermore, the insurer may not cancel the policy. However, the insurer may change the premium by classes of insureds. This policy is: A. a guaranteed renewable policy. B. an optionally renewable policy. C. a conditionally renewable policy. D. a noncancellable policy

a guaranteed renewable policy. Yes, a guaranteed renewable. This is the next to the last category... the next to the strongest provisions. The thing that gives this answer away to some extent is the part about changing the premiums by the classes of insureds... that can't be done with a noncancellable policy.

Which is always an exclusion in a health insurance policy? A. felonious acts B. a hernia as an accidental injury C. drinking or drugs D. a trip overseas

a hernia as an accidental injury Yes... it's because it is very possible to "accidentally" on purpose, give a hernia to yourself. People have apparently done that, so the companies make that restriction.

Dread disease policies are intended to provide which of the following: A. funds to handle the high costs of certain illnesses. B. a lump sum to defray medical costs associated with a specific medical diagnosis. C. they can include funds to cover specified accidents. D. all of the above.

a lump sum to defray medical costs associated with a specific medical diagnosis. Yes, dread disease policies are specifically for certain named illnesses, and they provide lump sums to assist in handling large costs.

A basic policy miscellaneous expense benefit will be expressed as: A. the approved charge per day. B. a percentage of the daily room rate. C. reasonable, usual and customary. D. a multiple of the daily room and board rate.

a multiple of the daily room and board rate.

Under some policies, an injury that does not qualify the insured for monthly disability income benefits may make the insured eligible for: A. outpatient compensation. B. an emergency room benefit. C. grace period reimbursement. D. a non-disabling benefit.

a non-disabling benefit. Yes... the non disabling benefit is a provision which can include payment for medical expenses... the actual cost of medical treatment that resulted from an accident. The benefit is usually limited to a percentage of the weekly or monthly income benefit in the policy.

In Medicare Part B, which of the following is not paid by the insured? A. a monthly premium B. 20% of covered charges above the deductible C. an annual deductible D. a per-benefit deductible

a per-benefit deductible

In an effort to eliminate preexisting disabilities and adverse selection, the disability contract will usually contain: A. an elimination period. B. a probationary period. C. a delayed disability period. D. a recurrent disability period.

a probationary period. Yes, it is the probationary period when the client has to wait for a certain period of time before submitting a claim for an ILLNESS. An accident doesn't have any probationary time to it.

An applicant for health insurance has a heart condition of which he is unaware & answers "no" to the questions pertaining to heart problems. His answer is considered: A. a warranty. B. fraud. C. concealment. D. a representation.

a representation Yes, he is representing that it is true to the best of his knowledge.

When a medical expense policy pays benefits on a fixed-rate basis, it pays: A. a fixed percentage of the hospital room charges. B. the hospital bill, less the deductible amount. C. for the costs associated with surgery and miscellaneous expenses. D. a set number of dollars per day that the insured was in the hospital.

a set number of dollars per day that the insured was in the hospital. Yes. What you have to first realize with this question is the policy discussed is the hospital fixed-rate policy, also known as a hospital indemnity policy. It pays a previously agreed amount per day, like $150 per day if that was the amount chosen in the beginning.

In an accidental death and dismemberment policy, benefit payments may be based on either "accidental means" or "accidental results". Most states require that AD&D policies base their definition of accident on: A. accidental means. B. accidental results. C. both A & B. D. neither A nor B.

accidental results

Which of the following will not be in the outline of coverage? A. discussion of benefits and coverages B. principle exclusions or limitations C. renewal and cancellation provisions D. actual contractual governing provisions

actual contractual governing provisions The contractual provisions will be in the policy itself.

The misstatement of age provision is one of the optional health policy provisions. When the insured misstates his/her age on the application, this provision allows the company to: A. deny any claim. B. adjust benefit payments C. cancel the policy D. None of the above

adjust benefit payments

The preexisting condition exclusion in a health policy is designed to protect the insurance company against: A. malingering B. overinsurance C. overutilization D. adverse selection

adverse selection Yes, it prevents adverse selection. That is a term commonly used in the industry. And used accurately. The goal of all insurance companies is to sell policies to insureds who are qualified, have the need for the coverage, and are in the normal risk category. The company knows they will have some insureds who will have a claim very soon after the policy is issued, and other insureds who may never have a claim. That is the "random selection" they expect. The questions asked on applications are to make sure the insureds don't already arrive with major problems, because that is not "random selection"... it is "adverse selection."

Exclusions for Preexisting conditions help to avoid: A. claims for long hospital confinements. B. more complicated underwriting procedures. C. adverse selection against a company. D. insuring persons who are accident prone.

adverse selection against a company.

A fully insured individual automatically qualifies for Medicare at what age? A. age 59 1/2 B. age 60 C. age 62 D. age 65

age 65 Yes... can't get it early, except for chronic kidney disease, and where the insured is receiving Social Security disability benefits, at any age.

What is found in Part III of the application? A. medical information B. inspection report C. credit report D. agent's report

agent's report Part I is general, Part II is medical, Part III is agent's report.

All of the following conditions are typically covered in a Long-Term-Care policy except: A. Alzheimer's disease B. Parkinson's disease C. senile dementia D. alcohol dependency

alcohol dependency

All of the following statements regarding maternity benefits are correct EXCEPT A. hospital expenses are usually covered up to 10 times the room and board benefit B. individual health insurance policies can be written to include maternity benefits C. maternity benefits are optional to the policyholder of group insurance D. all health insurance policies must provide maternity benefits

all health insurance policies must provide maternity benefits

An insurer may non renew or discontinue an individual health insurance policy for which of the following reasons: A. Nonpayment of premiums B. the client has performed an act of fraud C. insurer is ceasing to offer individual coverage as per state law D. all of the above

all of the above

Which of the following factors will insurers use when issuing policies to substandard risks? A. exclusion impairments or waivers. B. increased premium. C. limiting type of policy. D. all of the above.

all of the above

Long-Term-Care insurance can cover: A. Skilled Nursing Care B. Intermediate Nursing Care C. Custodial Care D. all of the above

all of the above Yes, long-term care can cover all of these levels. Once the insured qualifies for long-term care benefits by being unable to do two of the six ADLs, the company really doesn't care what you spend the money on, as long as you are receiving care from a qualified source.

If an HMO subscriber has been with the group plan longer than 3 months and is then terminated from the plan, he/she is entitled to convert to an individual contract unless: A. he/she failed to pay premiums. B. the subscriber obtains similar coverage within 30 days. C. fraud existed in applying for benefits. D. all of the above.

all of the above.

Cafeteria plans were designed to: A. provide insurer greater control of benefits selected for employees. B. provide diversity of insurance company and HMO. C. allow employees to pick and choose to tailor their own benefit package. D. allow employees to eat lunch in a cafeteria.

allow employees to pick and choose to tailor their own benefit package. Right... it is a tax incentive program setup to allow the employees to pick and choose.

A "cafeteria plan" is a benefit arrangement which: A. restricts choice of benefits to the employer. B. allows employees to tailor their benefit package to meet their specific needs. C. restricts choice of benefits to the insurance company. D. None of the above

allows employees to tailor their benefit package to meet their specific needs. You can visualize this just like a cafeteria... the employees have the freedom to choose what they want and sometimes, the amounts of coverage. This can also be known as Section 125 plans (tax code).

Fraternal benefit programs have all the following except: A. lodge system B. hold regular meetings C. noted for charitable & benevolent activities D. always operate as a corporation

always operate as a corporation Yes...they don't always operate as a corporation. On this one, you may have needed to look at the other three answers and choose this one because you knew the other three were right... and the normal definition of a Fraternal Benefit Society.

When delivering a Long-Term-Care policy to a client, it must be accompanied by: A. an NAIC shopper's guide B. a current FTC Long-Term-Care bulletin C. A FINRA statement of proper conduct D. a DFS client determination sheet

an NAIC shopper's guide

When delivering a health insurance policy, it must be accompanied by: A. the address and contact information of the Medical Information Bureau B. an agents certification statement C. an HIV/AIDS form D. an Outline of Coverage

an Outline of Coverage

A company that is licensed to sell insurance in a particular state is: A. a domestic company. B. an alien company. C. A foreign company. D. an authorized company.

an authorized company.

A small employer insurance carrier need not accept applications from: A. an employee whose spouse is also employed at the same company. B. an employee if the employee does not work or reside in a geographical service area of the carrier. C. a small employer whose business location is within a flood zone. D. an employer with less than 10 employees.

an employee if the employee does not work or reside in a geographical service area of the carrier.

Lulu Lilac names her husband as the beneficiary of the accidental death benefit in her health policy. She has relinquished her right to change the beneficiary designation. According to Required Provision 12, Lulu's husband is: A. an irrevocable beneficiary. B. a revocable beneficiary. C. a contingent beneficiary. D. a tertiary beneficiary.

an irrevocable beneficiary.

A third-party administrator is: A. an outside consultant that evaluates the quality of group health and welfare benefits. B. an outside organization that manages employers' self-insured plans. C. a legal entity that makes group insurance available to small employers. D. an arbitrator who works to settle health insurance claims.

an outside organization that manages employers' self-insured plans. Yes, it is an outside organization but is not an insurance company; the insurance companies who manage employers' self-insured plans are called ASOs... Administrative Services Only organizations.

Medicare has as its primary purpose to provide Hospital and Medical Expense protection to those Americans who: A. are 65 years of age or older. B. cannot afford health insurance. C. are on Social Security. D. belong to the AARP (American Association of Retired Persons).

are 65 years of age or older.

Health Maintenance Organizations (HMO): A. are considered pre-paid service systems. B. are licensed insurance companies. C. reimburse the insured for his medical bills. D. interface with Medicare recipients only.

are considered pre-paid service systems.

In individual health plans, a "pre-existing condition" is typically defined as a condition which appeared prior to the issuance of a policy and which was not disclosed on the application. In a group health plan, a "pre-existing condition" is typically defined: A. the same as in an individual plan of health insurance. B. as a condition for which the participant received treatment during a specific period prior to the effective date of the group coverage. C. as any condition which would make the participant uninsurable. D. None of the above

as a condition for which the participant received treatment during a specific period prior to the effective date of the group coverage. This is the definition of pre-existing conditions in group plans. It is a common sense answer. That is not true with the individual plans.... not common sense on pre-existing conditions. On individual plans, the insurance company is protecting itself.

In health policies, the right of assignment allows the insured to: A. assign benefit payment from the insurance directly to the health care provider. B. pay the health care provider out of his own pocket. C. pay his health premiums in advance. D. None of the above

assign benefit payment from the insurance directly to the health care provider.

The transfer of the insured's rights to receive benefits of a Health Insurance policy for a particular claim is known as: A. facility of payment B. assignment C. rebating D. waiver

assignment

How often must payments be made from a disability policy? A. at least monthly B. at least quarterly C. annually D. at the end of each fiscal year

at least monthly

To be eligible for benefits under the Waiver of Premium provision, the insured must: A. be confined to house/home. B. take a physical examination every 3 months. C. pay all premiums due. D. be under a physician's care

be under a physician's care Yes, and the physician has determined that the insured is "disabled due to accident or sickness".

Morbidity rates indicate the average number of people at various ages who can be expected to: A. become ill each year. B. become disabled each year as the result of accident or sickness. C. die each year as the result of accident or sickness. D. None of the above

become disabled each year as the result of accident or sickness.

Under state law, a handicapped child is one who: A. is incapable of employment or self support. B. has a mental or physical handicap. C. both A and B D. neither A and B

both A and B

Coverage for services provided by ambulatory surgical centers is provided by: A. individual health insurance only. B. both individual and group health insurance. C. group health insurance only. D. neither individual or group health insurance.

both individual and group health insurance. Yes, this one is rather logical. If medical care or a medical procedure can be done as well in an ambulatory surgical center (not in a hospital), then insurance companies are going to be happy with either, particularly if the cost is less for both the patient and the insurance company if the work is done in an ambulatory center.

For group insurance, employees may be classified in all the following ways except: A. by type of payroll B. by duties C. by length of service D. by age

by age Companies may not classify by age! That is discriminatory. Length of service does not necessarily have to do with age. Therefore, it is OK.

The Health Maintenance Organization concept that service providers are paid a fixed monthly fee for each member is called: A. designated service. B. capitation. C. closed panel. D. the gatekeeper system.

capitation Yes, capitation is the small fee supplied to each provider who agrees to accept that patient. Then it is multiplied times the number of patients they accept.

Insureds covered by a group insurance plan receive: A. individual insurance policies. B. notices of proposed insurance. C. certificates of insurance. D. copies of the master contract.

certificates of insurance. Yes, each insured will receive a certificate of insurance.

Under the uniform provisions law, which of the following provisions is optional for a health policy? A. change of occupation B. entire contract C. physical exam & autopsy D. time limit on certain defenses

change of occupation This is an optional provision. Let's take a minute and illustrate the difference between mandatory provisions and optional provisions. Obviously, mandatory means they have to be in the policy, and optional, not. OK... how do we remember the difference? Here it is: the Mandatory ones are for the benefit of the client, and the state is protecting the client. Optional ones are for the benefit of the insurance company, and the state is basically saying, "put it in if you want to be protected on that point." Now look at the provisions and you will be better able to judge which is which on the exam.... because exam questions will try to test you as to "which of the following are mandatory" just like this question you just answered.

All of the following are required uniform provisions in individual health insurance policies, except: A. grace period B. change of occupation C. entire contract D. reinstatement

change of occupation Yes, this is an optional provision. This is a difficult question. There are 12 mandatory and 11 optional provisions, and this question requires you know which are which. Let me give you a major clue that you will not find written anywhere (other than in PMReview material): The mandatory ones are for the benefit of the client, the optional ones are for the benefit of the company. In this case, the company is attempting to protect themselves in case the client changes to a more dangerous occupation. If that happens, and there is a claim, the company treats it the same as misstatement of age... recalculate the benefits.

The percentage of participation that is shared by the insurance company and the insured is called: A. lucid deductible. B. corridor deductible. C. coinsurance. D. equity management deductible.

coinsurance

The purpose of the Florida Healthy Kids Corporation is to: A. disseminate information to the public regarding the status of children B. collect local, state, federal and family funds to pay premiums to commercial insurers C. provide geographical information about recreation opportunities D. analyze the health needs of children in the community

collect local, state, federal and family funds to pay premiums to commercial insurers Yes, that's the goal, that's what they do. Families contribute what they can, and the rest of the charges are covered by other means.

Unauthorized entities are: A. agents who's licenses have been revoked or suspended B. agents who's licenses have expired C. companies who are selling products to agent without state approval D. companies who are selling what appears to be insurance products without approval

companies who are selling what appears to be insurance products without approval Yes, these could be products from companies that didn't take the time or effort to be approved by the Office of Insurance Regulation. They say they're not insurance; they say it's a non-insurance solution to health care. Florida says it looks like insurance, and it is misleading to the public. You may have seen assign stuck in the sand at a bus stop: for affordable health care call 904-555-1212

Policy delivery refers to the delivery of the: A. completed application for the insurance policy to the agency office. B. completed insurance policy to the applicant. C. insurance policy cost disclosure materials to the applicant. D. premium and receipt for the insurance policy to the agency office.

completed insurance policy to the applicant. Now there is something ELSE called constructive delivery where the insured is called on the phone and told that the policy is there and he/she is covered... but that's not what we are talking about here. This is strictly "policy delivery."

An applicant for an health insurance policy has a heart condition of which he is aware. He answered "no" to the question pertaining to heart problems. His answer is considered to be: A. a warranty. B. concealment. C. a fraudulent answer. D. a representation.

concealment Yes it is concealment. This is the best answer....but it is a tough question. It is not a representation because he knows it to be untrue. It is not a fraudulent answer because that comes from a court ruling later. He is concealing a fact right now and that is what is important.

An applicant for an individual health policy failed to complete responses to medical history questions because he forgot some important treatment dates. He did, however, sign the application. Before being able to complete the responses & pay the initial premium, he was confined to a hospital for a condition that would ordinarily be covered by the policy. In this situation he was not insured because he had not met the conditions specified in which of the following? A. insuring clause B. eligibility clause C. preexisting condition clause D. consideration

consideration This is really a pretty good test question, because you have to do some thinking along the way to figure all of this out. The bottom line fact which causes him not to be covered is that he never made an offer to the insurance company. He filled out an application and that was it. Doing so makes the application nothing more than a request for a quote on what the coverage will cost. The premium was not included. If he would have completed the responses and paid the initial premium, this would be known as the consideration (both parts), and it would then have been considered an offer. The company could have accepted the offer and delivered the policy by the time the coverage was needed, but because the consideration was not complete, there was no offer, no policy, and no coverage.

The purpose of medical cost management is to: A. require pre-certification. B. control how policy holders utilize their policies. C. control what is paid to the doctor and hospital. D. require second opinions.

control how policy holders utilize their policies. Yes, this is the basic purpose. It is to keep the cost down for all parties.

If an agent accepts a premium for a lapsed disability policy, coverage for accidents becomes effective in how many days after the acceptance of the premium? A. 10 days B. coverage is immediate C. 90 days D. None of the above

coverage is immediate Yes, immediately for accidents... 10 days for illness.

All of the following provisions are required by the Florida Employee Health Care Access Act EXCEPT A. coverage must always be renewed by carriers B. carriers must use a "modified community rating" methodology C. all small group health benefit plans must be issued on a guarantee-issue" basis D. preexisting exclusions are limited to 12 months for conditions manifested during the previous 6 months for a small employers with 2-50 employees

coverage must always be renewed by carriers

When premiums remain unpaid at the time a claim is submitted, the insurer may as a result of Optional Provision 7: A. deduct unpaid premiums from benefits before paying the claim. B. deny the claim even though it has not cancelled the policy. C. charge a low rate of interest for each period premiums remain unpaid. D. take all of the actions described above.

deduct unpaid premiums from benefits before paying the claim.

Major Medical expense insurance is: A. designed to replace Medicare. B. available only on a group basis. C. designed to have lifetime benefit maximums of $250,000 or more. D. None of the above

designed to have lifetime benefit maximums of $250,000 or more.

Which one of the following policies could be issued non-cancelable? A. basic plan B. major medical C. disability income D. A D & D

disability income Yes... the only one. DI policies are a fixed dollar amount; therefore, that amount won't go up, so the company can issue a non-cancelable policy without major concern of rising costs. Administrative costs could go up, but that can be estimated.

Eligible deductions on the insured's IRS-1040 form for Medical expenses include all but: A. disability premium B. prescriptions C. coinsurance D. insulin

disability premium The disability premiums on an individual policy are paid for with after tax dollars. No deduction is permitted. However, then any benefits arrive tax free.

The certificate that each member receives under an employee group insurance contract is a: A. contract between the insurance company and the individual employee. B. contract between the insurance company and the employer. C. document that identifies the employees as an insured under the master contract. D. document that identifies the employees as the owner of the master contract.

document that identifies the employees as an insured under the master contract.

Medicare Part A deductibles and co-pay costs are always expressed as: A. dollar amounts. B. percentages. C. 80%. D. 20%.

dollar amounts Now here is the interesting part: the amounts are expressed in dollars but did you notice that the co-pay amount for days 61 through 90 in the hospital just happen to be 1/4 of the dollar amount on the first 60 days... and the co-pay of the lifetime benefit days just happens to be 1/2, on a per day basis ... and after the 20 days nursing coverage which is 100% covered, there are 80 days of coverage on a co-pay basis...the amount just happens to be 1/8 of the deductible on the first 60 days in the hospital. I bring this up for a major reason. It helps you remember the dollar amounts. Remember the amount for the first 60 days and you have a pretty good chance of getting the others. Medicare deductibles are STILL always expressed as dollar amounts no matter what I just said. Note that we are talking about Part A. Part B has an annual deductible and then is based on a percentage: Part B covers 80% of allowed expenses.

Limited risk policies are also known as: A. dread disease or critical illness policies. B. modified whole life plans. C. universal coverage plans. D. Medicare specialized plans.

dread disease or critical illness policies.

The purpose of a disability policy is to cover for A. accidental death B. economic death C. death from natural causes D. none of the above

economic death Yes, and it is called economic death because the worker is unable to earn an income which is the same usually temporary result as a death would be. No income.

What is usually not covered under an employer AD&D policy? A. loss of 1 or 2 eyes by injury B. dismemberment of arm C. emergency surgery D. employee killed in a plane crash traveling on company business

emergency surgery It is strictly loss of body parts or death due to an accident.

A business overhead expense policy includes all of the following except: A. employees' income B. payments on the mortgage C. employer's income D. utilities costs

employer's income Yes... notice that it says "employer's income." BOE (Business Overhead Expense insurance) pays for salaries for the employees when the owner is disabled, but not the salary for the owner.

A major duty of the Department of Financial Services is: A. enforce the Florida Insurance Code B. make laws as additions to the Insurance Code C. interact with nearby state insurance departments for consistancy D. none of the above

enforce the Florida Insurance Code

The policy provision that prevents a company from changing its agreement with a policy owner by referring to outside documents is the ______ clause. A. insuring B. re-instatement C. consideration D. entire contract

entire contract

Voluntary cosmetic surgery, under the typical health insurance policy, is generally: A. excluded. B. included. C. included, but an extra premium is charged when voluntary cosmetic surgery is performed. D. None of the above

excluded Voluntary or elective surgery generally is not covered.

In Medicare supplement policies, the free look provision is: A. extended to 20 days. B. extended to 30 days. C. extended to 90 days. D. None of the above

extended to 30 days I would like to caution you about the answer, "None of the above." Often, the only reason there is such an answer is because the person writing the test couldn't think of a good 4th answer. You had better be VERY sure that none of the three are correct before choosing this one. It is VERY RARELY the right answer.

Part "A" Medicare is optional, has a deductible, and co-insurance. A. true B. false

false Part B is optional.

There are three basic kinds of deductibles in Major Medical policies. These are: A. flat, corridor and integrated. B. flat, rounded, and corridor. C. stacked, level and negotiable. D. level, increasing and decreasing.

flat, corridor and integrated.

All of the following are common exclusions or restrictions in an individual health insurance policy EXCEPT A. self-inflicted injuries B. maternity benefits C. free-look provision D. preexisting conditions

free-look provision

In the health insurance industry, the consideration is the: A. full minimum premium required. B. application. C. full minimum premium required or the application. D. full minimum premium required and the application.

full minimum premium required and the application.

The Internal Revenue Service (IRS) considers Disability Income benefits paid under an employer-paid group Disability Income policy to be: A. taxable for 13 weeks only B. nontaxable for 26 weeks only C. fully taxable as ordinary income D. exempt from taxation

fully taxable as ordinary income Yes... it is fully taxable because it was paid with "before tax" expense dollars.

What is not contained in an outline of coverage? A. benefits B. future value of policy C. limitations and exclusions D. renewability

future value of policy

The coordination of benefits (COB) clause is found in what kind of policy? A. individual B. group C. indemnity D. fictitious

group

State law requires maternity coverage in which type of policies? A. individual B. group C. both individual and group D. neither individual or group

group Yes, state law requires that maternity coverage be offered to the group members (employees). Only maternity and chiropractic coverage are required to be offered to the employees. The other coverages may be required to be offered to the employer and the employer makes the decision as to whether or not to offer the coverage to the employees.

Which policies are required to coordinate benefits? A. medicare supplement B. indemnity policies C. individual policies D. group policies

group policies It's called "coordination of benefits" in group policies so policy owners will not be paid more than the cost of the illness.

Which renewability provision is required in Long-Term-Care policies? A. cancellable B. optionally renewable C. conditionally renewable D. guaranteed renewable

guaranteed renewable

The renewability category required for Long-Term Care policies is _____. A. cancelable B. optionally renewable C. conditionally renewable D. guaranteed renewable

guaranteed renewable Yes, it's guaranteed renewable. That is the next to the strongest category for the benefit of the client.

If an error is made on an application for insurance, the agent must: A. recopy the application and sign the applicants's name. B. correct the application without the written consent of the insured. C. have a new application completed and signed by the applicant. D. None of the above

have a new application completed and signed by the applicant.

The purpose of the elimination period in a disability or long-term care policy is to: A. provide a trial period of coverage for the insured at little cost. B. limit the insurer's risk related to accidental injuries. C. give the insured an opportunity to cancel the policy and obtain a refund if not entirely satisfied. D. help the insured to reduce the cost of the policy by accepting the initial risk period of a disability.

help the insured to reduce the cost of the policy by accepting the initial risk period of a disability.

Premiums for industrial health policies are: A. low because there isn't much protection. B. always paid monthly to the insurance company. C. high because premiums are paid more frequently and company has less money to invest. D. none of the above

high because premiums are paid more frequently and company has less money to invest. Yes, this is correct. You might think it wouldn't make that much difference. Therefore, it could be on the exam.

Dr. Fumegarten, a chiropractor, is disabled. His Disability Insurance overhead expense policy will cover all the expenses below except: A. electricity. B. leased x-ray equipment. C. his salary. D. uniforms for the staff.

his salary.

From the insured's point of view, it is most advantageous to have a disability policy which defines total disability as being unable to work at: A. any occupation. B. his/her own occupation. C. any occupation and being confined in a hospital D. none of the above

his/her own occupation. At first glance, people often choose the "any occupation" definition because it sounds broader and therefore better for the client. Not true. The "his/her own occupation" definition is better. Here's how it works: When George becomes disabled, he can't work at his own occupation (we'll say), but he could do something else within a short period of time. The insurance company may say, "OK George, we will cover you for a year under the "own occupation" provision, but at the end of that time, you have better be able to do something, because the definition then changes after 12 months to 'any occupation.'" Thus if George was able to continue the "own occupation" definition, he would be continually receiving benefits, whether he was able to work at another occupation or not.

In a family basic health policy, generally how long must a policy be in force before maternity benefits go into effect? A. 3 months B. 9 months C. immediately D. no specific period of time

immediately

Florida's Long-Term-Care Partnership Program must provide which of the following coverage? A. Medical expanse coverage B. disability coverage C. inflation coverage D. Outpatient hospital treatment

inflation coverage

Personal health insurance policies do not normally include benefits for: A. injuries suffered while using an unsafe ladder B. injuries that are covered by Workers Compensation C. injuries suffered in an auto accident D. rehabilitation for alcoholism

injuries that are covered by Workers Compensation

An insurance application submitted to the insurance company with the initial premium provides coverage beginning when the: A. insurance company determines that the applicant is insurable and acceptable and the policy is issued. B. policy is mailed to the agent regardless of when the policy is delivered to the insured. C. application is signed by both the agent and the insured, and the policy is countersigned by the insurance company president. D. insured is accepted by the insurance company, the next month's premium is paid, and a continued good health statement is signed.

insurance company determines that the applicant is insurable and acceptable and the policy is issued.

Dread disease, travel accident, vision care, and hospital indemnity policies are all examples of: A. LTC policies. B. limited policies. C. group policies. D. blanket policies.

limited policies.

Washington takes a skiing trip and breaks a leg. Upon returning home, he purchases a major medical policy and files a claim which the company disapproves. The reason they decline the claim is: A. pre-existing condition B. consideration C. entire contract D. insuring clause

insuring clause Yes... the insuring clause tells what the company is going to do and WHEN. It also spells out the dates of the coverage, which in this case the event occurred outside of the dates of coverage. Read answer (a.) for more explanation. (a.) Yes, it was a pre-existing condition alright, but that doesn't have anything to do with it because he is submitting a claim for something that happened before the policy was in existence. It's like having an accident and then driving into an auto insurance office and buying auto insurance ... and then claiming on the accident you had before the policy was in effect. The problem is not occurring after the effective date of the policy. With a pre-existing condition, it exists before the effective date of the policy and again after the effective date of the policy. The leg did not break again after the policy was effective.

An insured's accident policy uses the phrase "accidental results" to define what constitutes accidental injury and/or resulting death. This phrase: A. means the insured will receive a lower benefit than a policy that uses the phrase "accidental means." B. means the same as the phrase "accidental means." C. is less restrictive than the phrase "accidental means." D. is more restrictive than the phrase "accidental means."

is less restrictive than the phrase "accidental means." Yes; when the accidental results definition is used, it means the company doesn't care how the accident happened, it just happened. Therefore, that is less restrictive than a definition that does require an accident to have happened in a certain way. An added hint is that "M" for (m)eans is (m)ore restrictive.

The Probationary Period on a health policy is true of all the following statements except: A. it is found in the insuring clause. B. is one of the 12 Mandatory clauses. C. it requires a certain waiting period for illness. D. it requires no waiting period for accidents.

is one of the 12 Mandatory clauses. No it is not one of the mandatory clauses.

All of the following are alternatives an insurer has when asked to insure a substandard risk except to: A. reject the risk. B. attach a rider to the policy excluding certain coverages or conditions. C. charge a higher than standard premium. D. issue the policy with a probationary period after which the insurer may continue or cancel the policy.

issue the policy with a probationary period after which the insurer may continue or cancel the policy. This is not done.

Which of the following is true about Medicare? A. it is a program for welfare recipients B. it has four parts: Part A, Part B, Part C and Part D C. it is free medical care similar to Canada D. Part A requires that a premium be paid

it has four parts: Part A, Part B, Part C and Part D

As compared to individual disability income policies, group disability income policies are generally: A. more costly and have less liberal provisions. B. more restrictive in terms of covered medical expense. C. less costly and have more liberal provisions. D. tied more closely to Social Security disability benefits.

less costly and have more liberal provisions.

All of the following are basic forms of health insurance coverage EXCEPT A. medical expense B. limited pay health C. disability income D. accidental death and dismemberment

limited pay health I made this up. There is no such thing as limited pay health. Limited pay life, yes. Limited pay health, no.

Under group health insurance policies, coverage for alcoholism or drug dependency is: A. specifically excluded. B. available, but at an additional premium when this coverage is used. C. made available to the employer as an optional coverage. D. none of the above

made available to the employer as an optional coverage. Here's the reason. It is a requirement to make this option available to the EMPLOYER, and he/she/they can then make the coverage available to the EMPLOYEE if he/she/they decide to.

In order to sell HMO contracts, an agent must do all of the following except: A. keep & renew his or her appointment. B. maintain a bond of not less than $10,000. C. abide by the Unfair Trade Practices Act. D. obey all regulations of the Department of Insurance.

maintain a bond of not less than $10,000.

If one becomes totally disabled, Social Security Disability benefits: A. may begin after 30 days B. may begin after 60 days C. may begin after three months D. may begin after five months

may begin after five months

Required Provision 10 indicates that if the insurer wants to have an autopsy performed while a claim is pending, the insurer: A. must have the permission of the insured's beneficiary or estate administrator in order to do so. B. may do so if it is not forbidden by law and if the insurer pays for it. C. may do so only if it presents evidence that substantiates the insurer's opinion that an autopsy is required. D. must first pay the claim and then may order an autopsy for which the insurer pays.

may do so if it is not forbidden by law and if the insurer pays for it. Yes... this is what is done. Now think about this... the insurer is not going to do this routinely! It costs way too much. They would only take this rather extreme step if they feel there are circumstances which lead them to a conclusion that something wrong or illegal has happened.

Which would not be covered under an AD&D policy? A. dismemberment of limbs B. loss of eye sight C. medical expense D. accidental loss of life

medical expense Yes, the medical expenses are covered under medical expense insurance.

Which is considered a reimbursement contract? A. life B. medical expense C. disability income D. AD & D

medical expense Yes.... the policyholder never knows how much the cost will be until after the illness. Medical expense insurance is a reimbursement policy.

In health insurance the length of the grace period varies according to which: A. mode of premium payment. B. length of the benefit period. C. length of the elimination period. D. length of the procrastination period.

mode of premium payment.

The time payment of claims provision requires that an insurance company pay disability income benefits no less frequently than A. annually B. semi-anually C. quarterly D. monthly

monthly

In health insurance policy underwriting, the three most important factors are: A. moral hazards, occupation and physical condition. B. moral hazards, avocation and occupation. C. moral hazards, morale hazards and physical condition. D. None of the above

moral hazards, occupation and physical condition OK. Remember MOP or M.O.P. That is the key to answering this question because there are a number of factors, some of which seem to be rather important. One other thing to point out if you are also working on your life insurance exam at the same time: In life insurance it's MMP which is moral, morale and physical. In health insurance, the moral and morale are combined into one, and the occupation becomes more important.

In a disability policy, what factor when increased causes a decrease in benefits? A. interest B. pool of insureds C. benefit D. morbidity

morbidity Yes... the morbidity table is the actual data of how many people are expected to be "disabled due to accident or sickness." If the morbidity rate increases, it will cause a decrease in benefits over a period of time for the same amount of premium

When comparing a group health plan with an 80/20 coinsurance provision with one which has a 75/25 coinsurance provision, the employee will pay _____ for the 80/20 provision. A. more premium B. less premium C. significantly less premium D. about the same

more premium

Which of the following is not used in determining the rates in a health insurance policy? A. stability of the group B. morbidity tables C. mortality tables D. experience rating

mortality tables Aka life insurance

If an employer pays the entire cost of a group health plan, the plan is said to be: A. contributory. B. non-contributory. C. universal. D. None of the above.

non-contributory.

A benefit that can be paid when the insured is not disabled is: A. total disability payments. B. partial disability payments. C. residual disability payments. D. non-disabling injury benefit.

non-disabling injury benefit. Yes... and remember it... because this one will throw you. It doesn't sound like something which would be included in disability policy -- for a non-disabling injury. But it is. The policy can have a provision intended to cover medical treatment for an accident even if the accident was a non-disabling one

What is the major reason that disability policies are available in a non-occupational category? A. non-occupational policies are purchased by unemployed people B. non-occupational policies are more expensive C. non-occupational policies are for part-time employment D. non-occupational policies cover where Worker's Compensation plans do not

non-occupational policies cover where Worker's Compensation plans do not

The health policy that always renews without an increase of premium would be identified as: A. noncancelable B. guaranteed renewable C. conditionally renewable D. unconditionally renewable

noncancelable

If an employer pays the premiums for an insurance plan that automatically covers all eligible employees, the plan is known as: A. salary savings insurance. B. contributory group insurance. C. noncontributory group insurance. D. franchise group insurance.

noncontributory group insurance. Yes... the employees are not contributing, at all.

What is the stop loss point in Medicare? A. $1,000 B. $2,000 C. $5,000 D. none

none

Individual health policies are usually written: A. participating. B. nonparticipating. C. nonadmitted. D. noncontractual.

nonparticipating Yes... companies don't normally write par policies on individuals with health insurance. Life, yes; health, no. Do you remember what "par" means? Participating with the company on their expenses... with a potential return in the form of dividends.

Under the illegal occupation provision included in most health insurance policies, the company is: A. liable for a loss even though the insured is engaged in an illegal occupation. B. not liable for a loss when the insured is engaged in a felony or illegal occupation. C. required to notify local law enforcement agencies when it suspects an insured is engaged in an illegal occupation. D. None of the above

not liable for a loss when the insured is engaged in a felony or illegal occupation.

Under the intoxicants and narcotics provision in most health insurance policies, the company is: A. not liable for losses attributed to the insured's use of intoxicants or narcotics unless prescribed by a physician. B. liable for losses attributed to the insured's use of intoxicants. C. permitted to cancel a policy when the company suspects an insured uses intoxicants or narcotics. D. None of the above

not liable for losses attributed to the insured's use of intoxicants or narcotics unless prescribed by a physician.

An HMO characterized by a network of physicians who work out of their own private offices, and participate on a part-time basis, is known as ________. A. multi-panel B. open panel C. closed panel D. fixed panel

open panel

Major medical policies may include a type of deductible where the insured pays a new deductible amount for each different event that causes medical expenses to be incurred. This is the: A. per-cause deductible. B. all-cause deductible. C. common accident or illness provision. D. carryover provision.

per-cause deductible.

The agent has just been told by a policyowner that she is 4 years younger than what she was listed on the application. The agent should: A. write a new policy at the correct age immediately so there is no gap in coverage. B. notify the insurance company for possible review of the application. C. notify the insurance company to adjust existing policy to the correct age. D. determine whether there has been any change in health since application for the policy.

notify the insurance company to adjust existing policy to the correct age. Yes... it is already established that this is what will happen. It's just adjusted. The company will fix things and establish a new premium. If it happens after the fact (at time of a claim) the company will adjust the benefits.

Agent Thumblebitton has just been told by a policyowner that she is three years younger than was listed on the application. The agent should: A. write a new policy at the correct age immediately so there will be no gap in coverage. B. notify the insurance company for a possible review of the application. C. notify the insurance company to adjust the existing policy to the correct age. D. determine whether there has been any change in health since the application for the policy.

notify the insurance company to adjust the existing policy to the correct age.

The COBRA plan provides the option when terminating employment: A. to convert to an individual plan within 45 days after leaving the employer B. to pay a premium of 102% more than what the employee had been paying C. to receive a discounted rate on a new coverage from a local agent D. of staying within the company's plan for up to 36 months

of staying within the company's plan for up to 36 months Yes, this is one of the time frames of COBRA. If an employee is terminated or reduced in hours to where they are no longer in the company plan, it's 18 months. The other options are 36 months.

In a guaranteed renewable health policy, the company may increase premiums: A. at its discretion. B. only for selected insureds. C. only for the entire class of insureds. D. None of the above

only for the entire class of insureds.

Hospital Indemnity policies are designed to: A. have maximum benefit periods of 30 days or less. B. pay a benefit based on the number of days an insured is hospitalized. C. replace major medical expense policies. D. none of the above.

pay a benefit based on the number of days an insured is hospitalized.

Medicare supplement insurance is designed to: A. take care of all expenses not covered by Medicare. B. pay at least some of the health care costs that Medicare will not pay. C. provide health care coverage for poor people on welfare. D. prevent spousal impoverishment.

pay at least some of the health care costs that Medicare will not pay. Yes... to cover some of the health care costs, in the areas of deductibles, co-pay, and excess charges over and above what Medicare covers.

Hector bought a disability policy many years ago when he had a high paying job. Two years ago he was laid off and had to take a job with a large reduction in pay. Last month Hector was injured and found by the doctors to be totally and permanently disabled. When he submitted a claim to the insurance company he noticed the benefits were much more than what he was actually earning before becoming disabled. What is the company's obligation? A. pay the full benefits that he bought B. pay benefits in proportion to current income earnings C. none, his policy is voided for not telling insurance company he had changed jobs. D. none of the above

pay benefits in proportion to current income earnings Hector will need to return the overpayment. The company's obligation was for a set percentage of Hector's income.

Under Workers Compensation, a disability that is a permanent physical impairment leaving the individual incapable of performing the previous regular occupation but capable of performing some other type of work, is a: A. permanent total disability. B. permanent residual disability. C. temporary total disability. D. temporary partial disability.

permanent residual disability. Yes, a residual disability which may be long term.

Medicare part A covers all the following costs except: A. inpatient hospital services. B. physicians' and surgeons' services. C. post hospital home health care. D. post hospital nursing care.

physicians' and surgeons' services. Physician's and surgeons' services are covered under part B. It is a general rule that the covered services on part A are the facilities and the payments made under part B are to the people providers.

All of the following are benefits provided under Part A of Medicare except: A. inpatient hospital care. B. skilled nursing facility care. C. hospice care. D. physicians' services for inpatient care.

physicians' services for inpatient care. Right... physicians' services for inpatient care is on Part B.

The time period specified in the Free Look provision begins when the: A. policy is issued. B. policy is delivered. C. application is signed. D. application is approved.

policy is delivered.

The entire contract provision in a health policy states: A. entire contract is on file with the agent and may be examined by the applicant at any time. B. policy with attached riders and other papers constitutes the entire contract between the policyowner and the insurer. C. specific rules, regulations, and procedures concerning the policy are maintained in the company's home office. D. the policy delivered to the insured is a brief summary of the entire contract, which is on file with the appropriate state insurance department.

policy with attached riders and other papers constitutes the entire contract between the policyowner and the insurer.

Medicare Part B includes all the following except: A. health care aids B. psychiatric care C. post hospital skilled nursing care D. physicians services in hospital, clinic, or home

post hospital skilled nursing care Yes, this is covered under part A. Better look at answer (b) while you are here.

A policy lapses when: A. premiums are paid in advance. B. premiums are not paid within the grace period. C. Both A & B D. Neither A nor B

premiums are not paid within the grace period.

All the following are correct about an individual disability policy except: A. premiums are tax deductible B. probationary period is a one time period C. benefits are received tax free D. elimination period is chosen by the insured

premiums are tax deductible Close Answer A - Correct. This answer is correct because the statement is wrong... and we are looking for an incorrect statement. On individual policies, the premiums are paid in "after tax" dollars. Not deductible. Then the benefits are tax free.

Health Maintenance Organizations are required to provide for all of the following except: A. emergency services. B. preventive services. C. prescription drugs. D. physicians' services.

prescription drugs.

The primary purpose of the Coordination of Benefits provision found in a group Medical Expense contract is to: A. prevent lengthy lawsuits between insurance companies. B. motivate hospitals to keep their charges reasonable and customary. C. prevent the claimant from profiting from an injury or sickness. D. ensure equal payment of a claim by all insurance companies.

prevent the claimant from profiting from an injury or sickness. This is the reason... and the COB provision is "found only in group health plans."

The amount payable as a death benefit in an accidental death and dismemberment policy is known as the A. primary amount B. capital sum C. indemnity amount D. principal sum

principal sum

The "one time only" period in a health policy when the policy first starts is called the _________. A. elimination period B. probationary period C. contestable period D. coverage period

probationary period Yes, the probationary period is only on the start-up of the policy, unless it lapses and has to be restarted.

The Office of Insurance Regulation will NOT issue a Certificate of Authority to an HMO until it has A. 500 prospective members B. deposited capital and surplus in the amount of $1 million C. received a valid Health Care Provider Certificate from the Agency for Health Care Administration of Florida D. been inspected and approved by the Florida Medical Association

received a valid Health Care Provider Certificate from the Agency for Health Care Administration of Florida Yes, there are two certificates involved. An HMO must receive this certificate as well as making a $10,000 deposit, looking good on paper financially, and becoming a member of the HMO consumer assistance plan. Then they receive THE Certificate of Authority.

A disability that is presumed to result from the same or a related cause of prior disability is called a: A. recurrent disability. B. residual disability. C. presumptive disability D. delayed disability.

recurrent disability.

Medical expense plans are based on what type of contracts? A. valued B. reimbursement C. devalued D. all of the above

reimbursement

Answers given by Health Insurance applicants are considered to be: A. the absolute truth B. warranties C. representations D. negotiable

representations

When a disability policy pays long-term benefits in direct proportion to actual earnings lost, it is called: A. partial disability. B. residual disability. C. delayed disability. D. recurrent disability.

residual disability. That is the specific reason for the residual benefit... to help an employee when he/she cannot get back to full employment because of the disability, but can work part time or at a position which is less demanding at a reduced salary.

Which is not a requirement of agents soliciting medicare supplements? A. inquire from each client if they already have coverage B. explain to the client where there will be overlapping coverage C. send a signed form to the company explaining why the policy can't be sold D. have client sign a form acknowledging information was provided

send a signed form to the company explaining why the policy can't be sold This is not a requirement. What is this exactly? Making excuses to the home office? Now... rather than concentrate on how dumb this answer was, note the other three because they are important considerations in selling Medicare supplements! These are requirements about which the state could easily ask questions in the exam.

Before coverage begins, a preexisting condition on a Medicare Supplement policy may not limit liability for a period longer than: A. one month B. three months C. six months D. one year

six months

A Medicare Supplement insurer may not deny any application, nor discriminate in the pricing of an applicant within: A. one months of turning 65 B. three months of turning 65 C. six months of turning 65 or older and enrolled in Medicare Part B D. twelve months of turning 65 and enrolled in Medicare Part C

six months of turning 65 or older and enrolled in Medicare Part B

Many major medical policies include a provision that states when expenses reach a certain dollar amount, the insured no longer shares in the cost of expenses; the insurer pays 100% of remaining covered charges. This is referred to as the: A. maximum benefit. B. benefit restoration. C. coinsurance percentage. D. stop-loss limit.

stop-loss limit. Yes... and one other thing about the stop loss limit. You need to know that the stop loss point does not include the deductible amount when you are doing the calculations to determine how much the company pays and how much the client pays.

The participants in a Blue Cross/Blue Shield plan are called: A. insureds B. subscribers C. policyowners D. dimbulbs

subscribers

HMOs include all of the following except: A. preventive health care. B. diagnostic surgery. C. co-payments. D. subscribers can choose any doctor of their choice.

subscribers can choose any doctor of their choice. Right .... subscribers in an HMO cannot choose any doctor. They need to choose a doctor in the HMO system.

Under the unpaid premiums provision included in most health insurance contracts, the company is entitled to: A. deny a claim when a premium is due. B. subtract the unpaid premium from claim payments. C. cancel a policy when a premium is due. D. None of the above

subtract the unpaid premium from claim payments

In a group disability income plan, the benefit payments which are attributed to employer contributions are: A. taxable. B. not taxable. C. reduced as the employee ages. D. None of these

taxable Because the employer is paying "before tax dollars." Actually what the employer is doing is spending the money and calling it general business expenses, but it's the same as before tax money.

When an insured holds more than one occupation, and the occupation is used to classify the risk, the insurer will generally classify the insured according to the occupation: A. at which the insured spends the majority of hours each week. B. that is most hazardous. C. in which the insured has been employed for the longest period of time. D that produces the lowest premium.

that is most hazardous.

The cost of living adjustment rider (COLA) in disability income policies is usually tied to: A. the Consumer Price Index. B. the Gross National Product. C. Equity Investments of the company. D. All of the above.

the Consumer Price Index (CPI)

Generally the party who delivers an insurance policy to the new policy owner is A. a representative of the insurance company's home office B. the agent C. the state's chief financial officer D. a US Post Office letter carrier

the agent

The consideration clause in a health insurance contract states: A. the amount and frequency of premium payments. B. the requirement of combining the initial payment with the application. C. the conversion requirements. D. All of the above

the amount and frequency of premium payments. That's exactly what it does. Notice the difference between "consideration" and "the consideration clause." Big difference. Consideration is the initial premium AND the application. It is then forwarded to the company so they can consider it. The consideration clause is after the client has received the policy and is IN IT. It states how much is to be paid and how often.

"Capitation," as used by HMOs means: A. the amount paid to an HMO by a physician for administrative costs. B. the amount paid by an HMO to the state in order to do business. C. the amount paid by an HMO to a physician for medical services rendered. D. None of the above

the amount paid by an HMO to a physician for medical services rendered.

All of the following are reasons an application is important except: A. the application becomes part of the policy when attached to the policy. B. the application becomes part of the insuring clause when attached to the policy. C. the application helps to more fully identify the applicant. D. statements made in the application become the basis for issuing the policy.

the application becomes part of the insuring clause when attached to the policy. The application does not become part of the insuring clause.

In an AD&D policy, the amount payable for a double dismemberment is referred to as: A. double indemnity B. the capital sum C. the principal sum D. elective dismemberment

the capital sum Yes it is the capital sum. Capital is usually "half" or one of something, one hand, one foot, or 2/3 if it is one arm, one leg.... etc. When it is two of something, it is still the capital sum which happens to be the same dollar total as the principal sum.

From a legal standpoint, Constructive Delivery of a policy is accomplished when: A. the company sends the policy to the agent with instructions to obtain a statement attesting to the insured"s continued good health. B. the agent delivers the policy for inspection but the initial premium has not yet been paid. C. the company relinquishes all control over the policy and turns it over to someone acting for the policyowner including the company's own agent. D. the agent mails a policy to the policyowner with a note that he or she will stop by later to collect the first premium.

the company relinquishes all control over the policy and turns it over to someone acting for the policyowner including the company's own agent. Right... including the company's own agent. Then if the agent calls the insured on the phone and says, "I've got it, you're covered," that was constructive delivery. In order for that to happen, the insured would have had to give payment of the initial premium along with filling out the application originally. The insured IS THEREFORE covered. The phone call still didn't give the insured the opportunity to have his/her free look. Whenever the policy finally physically makes it into the hands of the insured, then their free look starts.

The purpose of COBRA is: A. the Coordination Of Business Related Applicants. B. the coordination of medical supplement accounts. C. the continuation of health coverage. D. the coordination of reptile health coverage.

the continuation of health coverage. COBRA is not converting. It is staying within the company plan for a continuation of the same coverage.

The policy provision that prevents an insurance company from altering its agreement with a policyowner by referring to documents or other items not contained in the policy is called: A. the incontestable clause. B. the benefits provision. C. the entire contract provision. D. legal actions.

the entire contract provision. Yes, this is right. What you see is what you get. If it isn't in the policy including the application which will be attached, it doesn't count. Period.

To qualify for group health coverage, a group of persons must be a "natural group." This means that: A. the group should be made up of people who are in good health. B. the group must have been formed for some reason other than to obtain insurance. C. the group must have ten or more members. D. None of the above.

the group must have been formed for some reason other than to obtain insurance. Yes, and this is an important one and likely to be on the test.

In an individual health insurance contract, a pre-existing condition is usually defined as a condition that: A. the insured contracted after the first premium payment. B. the insured contracted (or one that manifested) prior to the policy's effective date. C. the insured contracted (or one that manifested) after the policy's issuance. D. None of the above

the insured contracted (or one that manifested) prior to the policy's effective date.

Under the typical HMO contract, the subscriber is: A. the health care physician. B. the health care institution providing services under the contract. C. the person or entity who has the health maintenance contract with the HMO and pays the fee and uses the services. D. None of the above

the person or entity who has the health maintenance contract with the HMO and pays the fee and uses the services. In insurance, this person is known as the policyholder, but not in an HMO.

An Outline of Coverage for health insurance must be given to the applicant when: A. the policy is delivered to the applicant. B. the application has been declined by the company. C. is admitted to a hospital or health facility. D. None of the above

the policy is delivered to the applicant.

When an application for health insurance is submitted without an initial premium, the earliest effective date is the date on which the: A. the application is taken by the agent. B. insurance company issues the policy. C. policy is received by the agent. D. the policy is delivered to the prospect by the agent and the premium is collected.

the policy is delivered to the prospect by the agent and the premium is collected.

The amount payable for a death claim in an accidental death and dismemberment policy is known as: A. the primary sum B. the capital sum C. the indemnity sum D. the principal sum

the principal sum Yes, the PRINCIPAL SUM is the maximum payout of the policy and it is paid when accidental death occurs.

In an accidental death and dismemberment policy, the sum which is paid as a death benefit is called: A. the principal sum. B. the capital sum. C. the corporal sum. D. None of the above

the principal sum. Principal is the death benefit. Capital is for loss of body parts.

All are true about Social Security Disability except: A. the worker must be fully insured B. the disability must be expected to last at least 12 months C. the worker can apply anytime after disability is deemed permanent D. the disabled applicant must be under 65

the worker can apply anytime after disability is deemed permanent

What is the incontestable clause called in health insurance? A. entire contract B. grace period C. time limit on certain defenses D. lapse point

time limit on certain defenses

Preexisting conditions are referred to in which of the following health policy areas: A. claim forms B. time limit on certain defenses C. insuring clause D. legal actions

time limit on certain defenses This question is a good example of a problem you may have on the state test. The best answer would be the Preexisting Conditions provision, but that answer is not here. It is true that preexisting conditions are referred to in the Time Limit on Certain Defenses provision, but the details are not stated there, the details are in the Preexisting Provisions provision. I have intentionally left this question this way, because you will find questions on the state test which have less than desirable answers, and yet you have to choose the best one. This is the best one in this case. The Insuring clause states that the benefits are subject to all provisions and exclusions in the policy. It is the "third choice" for a good answer here. Remember that the state test isn't perfect. They give you the opportunity to miss 30% of the questions just in case some are not written as well and are not as clear as you would like them to be.

The coordination of benefits provision (COB) in group health insurance is designed: A. to pay the insured in excess of all eligible expenses. B. to limit claim payment to one company. C. to limit claim payment to no more than the total allowable expenses. D. None of the above

to limit claim payment to no more than the total allowable expenses. Insurance companies are providing insurance to cover pure risk. That means cover expenses up to the amount that was paid, but no more than that... and to distribute it amongst the insurance companies involved on this insured.

The purpose of the Florida Employees Health Care Access Act is: A. to provide health care assistance to the financially disadvantaged. B. to require small employers to file annual statements of insurability. C. to assist small employers with Long-Term-Care coverage. D. to promote the availability of health insurance coverage to small employers.

to promote the availability of health insurance coverage to small employers. Yes, it's to make health insurance coverage available to small employers.

According to the time limit on certain defenses, unless an insured has made fraudulent misstatements, a policy is incontestable after: A. one year. B. two years. C. the insurer has accepted the initial premium. D. the insurer has signified its intent to pay a claim.

two years Yes, 2 years. This is very similar to the incontestability clause in life insurance. Same concept.

Mary-Margaret has a special risk policy. It will only pay a benefit for: A. dreaded diseases. B. unusual hazard not covered on other policies. C. an accident on a commercial flight. D. None of the above

unusual hazard not covered on other policies. This is the reason behind the Special Risk policy. Dread Disease policies or Limited Risk policies are different. They are for certain illnesses or certain periods of time. Special Risk policies are for UNUSUAL hazards.

The purpose of Disability Income insurance is to provide: A. weekly or monthly income. B. unemployment income. C. surgical expense reimbursement. D. hospitalization expense reimbursement.

weekly or monthly income.

Under social security, when does the black-out period begin for a surviving spouse? A. when the youngest child becomes 16 B. when the youngest child becomes 18 C. at age 60 D. at age 65

when the youngest child becomes 16 The blackout period is the "gulf" between when a spouse would be receiving social security benefits because of the children, and the time the spouse is old enough to qualify age-wise which is 60. When the youngest child turns 16, the spouse benefits shut off. If the worker died and the youngest child was already 16, the spouse would already be in the blackout period. Why do we worry about this? Planning for the clients.

Worker' compensation covers losses resulting from: A. work related disabilities. B. job layoffs. C. workers whose companies went out of business. D. worker terminations.

work related disabilities.

Must a health company return unearned premium on a cancelled policy? A. yes B. no C. only if insurer cancels D. depends

yes Easy answer really, because you can think of it this way: insurance companies do not cheat the public. If the premium is earned because the time has gone by where the client had the coverage, then the company will keep the premium. If the time hasn't occurred yet, because the premium was paid in advance and not earned yet, the company will provide a refund for the exact amount due.