Health Insurance - Chapter 7: Health Insurance Underwriting

Pre-hospitalization authorization is considered an example of

managed care

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?

$0 -- disability income benefits that derive from an individual policy which was paid entirely by the policyowner is not subject to federal income tax

An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to

determine if the applicant is an acceptable risk by completing standard underwriting procedures

what type of plan normally includes hospice benefits?

managed care plans

Which mode of payment is used by health insurance policies?

monthly premium, annual premium, semi-annual premium

Name some managed care organizations?

point of service plan (POS), preferred provider organization (PPO), health maintenance organization (HMO)

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant suffered a stroke 18 months ago, something that was not disclosed on the application. What action would the insurance company take?

send the initial premium back to the applicant, sent a notice to the applicant and the agent that the applicant was declined

Which mode of payment is NOT used by health insurance policies?

single premium

what best describes how pre-admission certification is used?

used to prevent nonessential medical costs

T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable?

Benefits are taxable to T -- when a disability income insurance plan is paid for entirely by the employer, the premiums are deductible to the employer. the benefits, in turn, are taxable by the recipient

What correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?

Complete the application and review the information with the customer prior to obtaining the customer signature; then send the app off to the insurance company

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

inspection report

which of the following actions will an insurance company most likely take if an applicant, who has diabetes, applies for a disability income policy?

issue the policy with a diabetes exclusion -- issue the policy with a rating -- decline the applicant

which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a disability income policy?

issue the policy with an altered time of payment of claims provision

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant suffered a stroke 18 months ago, something that was not disclosed on the application. What action would the insurance company NOT take?

send a notice to the MIB that the applicant was declined

What is an incorrect statement about the classification of applicants?

substandard applicants are never declined by underwriters

correct statements about the classification of applicants?

substandard applicants are occasionally declined by underwriters --- preferred risk applicants typically have better premium rates than standard risk applicants --- an applicant can be classified as substandard risk because of a hazardous job