Health Insurance Policy Underwriting Issuance, and Delivery

All of the following types of insurers underwrite health insurance EXCEPT: A) annuity companies. B) casualty insurance companies. C) life insurance companies. D) monoline companies.

- annuity companies. Health insurance may be written by a life insurance company, a casualty insurance company, or a monoline firm that specializes in medical expense and disability insurance. Annuity companies write contracts that provide life benefits for the insured while she is alive.

The purpose of the probationary period is to: A) limit the insurer's risk related to accidental injuries. B) help the insurer to avoid paying benefits for losses due to illness contracted before the policy was issued. C) provide a trial period of coverage for the insured at little cost. D) give the insured an opportunity to cancel the policy and obtain a refund if not entirely satisfied.

- help the insurer to avoid paying benefits for losses due to illness contracted before the policy was issued. The purpose of the probationary period is to help the insurer to avoid paying benefits for losses due to illness contracted before the policy was issued. Thus, many health insurance policies provide that benefits will not be paid due to any illness that commences during the first 30 days (or other specified period) following the issue date of the policy.

For situations where no initial premium was paid when the application was taken, when delivering that policy the agent is generally required to do all of the following Except: A) obtain a Statement of Good Health from the insured. B) explain the policy, its provisions, and any riders, exclusions, or ratings involved. C) collect any premium due. D) present the insured with a conditional receipt.

- present the insured with a conditional receipt. Since the insured has already been underwritten and a policy issued, a conditional receipt is no longer applicable to these type situations. Keep in mind, however, that whether the policy will go into effect or not is dependent upon the insured's health status at the time of delivery and full payment of any premiums due. If the insured has experienced any negative health changes that could effect their insurability since the time of the application, the agent cannot deliver the policy and coverage does not go into effect.

Transfer of Benefits Statement

A statement that ensures benefits provided under the old policy will continue under the new policy.

An applicant for health insurance completes the application and satisfies all of the conditions of the conditional receipt. If the policy is eventually issued as applied for, coverage takes effect: A) as soon as the underwriting process has been completed . B) just as if the policy had already been issued. C) as soon as the policy has been delivered to the applicant. D) as soon as the policy has been issued.

B) just as if the policy had already been issued. If the initial premium was paid with the application, the applicant satisfies all of the conditions of the conditional receipt, and the policy is eventually issued as applied for, coverage takes effect just as if the policy had already been issued.

Tom is talking to his client about replacing an existing health insurance policy. Which of the following statements about the planned replacement is NOT correct?

B) The new policy should put the insured in a position of financial gain. -Under the no gain/no loss statutes, the new policy must not put the insured in a position of profit in the event of a loss. It is important to review all key policy provisions before the replacement. There are limits on compensation requiring that commissions for the replacement policy not exceed the renewal commissions paid on the policy being replaced.

Initial Premiums

Is the first premium the applicant pays to place the policy into effect.

Policy fee

Which is a generally a flat amount that is helps defray such expenses such as acquisition costs, producer commissions, administration, and maintenance of the policy.

Fiduciary

is a person in a position of financial trust

When is the Policy Effective date?

technically the policy is effective whe the intial premuim have been paid and the policy has been delivered, but it is better to state that the policy takes effect ont he date specified in the policy

If an impairment rider has to be attached to a health policy, the policy will not be considered delivered until A) the free-look period has ended. B) the impairment rider has been explained and the applicant's signature has been obtained. C) it has been postmarked and placed in the mail. D) it is physically in the hands of the applicant.

B) the impairment rider has been explained and the applicant's signature has been obtained. Issuing a policy that differs from the terms applied for requires that the applicant accept any changes to the original application by signing the amended policy. Simply placing the policy in the applicant's hands or mailing it does not constitute delivery. The free-look period begins when the policy is delivered. It is not a part of the delivery process.

A health insurance policy does NOT go into force if: A) the producer delivers the policy B) the producer completes the application C) the applicant satisfies the conditions of the conditional receipt. D) the applicant pays the initial premium

B) the producer completes the application The insured must complete the application, not the producer. If the initial premium is paid at the same time the application is submitted, and the terms of the conditional receipt are met, coverage will take effect as if the policy was issued.

What is No Loss/No Gain Policy?

Legislation, which requires that when health insurance is replaced, on going claims under the former policy must continue under the former policy must continue to be paid under the new policy, thereby overriding any pre-existing conditions exclusions.

Ethics

Means setting a standard of conduct or behavior based on established values.

Premuim

(Considerations) Is the sum of money the insured pays the insurer in exchange for or in consideration of the benefits or indemnities provided in the policy - insurance premiums are paid in advance

Which of the following statements about a Medicare supplement policy is CORRECT? A) The insurer may cancel it because the insured has not paid the premiums. B) The insurer may cancel it on the grounds of the insured's geographic location. C) The insurer may cancel it on the grounds of the insured's health status alone. D) It can indemnify against losses resulting from sickness on a different basis from claims resulting from accidents.

- The insurer may cancel it because the insured has not paid the premiums. An insurer may not cancel or refuse to renew a Medicare supplement policy on any grounds other than the insured's failure to pay the premium or the insured's material misrepresentation.

When does a health insurance go into force

- the initial premium is payed - the policy is delivered to the insured Note: If the initial premium was paid with the application and the applicant satisfies all of the conditions of the conditional receipt, coverage takes effect just as if the policy had already been issued. - producer should always obtain initial premuim and application and submit entire package - The important thing is that the coverage never applies until the insured has paid for it. if the inital premuim does not accompany the application, the premium must be collected at policy delivery along with a signed statement that the insured continues to be in good health.

After a health insurance policy is in force, the initial period that often must pass before a loss due to sickness can be covered is known as: A) the preexisting interval. B) the elimination period. C) the probationary period. D) the trial term

- the probationary period The probationary period helps the insurer to avoid paying benefits for losses due to illness contracted before the policy was issued. The elimination period arises in the context of a disability income policy. It is the period between the beginning of an insured's disability and the commencement of the period for which benefits are payable.

Coverage for a health insurance policy will take effect just as if the policy had already been issued if all of the following conditions have been met EXCEPT: A) the initial premium was paid with the health application. B) the policy is eventually issued as applied for. C) the policy has been legally delivered to the applicant. D) the applicant satisfies all of the conditions of the conditional receipt

-the policy has been legally delivered to the applicant. If the initial premium was paid with the application, the applicant satisfies all of the conditions of the conditional receipt, and the policy is eventually issued as applied for, coverage takes effect just as if the policy had already been issued. It is not necessary for the policy to be legally delivered to the applicant for coverage to take effect.