Health Insurance Simulated Exam Questions
What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur? a) Conditionally renewable b) Optionally renewable c) Noncancellable d) Guaranteed renewable
a) Conditionally renewable
What is the maximum age for qualifying for a catastrophic plan? a) 26 b) 30 c) 45 d) 62
b) 30
Assume that the insured owns a Major Medical policy with a $2,000 deductible, an 80/20 coinsurance and a $15,000 stop loss limit. The insured suffered covered losses of $10,000. How much will the insurance company pay for the claim? a) $6,400 b) $3,600 c) $8,000 d) $10,000
A) $6,400 (The insurance company will cover 80% of the claim after the deductible is paid by the insured: $10,000 - $2,000 = $8,000 $8,000 x .80 = $6,400)
Before the Commissioner will issue a broker's license, the licensee must obtain a bond for at least A) $10,000 B) $15,000 C) $20,000 D) $50,000
B) $15,000
The required privacy disclosure notice must be provided by insurer to current policyholders at least once in any period of A) 3 months B) 6months C) 12 months D) 24 months
C) 12 months
Which of the following is NOT true regarding Basic Surgical Expense coverage? A) There is no deductible B) Contracts include a surgical schedule C) It is commonly written in conjunction with Hospital Expense policies D) Coverage is unlimited
D) Coverage is unlimited
What are the three basic coverages for medical expense insurance? a) Hospital, Surgical, Medical b) Basic, Major, Overhead c) Medical, Dental, Vision d) Reimbursement, Preventive, Service
a) Hospital, Surgical, Medical
Who makes up the Medical Information Bureau? a) Insurers b) Hospitals c) Former insured d) Physicians and paramedics
a) Insurers
Which of the following is considered a presumptive disability under a disability income policy? a) Loss of two limbs b) Loss of one eye c) Loss of hearing in one ear d) Loss of one hand or one foot
a) Loss of two limbs
An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would a) Pay the claim b) Hold the claim as pending until the end of the grace period c) Deny the claim d) Pay half of her claim because the insured had an outstanding premium
a) Pay the claim
An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary? a) Revocable b) Primary c) Contingent d) Irrevocable
a) Revocable
In major medical insurance policies, when the insured's share of coinsurance reaches a certain amount, the insured is no longer obligated to pay it. This feature is known as a) Stop-loss b) Maximum benefits c) Deductible d) Coordination of benefits
a) Stop-loss
When a licensee is accused of any act, omission, or misconduct that would subject the licensee to a license suspension or revocation, with the approval of the Commissioner, the license may be surrendered for a period of a) Time to be set by the Commissioner b) 90 days c) 6 months d) 1 year
a) Time to be set by the Commissioner
A group blanket health policy is best suited for which of the following? a) summer camp b) a small employer c) a manufacturer d) a large family
a) summer camp
While a claim is pending, an insurance company may require a) An independent examination only once every 45 days b) An independent examination as often as reasonably required c) The insured to be examined only within the first 30 days d) The insured to be examined only once annually
b) An independent examination as often as reasonably required
When an insurer requires a written proof of loss after notice of such loss has been given by the insured or beneficiary, the company must a) Request a police report from the Department of Motor Vehicles b) Furnish a blank form to be used for that purpose c) Document the request for further investigation d) Submit the loss claim to underwriting for premium review and resolution
b) Furnish a blank form to be used for that purpose
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to a) The spouse of the insured b) The insured c) Creditors d) Beneficiary of the death benefit
b) The insured
The insuring clause of a disability policy usually states all of the following EXCEPT a) The types of losses covered b) The method of premium payment c) The identities of the insurance company and the insured d) That insurance against loss is provided
b) The method of premium payment
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as a) Contracts of adhesion b) Unilateral contracts c) Aleatory contracts d) Binding contracts.
b) Unilateral contracts
What is a license suspension period for a second offense of violating state rules regarding records and reports? a) up to 6 months b) up to 1 year c) up to 3 years d) permanently
b) up to 1 year
An insured is covered by a partially contributory group disability income plan that pays benefits of $4,000 a month. If the insured pays 25% of the monthly premium, how much of the monthly benefit would be taxable? a) none b) $1,000 c) $3,000 d) $4,000
c) $3,000 (On partially contributory group disability income insurance, only that portion of the benefits that are related to the premium paid by the employer is taxable to the employee. In this case, because the employer pays 75% of the premium, the employee will be taxed on 75% of the benefits)
A business wants to make sure that if a key employee becomes disabled, the business will be protected from any resulting loss. Which kind of insurance will protect the business? a) Management Loss b) Business Loss c) Business Disability d) Individual Disability
c) Business Disability
Insurance agents licensed in this state must complete continuing education every 2 years by a) December 31 b) January 1 c) The last day of the licensee's birth month d) The licensee's birthday
c) The last day of the licensee's birth month
If an insured is not required to pay a deductible, what kind of coverage does he/she have? a) Corridor b) Major medical c) Comprehensive d) First dollar
d) First dollar
The corridor deductible derives its name from the fact that it is applied between the basic coverage and the a) Comprehensive expense coverage b) Interval expense coverage c) Limited coverage d) Major medical coverage
d) Major medical coverage
Which of the following applies to partial disability benefits? a) An insured is entitled to a principal sum benefit for the partial loss of a limb b) Payment is based on termination of employment c) Benefits are reduced once an insured is no longer under a doctor's care d) Payment is limited to a certain period of time
d) Payment is limited to a certain period of time
Which of the following is CORRECT regarding Business Overhead Expense insurance? a) Benefits received are received tax free b) Benefits received are taxable income to the employee c) Premiums are not tax deductible d) Premiums are tax deductible
d) Premiums are tax deductible (The premiums paid for BOE insurance is tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received)
Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and Dismemberment coverage? a) Limited Risk Policy b) Specified Disease Policy c) Credit Disability d) Special Risk Policy
d) Special Risk Policy
In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible? a) full b) half c) none d) corridor
d) corridor
Which of the following is true regarding coverage for a disabled child that has reached the limiting age? a) the insurer may not require proof of the dependent child's incapacity b) the insurer may require proof of the dependent child's incapacity every 6 months. c) the child is no longer eligible to be a dependent d) the child must be allowed to remain a dependent upon his or her parent's policy
d) the child must be allowed to remain a dependent upon his or her parent's policy
An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits? a) Partial benefits b) Full benefits until the blindness lifts c) No benefits d) Full benefits
c) No benefits (Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits)
An agent is completing an application of insurance for a client. The agent is required to provide the client e a "notice of information practices" at all of the following times EXCEPT a) At the time of policy delivery b) When personal information is collected from another source other than the applicants c) No notice is ever required at the initial completion of the application d) At the policy renewal date
c) No notice is ever required at the initial completion of the application
If a licensee fails to notify the Commissioner of insurer insolvency, if known or suspected, and to provide a statement of relevant facts, which of the following is TRUE? a) The person will be subject to a fine b) There will be no repercussions for that; reporting of insurer insolvencies is voluntary c) The Commissioner may suspend or revoke the person's license d) The Commissioner will issue a cease and desist order
c) The Commissioner may suspend or revoke the person's license
An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy? a) The capital amount in monthly installments b) The principal amount in monthly installments c) The capital amount in a lump sum d) The principal amount in a lump sum
c) The capital amount in a lump sum (Accidental Death and Dismemberment policies pay a capital amount (a percentage of the principal amount) for the loss of one limb or loss of sight in one eye. The principal amount is paid for death or often for the loss of 2 limbs or loss of sight in both eyes. Benefits are paid in a lump sum)
Which of the following statements is CORRECT about Social Security? a) It is very easy to qualify for disability benefits b) It is designed for people over 59½ c) To be eligible, one must meet certain requirements d) It is more than income received while employed.
c) To be eligible, one must meet certain requirements
Which of the following would best describe total disability? a) A person's inability to perform one of the regular duties of his/her occupation b) A person's total loss of income c) A person's inability to qualify for insurance coverage d) A person's ability to work is significantly reduced or eliminated for the rest of his/her life
d) A person's ability to work is significantly reduced or eliminated for the rest of his/her life
Which describes the features of a comprehensive major medical policy? a)T he deductible is always expressed as deferred amount b) It is the same as major medical insurance c) There is no coinsurance d) Basic medical expense benefits are provided in a single package
d) Basic medical expense benefits are provided in a single package (A comprehensive major medical plan is a combination of basic expense coverage and major medical coverage, sold as one policy. These policies include a deductible and coinsurance)
In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is a) More limited in general b) More limited in duration c) Broader in duration d) Broader in general
d) Broader in general (A policy that uses the accidental bodily injury definition will provide broader coverage than a policy that uses the accidental means definition)
Which of the following is true regarding inpatient hospital care for HMO members? a)Care can only be provided in the service area b) Services for treatment of mental disorders are unlimited c) Inpatient hospital care is not part of HMO services d) Care can be provided outside of the service area
d) Care can be provided outside of the service area
In a disability policy, the probationary period refers to the time a) Between the first day of disability and the day the disability must continue before the insured receives any benefits b) Between the 10th day of an illness-related disability and the first payment c) Between the first day of disability and the actual receipt of payment for the disability incurred d) During which illness-related disabilities are excluded from coverage
d) During which illness-related disabilities are excluded from coverage
Which of the following is NOT true of a major-medical health insurance policy? a) It is designed to pay on a first dollar of expense basis b) It usually has a maximum benefit amount c) The benefits are subject to deductibles d) It is designed to cover hospital and medical expenses of a catastrophic nature
d) It is designed to cover hospital and medical expenses of a catastrophic nature (A major medical policy usually has deductibles and a copayment requirement. Basic medical, but not major medical, expense policies pay on a first dollar basis)
Which statement accurately describes group disability income insurance? a) In long-term plans, monthly benefits are limited to 75% of the insured's income b) There are no participation requirements for employees c) Short-term plans provide benefits for up to 1 year d) The extent of benefits is determined by the insured's income
d) The extent of benefits is determined by the insured's income
A deductible is a) An insurer's obligation to the service provider b) A nominal fee for the use of an insurer's services c) A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits d) A percentage of the medical bill the insured must pay before services will be rendered
c) A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits
How can a new physician be added to the PPO's approved list? a) Pay an annual fee for being on the PPO list b) New physicians are only added once a year, and are selected by the PPO's Board of Directors c) Agree to follow the PPO standards and charge the appropriate fees d) Fill out the appropriate paperwork and wait the 12 month pre-certification period
c) Agree to follow the PPO standards and charge the appropriate fees
Maurice's health insurance plan covers practically all types of medical expenses. Maurice's insurer provides first-dollar coverage for basic benefits, but applies a deductible for major benefits and then pays 80/20 coinsurance. What type of coverage does Maurice have? a) Combined major medical b) Combined medical c) Comprehensive major medical d) Customized medical
c) Comprehensive major medical (A comprehensive major medical plan is a combination of basic expense and major medical coverage. This policy covers practically all medical expenses, since it includes both types of coverage. The plan will provide first-dollar coverage for basic medical benefits, but a deductible may be applied to the major medical benefits)
The gatekeeper of an HMO helps a) Prevent double coverage b) Determine which doctors can participate in an HMO plan c) Control specialist costs d) Determine who will be allowed to enroll in an HMO program
c) Control specialist costs
The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the a) Incontestability clause b) Legal action against us clause c) Entire contract clause d) Time limit on certain defenses clause
c) Entire contract clause
An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? a) Full benefits for 2 years b) No benefits c) Full benefits d)Partial benefits
c) Full benefits
Which of the following is true of a PPO? a) Claim forms are completed by members on each claim b) No copayment fees are involved c) Its goal is to channel patients to providers that discount services d) The most common type of PPO is the staff model
c) Its goal is to channel patients to providers that discount services
A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay? A) 10 days B) 15 days C) 25 days D) 45 days
B) 15 days (A probationary period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days)
If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits? A) 20 credits B) 6 credits C) 40 credits D) 12 credits
D) 12 credits (Persons disabled between ages 24 and 31 can qualify for benefits if they have credit for having worked half of the time between age 21 and the start of the disability. For example, if Joe becomes disabled at age 27, he would need 12 credits (or 3 years' worth) out of the prior 6 years (between ages 21 and 27)
What is the continuing education requirement in Ethics for agents in this state? a) 5 hours every 2 years b) 3 hours every year c) 5 hours every year d) 3 hours every 2 years
d) 3 hours every 2 years
The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT a) Right to appeal b) No lifetime dollar limits c) Coverage for preventive benefits d) Individual tax deduction for premiums paid
d) Individual tax deduction for premiums paid
Kevin and Nancy are married; Kevin is the primary breadwinner. Nancy has an illness that requires significant medical attention. Kevin and Nancy decide to legally separate, which means that Nancy will no longer be eligible for health insurance coverage under Kevin. Which of the following options would be best for Nancy at this point? a) COBRA b) Apply for social security benefits c) Apply for an individual health insurance policy d) Convert to an individual insurance policy with 31 days so she won't have to provide evidence of insurability
a) COBRA (Dependents of employees are eligible to receive group health insurance under the employee's plan. If the employee and the dependent become legally separated or divorced, or if the employee dies, the dependent will be eligible for COBRA benefits for up to 36 months. This is best for Nancy, since she has endured a long-term illness. Otherwise, being approved for individual health insurance would be difficult, or the premiums would be high)
Which of the following disability income policies would have the highest premium? a) 15-day waiting period / 5-year benefit period b) 15-day waiting period / 10-year benefit period c) 30-day waiting period / 10-year benefit period d) 30-day waiting period / 5-year benefit period
b) 15-day waiting period / 10-year benefit period (The waiting, or elimination, period is the time from the onset of disability the insured must wait before becoming eligible for benefits. The shorter the waiting period, the higher the premium. After the insured satisfies the waiting period, they will receive benefits from the insurer for a limited benefit period. The longer the benefit period, the higher the premium. A disability income policy that includes the shortest waiting period and the longest benefit period would be most expensive)
When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision a) Because the misstatement occurred more than 2 years ago, it has no effect b) Amounts payable under the policy will reflect the insured's correct age c) The contract will be deemed void because of the misstatement of age d) The elimination period will be extended 6 months for each year of age misstatement
b) Amounts payable under the policy will reflect the insured's correct age
The provision that provides for the sharing of expenses between the insured and the insurance company is a) Divided cost b) Coinsurance c) Stop-loss d) Deductible
b) Coinsurance
In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point? a) Practical value b) Conversion factor c) Relative value d) Translation factor
b) Conversion factor (In order to determine the amount payable for a given procedure, the assigned points [relative value] of 200 are multiplied by a conversion factor. This conversion factor represents the total amount payable per point. For example, if the conversion factor is $10 and the point value is 200, the policy would pay $2,000 for the procedure [200 x 10])
An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits? a) Have reached the age of 25 b) Have accumulated 6 work credits in the past 3 years c) Have accumulated 20 work credits in the past 10 years d) Have accumulated 40 work credits
b) Have accumulated 6 work credits in the past 3 years (To qualify for disability benefits under Social Security, the disabled person must have earned a certain amount of work credits. A maximum of 4 work credits can be earned each year. The amount of credits required varies by age. Persons disabled before the age of 24 can qualify for Social Security Benefits with only 6 work credits earned in the 3 years prior to the start of the disability)
Don has both a basic expense and a major medical policy. He is injured in an accident, which requires several major surgeries. This quickly exhausts Don's basic expense policy. What must Don do before his major medical policy can pick up where the basic expense policy left off? a) Submit written notification to his major medical insurance company b) Pay a special deductible on his major medical policy c) Wait 6 months in order to be covered again d) Nothing needs to be done. The hospital's billing staff will make the appropriate arrangements.
b) Pay a special deductible on his major medical policy
An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? a) The group plan will pay depending on the employee's recovery b) The group plan will not pay because the employee was injured at work c) The group plan will pay d) The group plan will pay a portion of the employee's expenses
b) The group plan will not pay because the employee was injured at work
Insured Z's health insurance policy year begins in January. His policy contains a carry-over provision. In November, he has a small claim which is less than his deductible. Which of the following is true? a) The insured must satisfy this year's deductible, but next year's deductible will begin when or if he makes a claim in the following calendar year b) The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible c) The deductible will be waived d) The insured is now eligible for an integrated deductible until the new policy year
b) The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible
