Health insurance tutor
With respect to the insurance contract, the insurance company and the applicant are, respectively, the:
offeree and offeror
Barbara buys a business overhead expense policy to help ensure that her business will continue if she is disabled. This coverage will pay for:
office supplies
Which type of policy Medicare supplement policy offers the most basic coverage?
Plan A
A person who wants a Medicare supplement policy with a high deductible option and a low premium payment should buy:
Plan K or L
Which statement about the any occupation definition of total disability and the own occupation definition is correct?
Policies with an own occupation definition of total disability are more expensive.
Because they are aleatory contracts, insurance policies:
often award disproportionately large benefits due to chance events
Which statement is correct about a benefit period in a credit disability insurance policy?
The benefit period is the same as the loan period.
Sophia owns a small publishing company and is covered by a business overhead expense policy. After suffering a disabling injury, the policy pays a $10,000 monthly benefit. How must the benefits be treated for tax purposes?
The benefits are fully taxable in the year received.
Abby receives $15,000 of benefits this year from her employer's managed care plan. Which statement is correct about the taxation of these benefits?
The benefits are not taxable income.
What reason would favor the purchase of an individual health insurance policy?
The buyer does not belong to a group that offers coverage.
Who can NOT deduct the cost of qualified long-term care insurance premiums, subject to the age-based limits?
participants in a group health plan whose employer pays the premium
Who might NOT receive funds directly from Medicaid?
patient
Which is NOT subject to HIPAA privacy regulations?
patient's family members
On her insurance application, Jenny states her age is 38 although she is 42. With the misstatement of age provision, her policy will:
pay benefits at a level her premium would buy at her correct age
When health care services incur a coinsurance payment, the insured must:
pay costs that exceed the limitation on coverage for the service
What must the insurer do if a health insurance claim involves a loss of life and the insured did not specify a beneficiary?
pay the claim to the insured's estate
If a group health insurance plan is experience-rated, which of the following factors will the insurer NOT examine when issuing the policy?
the community or region in which the group operates
Which is NOT among a health insurance policyholder's rights?
right to change the duration of coverage during the policy term
Robin falls while snow skiing and breaks a leg. She decides to never again attempt this activity. What method is she using to manage this risk of falling?
risk avoidance
A group disability income plan with a maximum benefit period of less than two years is considered what type of plan?
short-term disability plan
As part of the field underwriting process for health insurance, producers must provide the following types of information to applicants EXCEPT:
the applicant's MIB report
When deciding whether to issue a policy, the health insurance underwriter will weigh all of the following factors EXCEPT:
the applicant's neighborhood
With respect to individual disability income insurance, which of the following underwriting factors most reflects the risk the applicant's job represents to the insurer?
the applicant's occupational class
All of the following are examples of an agent's responsibilities toward an applicant EXCEPT:
waiving payment of the policy's first premium
Statements that are guaranteed to be true are known as:
warranties
A claimant on a health insurance policy must give written notice of the claim to the insurer within how many days following a loss?
20
Bethany was injured in a car accident. Within how many days must she typically notify her health insurance company about the claim?
20
Under the Age Discrimination in Employment Act, an employer can reduce benefits based on age only when the:
cost of reduced benefits for older workers equals the cost of full benefits for younger workers
An agent who recommends the replacement of an insurance policy with another is not required to discuss which of these with the prospect?
cost of similar policies from competing insurers
Which of the following riders adjusts the benefit payments under a disability income policy based on changes in the Consumer Price Index (CPI)?
cost-of-living adjustment (COLA) rider
Which is not an element of all legal contracts?
counteroffer
Which information is not to be included in the first part of an insurance application?
medical information
Which health care professional is NOT a common primary care provider (PCP)?
orthopedic surgeons
Susanna is a cancer patient who has health insurance coverage. What is the most she will pay for her care and treatment?
out-of-pocket maximum
Sanjay applied for an individual health insurance policy in Florida. The agent gave him a document at the time of application that summarizes the type of coverage provided, the exceptions and limitations, and the conditions for renewal. Which document did Sanjay receive?
outline of coverage
An employer pays $500 in premiums annually for each employee enrolled in its group medical plan. How much of the contribution is taxable income to the employee?
$0
Andrea earned $3,000 each month before she was injured in an accident. Now partially disabled, she earns $1,500 a month. Her disability income policy pays a $2,000 monthly benefit for total disability. The policy pays a flat benefit of 50 percent for partial disability. How much will Andrea receive each month?
$1,000
Karl's basic medical expense policy provides a $200 benefit for each day of hospitalization. He is hospitalized for five days at a cost of $5,000. How much will his policy pay?
$1,000
Ava incurs these unreimbursed medical expenses this year: $12,000 in health insurance premiums, $2,000 in long-term care premiums, $500 in doctors' fees, and $1,000 in disability income insurance premiums. She can take an income tax deduction to the extent these expenses exceed 10 percent of her adjusted gross income for all of the expenses EXCEPT:
$1,000 in disability income insurance premiums
Jerry was injured in an accident and was hospitalized for 50 days at $250 per day. His basic hospital expense indemnity policy pays a benefit of $250 per day for up to 45 days. How much of the hospital expenses will Jerry pay?
$1,250
Under Nick's basic surgical expense policy's fee schedule, an appendectomy has a unit value of 70. To determine the maximum payable under the policy, a conversion factor of $20 is multiplied by the unit value. So, if Nick needs to have his appendix removed, what is the maximum amount payable under his policy?
$1,400
Alex earns $5,000 a month as an accountant. He suffers a disabling neck injury and is receiving $3,000 per month as a total disability benefit. If he is able to return to work part-time and can earn $2,500 a month, what would be his disability income benefit if the policy includes a partial disability benefit?
$1,500
June has a comprehensive major medical policy with a $500 per year deductible and an 80/20 coinsurance provision. She has surgery for cancer and incurs $60,000 in covered medical expenses. How much will June pay in total for the surgery?
$12,400
Melina paid $7,000 for medical care this year. If her adjusted gross income is $50,000 this year, how much of these expenses can she deduct from her income taxes, if any?
$2,000
The annual benefit limit under a single-insured dental plan typically ranges from:
$2,000 to $3,000
Although stop-loss amounts vary by insurer and by policy, what is the usual range?
$2,000 to $5,000 a year
Jan's adjusted gross income this year is $70,000. She incurs $10,000 in unreimbursed medical expenses, which includes $6,000 in medical insurance premiums. How much will Jan be able to deduct this year?
$3,000
John has Medicare Part A. He incurs $5,000 in expenses for a two-day hospital stay, $150 for a home health aide visit, $300 for prescription drugs while hospitalized, and $500 for massage therapy. Which of these expenses will not be covered by Medicare Part A?
$500 for massage therapy
Hector's long-term care policy has a 30-day elimination period and pays a $200 daily benefit. His doctor certifies that he needs long-term care assistance. A home health aide begins assisting him each day at a cost of $100 per day. Ninety days later, Hector's health improves and he no longer needs such care. What amount of benefits will his policy pay?
$6,000
If an insurer decides to cancel a health insurance policy because the policyowner did not pay a premium, how much notice must it give the policyowner before doing so?
10 days
Dental plans group their covered treatment and benefits into three classes or categories, and cover all expenses for which category?
1 only: diagnostic and preventive care
Roberto let his individual health insurance policy lapse two months ago. He pays the premium to reinstate the policy. How many days must Roberto wait before any illnesses will be covered?
10
When a health insurer cancels a policy for failure to pay premiums, the cancelation provision requires the insurer to give the policyowner how many days' advance notice?
10
Most states require that a group (at least a single-employer group) have a minimum of how many members to be eligible for group health insurance?
10 members
A health insurance policy that has monthly premiums usually has a grace period of how many days?
10 or 31 days
Premiums for Medicare Part B and Medicare supplement insurance are tax deductible if, when added to other medical expenses, they exceed how much of a person's adjusted gross income?
10 percent
Those who buy tax-qualified long-term care insurance policies can deduct their premium payments by the amount that their unreimbursed medical expenses exceed what percent of their adjusted gross incomes?
10 percent
In general, non-contributory plans must cover what percentage of those who are eligible to participate?
100 percent
The NAIC's model law sets forth certain optional provisions that insurers can but are not required to add to a health insurance policy. How many optional provisions are on the list?
11
For how many days would a patient pay coinsurance under Medicare for a hospital stay that lasts 71 days?
11 days
A group health insurance policy issued in Florida can exclude a pre-existing condition from coverage for up to how many months?
12
An insurer must notify its current customers of its privacy policies or practices at least once every how often?
12 months
The Family and Medical Leave Act (FMLA) protects the employment status of certain employees on unpaid leave for up to how long?
12 weeks per year
ABC Life Insurance Co. sells term and whole life insurance policies through agents. If it sells a policy, it must give the customer the right to examine the policy for at least how long?
14 days
Under a health insurance policy claim forms provision, how many days does the insurer have to provide claim forms to the insured after receiving a notice of claim?
15 days
HIPAA guarantees the availability of health insurance coverage in the individual market for eligible individuals who have had at least how many months of aggregate creditable coverage?
18
Margaret loses her job and applies for continued group coverage through COBRA. What is the maximum amount of time she can continue coverage under her former employer's group health insurance plan?
18 months
What is the most common elimination period used in disability income policies that are purchased by a company for disability buy-out purposes?
18 to 24 months
Jim is covered under two group medical plans ' one through his employer and one through his wife's employer. If he incurs $6,000 in medical expenses and his employer's plan pays him $4000, how much will his wife's plan pay him?
2,000
Unless they operate in a state that has additional requirements, employers with fewer than how many employees are exempt from COBRA requirements?
20
After completing a week's hospitalization, Stan enters a skilled nursing facility for additional care. How long will Medicare Part A pay all of the approved charges in the facility?
20 days
Margaret enters a skilled nursing facility after being released from the hospital. Medicare will fully cover her costs for how long?
20 days
Medicare Part A provides benefits for nursing home care without coinsurance for up to:
20 days
Residents of skilled nursing facilities receive Medicare Part A benefits for up to how long before they must pay coinsurance?
20 days
Under a health insurance policy's notice of claim provision, how many days does the insured have to notify the insurer after having a covered loss?
20 days
COBRA applies to employers with how many employees?
20 or more
Continued group health coverage through COBRA is available for terminated employees of group plans that insure more than:
20 persons
Terry is licensed in Florida as a life and health insurance producer for the past two years. To maintain his license, how many hours of continuing education must he complete every two years?
24
After it issues an insurance policy, how long does the insurance company have to void the policy due to fraud in the application?
24 months
If a policyholder qualifies for Medicaid, a Medicare supplement policy must suspend benefits and premiums at the policyholder's request for up to:
24 months
Thomas' brother is injured while on active military duty. As an eligible employee under the Family and Medical Leave Act, how much time can Thomas take off from work to care for his brother?
26 weeks
An insured parent can include dependent child under a group health insurance plan up to what age?
26 years
Into how many categories do dental plans typically group their covered treatment and benefits?
3
Jeff is a licensed insurance agent in both New York and Florida. He is was charged with embezzlement in New York, and pleaded guilty to the charge on March 1. He must notify the Florida Department of Financial Services of the charge within how many days?
30
Joanne buys a Medicare supplement policy but decides not to keep it. How many days does she have to return it for a full refund of the premium she paid?
30
Horace buys a Medicare supplement insurance policy but decides not to keep it. How many days does he have to return it for a full refund of the premium?
30 days
Bill's long-term care insurance policy has a 30-calendar-day elimination period. He becomes eligible for long-term care benefits and starts receiving care. When will his policy begin paying benefits?
30 days after he becomes eligible for benefits
Eric fails to pay the annual premium on his major medical insurance policy. The grace period provision allows him to pay the premium within how many days after the due date?
31
Charlie was covered under his wife's employer-sponsored health insurance plan before their divorce. Charlie applies for continued coverage through COBRA. How long can he continue coverage?
36 months
The Patient Protection and Affordable Care Act (PPACA) , also called the Affordable Care Act (ACA), recognizes how many 'metal levels' of coverage?
4
The Age Discrimination and Employment Act (ADEA) prohibits discrimination in group health insurance participation against those who are at least what age?
40 years old
A health insurance policy lapses after the insured fails to pay the premium. The insured applies for reinstatement and includes a premium payment. How long does the insurer have to notify the client whether the reinstatement is accepted or rejected?
45 days
The cancelation provision in a health insurance policy permits the insurer to cancel the policy after it gives the insured at least how much notice?
45 days
If a health insurance policy is cancelable, the insurer can cancel the policy at any time provided it gives the policyowner at least:
45 days' notice
BBX Insurers terminated Henry's appointment as its life insurance agent on December 1. How long will Henry remain eligible to be appointed as a life insurance agent by another insurer?
48 months
Which statement about working and participating in Medicare Part B is correct?
A person can voluntarily participate in Part B while still working.
For purposes of group health insurance, a small employer is defined in Florida as any person or entity that employs no more than how many employees?
50
A flat benefit amount in a disability income policy is usually what percent of the full disability benefit?
50 percent
A recurrent disability occurs while the disability income policy is in force and within how many months of an earlier, related disability?
6 months
What is the maximum period for pre-existing limitations or exclusions under Medicare supplement insurance policies with grandfather status under the Affordable Care Act?
6 months
Medicare Part A covers a beneficiary's hospitalization beyond the 90 days allowed in a benefit period by offering a lifetime reserve of:
60 days
Medicare Part A provides reasonable and medically necessary hospital care for how long?
60 days
For how many days in each benefit period does Medicare pay for hospitalization?
90 days
How much advance notice must the insurer of a group health plan give the sponsor before terminating coverage?
90 days
If an insurer plans to discontinue a group health insurance plan, it must notify the employer of its intent to do so at least how many days in advance?
90 days
John's child must have his teeth straightened. His group dental policy covers 60 percent of orthodontic care, 100 percent of endodontic care, and 75 percent of periodontal care. What percentage of costs will the insurer pay for the child's care?
60 percent
Bryson Inc. has 150 employees and a contributory group health plan. Bryson finds that 100 of its employees are eligible to participate in the plan. How many employees must the plan cover?
75
In general, contributory plans require what minimum percentage of eligible employees to participate?
75 percent
Under a health insurance policy's proof of loss provision, how many days does the insured have to provide the insurer with written proof of loss?
90 days
With respect to qualifying for Social Security Disability Income benefits, which of the following statements is correct?
A 5-month waiting period must be met before Social Security disability benefits begin.
A state cannot take the primary residence of which Medicaid recipient?
A Medicaid recipient who dies after receiving benefits for three years, leaving behind a blind child, 34, who lives at home
Which statement correctly describes Medicare Part A hospital insurance?
A benefit period begins on the day a beneficiary is admitted to the hospital.
For insurance purposes, which statement applies to a group?
A group consists of members who have a common purpose other than to obtain insurance.
Which statement about group health plan menus is correct?
A more complete benefit package appeals to prospective employees.
How does a state's long-term care partnership policy different from other long-term care policies?
A partnership policy holds tax-favored status.
Which of the following best describes the IRS rule that applies to deductible medical expenses for persons under age 65?
A person can deduct unreimbursed medical expenses exceeding 10 percent of his or her adjusted gross income (AGI).
What is NOT correct about the reinstatement of a health insurance policy?
A policy may be reinstated for up to five years after it lapsed.
Which defines a pre-existing condition for group health insurance purposes?
A pre-existing condition is a health condition that the insured was diagnosed with or treated for within the six months before enrolling in the plan.
What is the difference between a representation and a warranty in an insurance contract?
A representation is believed to be true, while a warranty is guaranteed to be true.
Which statement is correct about representations and warranties in insurance contracts?
A warranty is guaranteed to be true.
Abbott Corporation and Taylor Company each apply for the same group PPO plan from the same insurance company. Abbott has 500 employees, and Taylor has 75 employees. Which statement is correct?
Abbott's policy will cost less per member than Taylor's policy.
Liz earns a gross salary of $3000 per month and is covered under her employer's group disability income policy. She becomes totally disabled and receives a monthly benefit payment of $1,800 per month. The benefit does not match her original salary because:
Aa DI policy will not replace full gross income, since doing so promotes malingering.
Jake borrowed $300,000 from ABC Capital Company and bought a credit disability insurance policy. Soon afterward, he is injured and unable to work or pay back the loan. Who will receive the policy's benefit payment?
ABC Capital Company only
ABC, Inc. does not want an insured group health plan, but it does not want to entirely self-fund its group health plan, either. What can ABC do?
ABC can self-fund part of its plan to cover small claims and benefits, and the balance of the plan can be insured.
ABC Insurance Company is domiciled in Delaware and does business in Ohio. Which of the following is correct about ABC?
ABC is a domestic insurer in Delaware and a foreign insurer in Ohio.
Which of the following statements about the 10 standard Medicare supplement plans is correct?
All plans are required to cover six basic core benefits of Medicare supplement insurance.
Which is correct about the various Medicare supplement plans?
All plans offer the same coverage no matter the insurer.
All of the following statements about grace period provisions in health insurance contracts are correct, EXCEPT:
All states require a 31-day grace period for all modes of premium payment.
Which statement about residual benefit payments for partial disability is NOT correct?
Almost all insurers require that the insured sustain a loss of at least 35 percent of income as a result of the partial disability before paying any benefits.
Alpha Corporation pays the premiums for its group medical, dental, disability, and long-term care insurance plans. Which statement is correct about the income tax consequences?
Alpha can take an income tax deduction for all of the premiums it pays for all of the policies.
Which statement about HMOs is NOT correct? A. People become members or participants in an HMO by signing a contract to join the organization. B. People pay premiums monthly, quarterly, semi-annually, or annually to an HMO. C. An HMO's network of providers is limited to a town or city. D. The HMO is responsible for the availability, accessibility, quality, and cost of the health care it delivers.
An HMO's network of providers is limited to a town or city.
Which of the following describes an agent's fiduciary responsibilities?
An agent must act in the best interests of insureds, applicants, and appointing insurers.
An individual can set up a health savings account (HSA) and buy a high-cost insurance policy. What is another way to set up an HSA?
An employer can set up an HSA plan for the benefit of its employees.
Beyond what point can an insured no longer take legal action against an insurer to dispute its decision on a claim?
An insured cannot take legal action against an insurer more than 3 years after proof of loss was provided.
Brian and Paul are the same age. Each buys a disability income policy from the same insurer. However, Paul's disability income policy uses an any occupation definition of total disability while Brian's policy has an own occupation definition. Which of the following statements is correct?
An insured would prefer a policy like Brian's.
Which of the following best illustrates risk transfer?
Anita buys health insurance to protect herself in case of serious illness.
Kelly owns several insurance policies with the ABC Insurance Co. What will happen if the total amount of insurance that Kelly owns with ABC Insurance Co. exceeds the total coverage that ABC underwrites for one person?
Any excess insurance is void, and ABC Insurance Co. must return any premiums Kelly paid for coverage above the limit.
All the following statements about the taxation of accidental death and dismemberment (AD&D) policy benefits are correct EXCEPT:
Any interest earnings paid are not taxed.
Which statement is true about contributory group insurance?
At least 75 percent of eligible persons must participate in the plan.
Sandra, a shop owner, owns a business overhead expense (BOE) insurance policy. Which of the following statements correctly describes the tax treatment of this policy?
BOE benefits are taxable as income to Sandra, and premiums are tax deductible.
Which of the following statements regarding business overhead expense (BOE) insurance is correct?
BOE insurance benefits are income taxable to the business owner.
Which condition must a person who is almost 65 years old meet to qualify for Medicare?
Be eligible for Social Security and apply for Medicare coverage.
Which statement about maximum benefit periods in disability income policies is NOT correct?
Benefit periods in short-term disability income policies are limited to five years.
Which statement about business overhead expense policies is correct?
Benefits are taxable income to the business.
Johnny's disability income policy has a probationary period of 20 days. He is injured in an accident ten days after buying the policy. What benefits, if any, will be paid?
Benefits for lost income will begin immediately.
Brick Motors Co. offers a group disability income plan and pays all of the premiums. Which of the following statements is correct if an employee suffers a disabling injury?
Benefits paid to the employee are taxable income to the employee.
Which of the following correctly describes the income tax treatment of qualified long-term care insurance premiums and benefits?
Benefits paid under the policy are not taxable, within limits. Premiums are deductible within limits if they exceed 10 percent of a person's adjusted gross income
When a person starts receiving Social Security disability benefits, what happens to disability benefits paid by a social insurance supplement (SIS) rider?
Benefits provided by the SIS rider end or are reduced.
A group disability income policy has a 90-day elimination period. How does this affect benefit payments?
Benefits will begin 90 days after the disability occurs.
Charles is the senior vice president of Beta Corporation and is insured under a key employee disability income policy. He is injured while on a business trip and becomes permanently disabled. Which party will receive the disability income proceeds under the policy?
Beta Corporation
Blake has a vision care policy, while Tom has a policy that covers a variety of medical services. Which statement is correct?
Blake owns a limited care policy, while Tom owns a comprehensive policy.
Which plans were the first to use risk pools and group or community ratings?
Blue Cross Blue Shield plans
Bob applies for an individual disability income policy. He cannot substantiate his income to the underwriter's satisfaction of the underwriter. What might this suggest to the underwriter?
Bob may be unable to afford the premium.
Bob applies for an individual health insurance policy. Terri enrolls in her group health insurance plan. Which case requires the insurer to account for adverse selection?
Bob's application
How are medical savings accounts similar to health savings accounts?
Both combine a high-deductible health insurance plan with a tax-advantaged savings account.
Bettina and Ray are enrolled in different Medicare Part D plans. Which statement about their coverage is correct?
Both plans require them to pay a coinsurance amount.
Which of the following statements about utmost good faith in insurance contracts is correct?
Both the insured and insurer must act in utmost good faith.
Bruce has a Medicare Advantage plan. Ted is covered by Original Medicare. Which of the following statements is correct?
Bruce will get health care from a Medicare-sanctioned managed care HMO or PPO. Ted will select his own provider.
For taxation purposes, the term "self-employed person" includes all of the following EXCEPT:
C corporation stockholders
Which protects an individual who is no longer covered by an employer's health insurance plan?
COBRA
Morgan loses her job and continues group health coverage through COBRA. Six months later, she begins a new job and is covered by her employer's group health plan. How does this effect coverage under COBRA?
COBRA benefits will end.
Which of the following statements regarding COBRA and group medical insurance plans is correct?
COBRA coverage ends if the participant is eligible for another group plan.
Lola buys a Medicare supplement policy on June 15 but decides not to keep it. Two weeks later, she mails the policy back to the insurer. What must the insurer do?
Cancel the policy and refund the premium.
What is a significant drawback to being an HMO member?
Care provided to HMO members outside the HMO's network of providers is not covered.
A dental plan that separates covered treatments into three categories will typically include fillings and tooth extractions in:
Category 2
Nick submitted a claim to his insurer just before his health insurance policy was canceled. Under the policy's cancellation provision, what must the insurer do?
Company A must still pay any outstanding claim Nick submitted before the policy was canceled.
Under a disability income insurance policy's 'insurance with other insurer' provision, what can Insurer A do if it finds that a disabled policyowner has similar coverage with Insurer B and had not notified Insurer A of this fact?
Company A will pay a reduced benefit so that the insured's total benefits do not exceed pre-disability income.
The cost of living adjustment (COLA) rider adjusts the disability income benefit payments according to changes in the:
Consumer Price Index
Which statement is correct about the taxation of a flexible spending account in a group health plan?
Contributions are made on a pre-tax basis.
Which of the following statements about health savings accounts (HSAs) is correct?
Contributions to an HSA grow on a tax-deferred basis.
Kim lives in a large city with a high cost of living. Grace lives on a farm with a lower cost of living. Both have medical expense plans that pay claims on a usual, customary, and reasonable (UCR) basis. However, Grace would pay an unfair share of her medical costs if the insurer based payments on the costs in Kim's urban area. How does the insurer resolve this?
Costs for medical treatment in large urban areas are typically higher than costs for the same treatment in rural areas, and a usual and customary payment approach allows for these differences.
Which of the following statements correctly describes the relationship between a disability income (DI) insurance policy's benefit amount and the insured's income?
DI policy benefits may never exceed the insured's income.
Delta Insurers typically affirms or denies claims within 120 days after it receives proof of loss statements. Which statement is correct?
Delta is engaged in unfair claims settlement practices.
Delta Insurers sells health insurance policies to small employers. Kappa Company, a small employer, applies for a policy with Delta. Which statement is NOT correct?
Delta must use experience rating when setting the premium.
Joan bought a health insurance policy from Delta Insurers. Which statement describes the consideration that a party gave under the contract?
Delta promises to pay benefits when a stated future event occurs.
Which is an example of formal caregiving in the context of long-term care?
Dennis performs homemaker chores through an agency.
Which entity does NOT mandate the minimum size of groups eligible for group health insurance?
Department of Labor
Which statement is correct about the types of insurance sales systems?
Direct response companies sell insurance to consumers without the use of a licensed producer.
Sid is applying for Medicaid. What must he do in order to apply?
Disclose all assets and sources of income and meet his state's requirement for maximum allowable assets and income.
In addition to regulating defined benefit pension plans, which entity protects participants enrolled in group health plans?
ERISA
Because states define the scope of their Medicaid coverage, which statement is correct?
Eligibility for Medicaid assistance is based only on financial need.
Ellen, Bob, Miguel, and Amy all turned 40 years old this year and all are in good health. Which person will pay the highest premium for a disability insurance policy?
Ellen, a heavy equipment operator
Which statement about flexible spending accounts (FSAs) is NOT correct?
Employees can use the FSA funds to pay qualified medical costs as well as costs their employer's health plan covers.
Which explains the portability provisions of HIPAA?
Employees continue to qualify for health insurance after they lose their job or change their insurer.
What is NOT characteristic of an employer's prepaid dental plan?
Employees do not pay a deductible.
With respect to the taxation of group and individual disability income (DI) insurance, which of the following statements is correct?
Employer-paid premiums for group DI insurance are deductible by the employer.
How do employers contribute to a medical savings account (MSA)?
Employers can contribute to MSAs under the same principles that apply to health savings accounts.
For those enrolled in Medicare Part A or B, which statement is correct about Part D?
Enrollees in a Part C managed care plan can buy a prescription drug plan.
Which statement is NOT correct about group insurance?
Exclusions and riders are written for the most at-risk members.
Which law allows Joe to take several weeks off from work to help his wife recuperate from surgery without fearing the loss of his job?
Family and Medical Leave Act
Life and health insurance companies regulate themselves through each of the following entities or organizations EXCEPT:
Financial Industry Regulatory Authority
Which of the following provides access to health insurance to Florida residents who have been rejected by at least two insurers for health reasons?
Florida Health Insurance Plan
Which organization provides access to comprehensive insurance and health care for uninsured children ages 5 through 18 in Florida?
Florida Healthy Kids
Which entity protects policyowners, insureds, and beneficiaries if an insurer cannot perform its contractual obligations because of impairment or insolvency?
Florida Life and Health Guaranty Association
Fran applied for an individual health insurance policy on July 1 and was issued a binding receipt. If she injured her back on July 4 before the policy was issued, what will happen?
Fran's medical claims for her injury will be covered by the policy.
Which will not be a significant factor when the underwriter is reviews an application for individual health insurance?
Frank's slow completion of the application
On July 1, an employer makes the maximum annual contribution to its employees' health savings accounts. Two weeks later, Franklin quits his job. Which is correct about the contribution in his has?
Franklin will retain the funds.
Ginger operates an accounting business as a sole proprietor. She pays $1,600 each month in premiums for a medical insurance policy covering herself and her family. Which of the following statements correctly describes the tax treatment of this policy?
Ginger can deduct 100 percent of the premiums paid for her health insurance policy, and benefit payments are tax free.
A significant difference between individual and group disability income policies is that:
Group DI policies are not portable, while individual policies are portable.
All of the following statements about health savings accounts (HSAs) are correct, EXCEPT:
Group HSAs must be entirely employee-funded.
With respect to the type of plan underlying a group medical insurance policy, which of the following statements is correct?
Group medical plans may be based on either an indemnity plan model or a managed care plan model regardless of the plan sponsor's business type.
What is one difference between individual disability income policies and group disability income policies?
Group plans are underwritten as a whole while individual policies consider the insurability of the applicant.
With respect to health insurance renewability provisions, which of the following statements is true?
Guaranteed renewable coverage is generally less expensive than noncancellable coverage.
Gwen is 37 years old but on her health insurance application she states that she is 30 years old. Which of the following is a likely consequence of this?
Gwen (or her beneficiary) is still entitled to benefits. However, the benefits payable will be those that Gwen's premium would have bought at her actual age.
Which federal law prevents a health insurer from refusing to insure a member of a small group?
HIPAA
Which regulates the privacy and security of information about a person's health?
HIPAA
Which statement about the Health Insurance Portability and Accountability Act (HIPAA) is NOT correct?
HIPAA protects those who are no longer covered by an employer's health insurance plan or its benefits.
Which of the following must HMO members use to receive covered care?
HMO's network of health care providers
Which statement is NOT true about HMOs?
HMOs always use a closed panel network of providers.
Harry files a notice of claim under his health insurance policy but does not receive claim forms from his insurer within the required number of days. What can Harry do?
Harry can submit a written statement describing how the loss occurred, the nature of the loss, and how much was lost.
Harry is enrolled in an HMO. David has a traditional major medical plan. Which statement about their policies is correct?
Harry pays a small co-payment for each doctor's visit. David pays a deductible and coinsurance.
Warren is insured by a disability income policy and paid $2,500 each year in premiums until he is disabled. He now receives a $1,200 monthly disability benefit. Which statement is correct?
He cannot deduct the premium he paid but can exclude the benefits from taxable income.
Jason applies for Medicaid assistance and discloses his assets and income. He has a car, $200 in cash, some personal items, and an industrial life insurance policy with a $1,000 face amount. Which statement is correct?
He may keep some assets and qualify for Medicaid according to his state's formula for calculating the maximum allowable income and assets.
Benefits paid under Ken's qualified long-term care policy up to a daily limit are not taxed. What must happen for Ken to receive these amounts tax free?
He must be diagnosed as chronically ill.
Grant's Medicare SELECT plan offers the same benefits as the coverage provided under a standard Medicare supplement. Why are his premiums lower than those for a standard Medicare supplement?
He must obtain covered services through the plan's network.
Ross collects a policy's first premium with an application for insurance. The next day he learns that the customer canceled the policy. What must Ross do with the premium?
He should see that the funds are remitted to the customer as soon as possible.
Glen files a notice of claim with his health insurance provider. Of what, specifically, is he notifying his insurer?
He will be making a claim against the policy and that the insurer should send Glen the required claim forms.
Franklin is covered by a PPO. If he receives medical treatment from an out-of-network physician, what is the result?
He will pay a higher amount for the medical care.
Adam bought an individual disability income policy with a social insurance supplement (SIS) rider. If he becomes disabled and is eligible for Social Security disability benefits, what will happen?
He will receive benefits under the SIS rider while he is waiting for his Social Security disability benefits to begin.
How does health insurance differ from life insurance?
Health insurance coordinates benefits with similar policies covering the insured, while life insurance does not.
Andy is covered by a group disability plan. What will happen if he leaves his company to work for a competitor?
His coverage under his former employer's group disability plan ends and cannot be converted to an individual policy.
Mark is covered by his employer's group health care plan. He is also covered by his wife's group health care plan. How will benefits be paid if he incurs $300 in medical expenses?
His employer's plan will pay benefits first.
If a business owner is disabled, business overhead expense insurance will NOT pay the:
If a business owner is disabled, business overhead expense insurance will NOT pay the:
Which of the following statements regarding the coordination of benefits (COB) provision found in health insurance plans is correct?
If a child is covered under two group plans (one from each parent), the primary plan is the one covering the parent whose birthday falls first in a calendar year.
Which statement does NOT describe the conditions, limitations, and restrictions imposed upon the care received through an HMO?
If a member is outside the HMO's service area, the member must contact the HMO within one hour of receiving treatment.
Which describes the tax treatment of funds in a health savings account (HSA)?
If the account holder withdraws money from the fund but does not use it to pay qualified medical expenses, the withdrawal may be taxed.
The payment of claims provision in a health insurance policy states that:
If the insured dies, health insurance claims are paid to the beneficiary.
Which statement is correct about the income requirements for Medicaid eligibility?
Income limits are determined by the state.
Which statement about maternity coverage in group and individual health plans is correct?
Individual and group plans that cover maternity care must cover the services of midwives and birth centers.
Which of the following statements about the MIB Group, Inc. (MIB) is correct?
Information submitted to it by one insurer is available for review by other insurers.
Which statement about health savings accounts (HSAs) is correct?
Instead of paying higher premiums for health insurance, the HSA owner and family can use the HSA to pay for qualified health-care expenses.
Which statement is NOT correct about the use and investment of health insurance premiums?
Insurers cannot invest health insurance premiums.
Which of the following statements about the underwriting of group health insurance policies or plans is correct?
Insurers must consider the risk characteristics of the group as a whole.
Which of the following statements about the Fair Credit Reporting Act is CORRECT?
Insurers must notify their applicants any time that a consumer or investigative report has been requested.
How does HIPAA protect the right of a small employer to buy group health insurance?
Insurers must permit groups of fewer than ten people to buy health insurance.
How do insurers set usual, customary, and reasonable (UCR) rates?
Insurers use published databases to determine how much they will reimburse under their policies.
What is the purpose of a guaranteed insurability rider in a disability income policy?
It allows the insured to increase a policy's benefits in the future without having to prove insurability.
Which statement accurately describes the MIB (Medical Information Bureau)?
It collects medical information about insurance applicants and gives that information to member insurance companies.
Which describes the basic concept of the health savings account (HSA)?
It combines a high-deductible, high out-of-pocket cost insurance plan with a tax-favored savings account.
What impact did the Patient Protection and Affordable Care Act (PPACA, or ACA) have on the pre-existing conditions restriction found in most health insurance policies?
It ended the use of pre-existing condition exclusions in medical expense insurance only.
Which correctly describes a health savings account (HSA)?
It finances the costs of health-care services. It is a tax-exempt account that eligible people can set up in their names. People can make tax-deductible contributions to these accounts. The contributions grow tax free. When withdrawn to pay for qualified medical expenses, the distributions are tax free.
Which statement is correct about ERISA?
It is a law that protects enrollees in group health plans and retirement plans.
Which of the following most accurately describes a point-of-service (POS) plan?
It is a managed care plan combines characteristics of an HMO and a PPO.
Which statement correctly describes the Medicaid program?
It is a medical assistance program funded by federal and state taxes to assist low-income people.
Zelda, a producer selling health insurance, assures a prospective applicant that the insurance company she represents is backed by the protections of the Florida Life and Health Insurance Guaranty Association. What is true about this kind of assurance?
It is prohibited at all times.
Tim paid only the first premium for his health insurance policy before he was diagnosed with cancer. Nevertheless, the insurance company paid all of the expenses for his medical treatment. Which characteristic of an insurance policy resulted in the insurer paying much more than the premium it received?
It is an aleatory contract.
Which statement is NOT correct about the Medicaid program?
It is based on medical need.
Before delivering a health insurance policy to a client, the agent alters the insuring clause in a way that he believes will benefit the insurance company. What is true about this alteration?
It is prohibited by the entire contract provision.
Which statement about the elimination period in a disability income insurance policy is correct?
It is the period of time immediately following the onset of a disability during which no benefits are payable.
How does a health insurance policy's illegal occupation provision protect the insurer?
It lets the insurer deny liability when the insured's claim arises from an illegal activity in which he or she participated.
Which is NOT true about the insuring clause in a health insurance policy?
It lists the coverage exceptions and exclusions.
What is the function of the Age Discrimination in Employment Act (ADEA)?
It makes it illegal to discriminate against those age 40 or older in employment practices.
Which statement is NOT correct about credit disability insurance?
It pays a flat benefit amount over the policy period.
How does a partial disability provision affect coverage under a disability income policy?
It pays benefits for a partial disability, even if the insured continues to earn wages.
Which statement is correct about benefit payments under a Blue Cross Blue Shield plan?
It pays the provider directly, with no claim form.
Why would a basic medical expense policy not be a good form of coverage for a person who visits his doctor very often?
It primarily covers hospital-related expenses.
What is the purpose of the Age Discrimination in Employment Act (ADEA)?
It prohibits discrimination against workers who are at least 40 years old.
Which statement about the Age Discrimination in Employment Act is correct with respect to Medicare, Medicare supplement policies, and group plans?
It prohibits employers from denying coverage to older workers under a group health plan.
Charlie was an ironworker, but a recent injury caused him to take another position in an administrative role. How does the change of occupation provision in a health insurance policy protect Charlie?
It requires the insurer to reduce the premium rate.
What is the purpose of the time of payment of claims provision?
It stipulates that the insurer will pay a claim as soon as possible after receiving proof of loss.
Beverly owns a small manufacturing business. Her sister, Rose, is her assistant. Beverly could not run the business without Rose. Beverly wants key employee disability insurance because:
It will pay cash benefits to the employer if a key employee is disabled.
If an applicant for medical insurance lives in a state that prohibits 'medical underwriting,' how will the insurer determine the premium to charge him or her?
It will use a single community rate.
Janet is the owner of a small hardware store and is insured under a business overhead expense policy. If Janet became disabled, the policy would cover all of the following EXCEPT:
Janet's salary
Debbie, Lisa, Greta, and Jessica apply for individual health insurance policies. At the end of the underwriting process, the insurer classified them as follows: Debbie as substandard, Lisa as standard, and Jessica as preferred. Greta's application was declined. Which of the following statements is correct?
Jessica's policy will be issued with the lowest premium rate.
Which is not an example of a hazard?
John takes medication to control high blood pressure.
Which of the following presents a situation of pure risk?
Knowing that his family depends on his income, Franklin wants to insure his life.
Which statement about Medicare is correct?
Like Social Security, it is funded by payroll taxes.
Which entity does not rate the solvency of insurance companies?
Lloyd's of London
All the following statements about the taxation of qualified long-term care (LTC) insurance policies are correct EXCEPT:
Long-term care premium deductibility limits are flat up to age 61, and then increase through age 70.
Who does NOT appear to need long-term medical care?
Lucy, who is recuperating from a severe back sprain
Which is a database of confidential underwriting information obtained by insurers for the purpose of underwriting disability income policies?
MIB (Medical Information Bureau)
All the following statements regarding the tax treatment of disability income and medical expense insurance are correct, EXCEPT:
Major medical insurance policy premiums may be deductible but premiums for HMO and PPO plans are not deductible under any circumstances.
White Insurance Company is a domestic insurer in Florida. By what date must it file an annual statement regarding its financial condition each year?
March 1
How late in the year can flexible spending account (FSA) participants apply their contributions for any one year?
March 15 of the following year
Maude is 65 years old and chooses Medicare Part B coverage, for which she pays a monthly premium. She incurs $1,000 this year in covered Part B medical expenses. What must Maude pay?
Maude must pay the deductible. Of the remaining amount, Medicare Part B would pay 80 percent and she would pay the remaining 20 percent.
Which statement characterizes the role of Medicaid for its recipients?
Medicaid assistance supplements personal savings used to pay the costs of an extended nursing home stay or catastrophic illness.
Which statement accurately describes variations in the Medicaid benefit program?
Medicaid provides a range of health services for beneficiaries, but services vary from state to state.
When and why was Medicaid created?
Medicaid was established in 1965 to provide health care and health-related services to people with low incomes. It is jointly funded by the federal and state governments and administered by the states.
Margo, who is 52 years old and in good health, is uninsured. She may get health insurance coverage through all of the following EXCEPT:
Medical Information Bureau
Which is NOT a means by which the federal government currently encourages employers to provide health care coverage for their employees?
Medical Savings Accounts
Which of the following statements regarding the Patient Protection and Affordable Care Act (PPACA) is correct?
Medical expense insurance is available on a guaranteed issue basis to all persons regardless of pre-existing conditions.
Which describes the difference in benefit triggers between tax-qualified and non-tax-qualified long-term care insurance plans?
Medical necessity cannot trigger benefits under a tax-qualified plan.
Ed and his spouse are 67 years old and retired. Their hospital and medical insurance is typically provided by:
Medicare
A common name for Medicare Part C is:
Medicare Advantage
Chelsea retires when she turns 65. She wants comprehensive hospital and medical coverage under a single Medicare program. Which would meet her need?
Medicare Advantage
Which coverage does a person who is eligible for Medicare buy from a private insurer?
Medicare Advantage
A patient who has permanent kidney failure would be a candidate for which Medicare program?
Medicare Part A
An insurer offers Medicare supplement policy benefits through a network of health-care service providers, and every insured uses these providers to take advantage of full benefits. What type of Medicare supplement plan has the insurer created?
Medicare SELECT
What is a Medicare supplement plan of an insurance company that offers the policy's benefits through a network of doctors, hospitals, and health-care service providers called?
Medicare SELECT plan
Which of the following statements accurately describes the Medicare program?
Medicare is a federal health insurance program designed for people age 65 and over and for certain disabled people.
Nick enrolls in Medicare Parts A and B and is eligible for his state's Medicaid program. He incurs $500 in doctors' fees this month. How will this expense be paid?
Medicare will pay benefits first.
All of the following statements regarding Blue Cross and Blue Shield (BC/BS) plans are correct EXCEPT:
Members submit claim forms to seek reimbursement of covered medical expenses.
Which statement about open enrollment periods is NOT correct?
Members who have pre-existing conditions do not have to wait for an open enrollment period.
Why do many employers change plans or insurers when trying to minimize group health insurance costs or maximize benefits?
Most group health plans are written to provide benefits for a single year.
Which of the following statements about a disability income insurance policy's waiver of premium rider is correct?
Most modern policies include a waiver of premium provision in the policy itself.
Sarah applies for a $1 million life insurance policy from ABC Insurance Company. ABC counters by offering to insure her for $200,000 and asks her for a written response. Sarah tells her agent that she accepts the counteroffer. Which statement is correct?
No binding contract is formed until ABC gets Sarah's written acceptance.
Which statement is correct about the coordination of benefits provision in group health insurance policies?
No insurer is required to reimburse benefits or coverages beyond those specified in the contract.
A policyowner repeatedly declines the opportunity to increase her disability income policy benefits through its benefit increase rider. She suffers a loss that would have been covered under the rider. May she sue the insurance company to increase the policy benefit?
No, because the policyowner waived her right to exercise the rider benefit when the opportunity to do so was available to her.
Are group medical expense insurance benefits paid to employees taxable income to the employer who pays the premium?
No, benefits paid to an employee are not taxable income to the employer.
Sue names Bill as the irrevocable beneficiary of her policy. Can Sue use the change of beneficiary provision to name another beneficiary within three years of the issue date?
No. She cannot make the change because an irrevocable beneficiary designation cannot be changed.
Nolan is covered by a group PPO plan. Ned has an individual PPO plan. Which statement is correct?
Nolan pays less for coverage than Ned.
An insured is chronically ill and receives nursing care at home. The insured's long-term care insurance policy pays a daily benefit of $250, which is equal to the daily expenses incurred. Which statement is correct?
None of the benefit is taxable income.
Which of federal laws does NOT affect group health insurance plans?
OASDI
With regard to group health insurance, how does the Age Discrimination in Employment Act affect participants?
Older workers cannot be denied coverage under a group health plan.
Larry has health insurance coverage with Company A and Company B. He has not notified either insurer of the duplicate coverage. If Larry has a claim, what recourse do these insurers have under the Other Insurance with Other Insurer provision?
One of the insurers can prorate the amount of benefit it will pay for an expense-covered loss if the other insurer is covering losses from the same event, which keeps Larry from receiving benefits in excess of his loss.
An insurance policy that reimburses medical expenses directly to the insured is a:
basic medical or indemnity plan
Which statement is correct about eligibility for Medicare Parts A and B?
Part A is primarily hospital coverage automatically available to persons age 65 and over, while Part B is optional medical care coverage available to those covered under Part A.
Which of the following components of Medicare will pay for the costs of a surgeon and anesthetist?
Part B
By what means have managed care companies entered the Medicare services market?
Part C
In 2006, federal legislation expanded Medicare to provide prescription drug coverage through:
Part D
Coverage provided under Medicare is divided into four parts. All of the following accurately describe the four parts of Medicare, EXCEPT:
Part D provides coverage for long-term home health care and hospice care.
All of the following statements regarding health care flexible spending accounts (FSAs) are correct, EXCEPT:
Participants may make claims against their accounts for up to six months after the end of their benefit year.
The federal law that requires all Americans to be covered under a medical expense insurance plan is called the:
Patient Protection and Affordable Care Act (PPACA)
Paul has a group health savings account (HSA) through his employer. If Paul changes jobs, what happens to his HSA?
Paul's HSA goes with Paul; it does not remain with the employer.
With respect to the tax treatment of a disability buyout insurance policy, which of the following statements is correct?
Policy premiums are not tax deductible to the business, and benefit payments are tax-free.
With respect to the Patient Protection and Affordable Care Act (ACA), which of the following statements correctly explains how a medical expense insurance policy may treat an applicant's pre-existing medical conditions?
Pre-existing condition exclusions are prohibited on all policies issued today, but may remain in place for policies that were issued before March 23, 2010 .
Which statement about pre-existing condition provisions is NOT correct?
Pre-existing conditions are treated the same by individual and group plans.
A female employee who is undergoing post-natal medical treatment is protected from unfair treatment in the workplace under the:
Pregnancy Discrimination Act
The Pregnancy Discrimination Act makes discrimination on the basis of pregnancy, childbirth, or related medical conditions unlawful sexual discrimination, meaning that:
Pregnant women will be treated the same at work as non-pregnant women, and all will be offered the same fringe benefit programs.
Which is an accurate statement about individual health insurance that differentiates it from group health insurance?
Premiums are eligible for favorable tax treatment.
Which of the following statements correctly describes the tax treatment of disability buy-out insurance?
Premiums are not tax-deductible and benefit payments are tax-free.
Which of the following statements correctly describes the tax treatment business overhead expense (BOE) insurance?
Premiums are tax-deductible and benefit payments are taxable.
As a part-time employee of the Acme Supply Co., is Tom eligible for group health insurance coverage from Acme?
Probably not
Which of the following statements about preferred provider organizations (PPOs) is correct?
Providers who become part of a PPO are required to accept the PPO's fee as full payment for services.
Under a basic medical expense policy, how does the insurer reimburse covered medical expenses?
Reimbursement will be paid up to 100 percent of covered expenses, or up to a specified maximum amount.
Which statement about return of premium riders is NOT correct?
Return of premium riders are available in all states.
Sally is covered by Social Security and is eligible for Medicare, so her enrollment in Medicare Part B is automatic. What would prevent this automatic enrollment?
Sally notifies the Social Security Administration that she declines to participate in Medicare.
Sam, age 61, and Mary, age 57, have been married for 30 years and have two adult children. After becoming totally disabled in a car accident, Sam applies for Social Security disability benefits. If he is approved, which of the following statements is correct?
Sam will receive a benefit equal to his primary insurance amount (PIA) but neither his wife nor children will receive anything from Social Security.
Sasha, Kendall, Adam, and Julio are licensed agents in Florida. The Department of Financial Services would NOT be able to suspend or revoke which agent's license for engaging in the following acts?
Sasha, who sold insurance policies to family members and friends this year
Which does not rate the financial strength of insurance companies?
Securities and Exchange Commission
Shannon loses her job and applies for coverage under COBRA. Who pays for this continuation of coverage?
Shannon
Jackie has a health savings account and has contributed to the account for two years. She cancels her high-deductible health plan coverage this year. Which statement is correct?
She can no longer contribute to her HSA.
Fallon is self-employed and has an medical savings account (MSA). Which is correct about the account?
She must maintain a high-deductible health insurance plan.
Maxine has a basic hospital expense policy that pays a benefit of $250 per day for up to 30 days. If she is hospitalized for more than 30 days, which of the following statements is correct?
She will be responsible for all hospital costs beyond the first 30 days.
Stacey and Edna are the same age and each owns a long-term care policy with a two-year benefit period and a $200 daily benefit. Stacey's policy has a 30-day elimination period, while Edna's has a 90-day elimination period. Which statement is correct?
Stacey's policy will cost more than Edna's policy.
Which statement is correct about insurance regulation?
State governments primarily regulate the insurance industry, and the federal government regulates some aspects of it.
Mallory submitted a notice of claim with ABC Insurers but receives no response from ABC after several weeks. What should Mallory do to make sure ABC knows of her claim?
Submit a written statement that describes the loss.
Which of the following describes why the with the surgical fee schedule approach creates problems?
Surgical fee schedules are fixed, so as surgical fees increase, the insured must pay more for surgery.
What is the principal difference between medical savings accounts (MSAs) and health savings accounts (HSAs)?
The amount of the maximum deductible and the maximum annual out-of-pocket cost.
If an applicant for health insurance includes the first premium with the application , which of the following statements is correct?
The applicant has made an offer to the insurer.
Which HIPAA condition is based on the length of an insurance applicant's previous coverage?
The applicant must be covered by an employer-sponsored health plan for 18 months.
An insurance applicant submits a completed application with a check for the first premium to her agent. The insurance company accepts the application and issues the policy. Which describes this process?
The applicant offered to buy the policy, and the insurance company accepted.
Which statement about disability reducing term insurance policies is NOT correct?
The benefit payment under such policies increases over the policy's term.
Sarah misstated her age on her health insurance application. The insurer discovers this after receiving notice of Sarah's claim. What result will come from her misstatement?
The benefit payment will be adjusted for her age.
Henry is on active military duty and suffers a disabling injury while on a combat mission. How will his disability income policy treat the claim?
The claim will be denied.
Alex is injured while traveling for vacation. He receives emergency medical care from several doctors who are not in his HMO's network. What will happen when he submits a claim to his HMO?
The claim will be paid if he contacts the HMO within a certain time after receiving treatment.
Your client was injured in an accident and submits proof of loss in a timely manner to Alpha Insurers. Alpha refuses to pay the claim. Your client wants to sue Alpha. What should you recommend?
The client cannot take legal action until at least 60 days after submitting proof of loss to Alpha.
Mark knowingly exceeds his actual authority when dealing with a client. His actions cause a loss to the insurance company he represents. Which statement is correct?
The company may be liable for Mark's actions.
In which case does ABC Insurance Company most accurately reflect its group underwriting standards in its premium rates?
The company prices a policy based on its own morbidity experience.
Sandra and David orally agree that she will pay him $25,000 to set fire to her ex-husband's house. Which statement is correct?
The contract is unenforceable because its purpose is illegal.
Why do courts interpret ambiguities in an insurance contract in favor of the policyowner?
The contract's terms are drafted by the insurer and not negotiated with the policyowner.
Which statement about long-term care insurance (LTC) and long-term care services is correct?
The cost of long-term care services often exceed a person's financial resources.
Under the Age Discrimination in Employment Act, a company can reduce benefits based on age when:
The cost of providing reduced benefits to older workers is the same as the cost of providing full benefits to younger workers.
Steve is the beneficiary of his mother's accidental death and dismemberment policy. At her death, he receives the policy's death benefit in a lump sum. Which statement is correct?
The death benefit is not taxable income.
All of the following statements about the recurrent disability provision of a disability income policy are correct EXCEPT:
The disability income benefits paid are typically lower for a recurrent disability.
Which statement about the elimination period in a disability income policy is CORRECT?
The disability must last through the elimination period before the insured can receive benefits.
Which statement about taxation of a health savings account is correct?
The earnings in the account are not taxable income.
Sky Corporation pays 80 percent of the premium for its group medical plan each year while the employees pay the remaining 20 percent. Which statement is correct about the deductibility of the premium payments from taxable income?
The employees can deduct the amount of premiums they pay that exceed 10 percent of adjusted gross income.
Which of the following statements is true if an employer pays all of the premiums for a group disability income plan?
The employer can deduct the premiums paid as a business expense and benefits are taxable to the employee.
How are self-funded group health insurance plans funded?
The employer funds and pays for member claims and benefits.
What does the entire contract provision state?
The entire contract consists of the policy, attached riders, and endorsements.
Lynn participates in a flexible spending account established by her employer. Which statement is NOT correct?
The funds in the account roll over from year to year.
A health insurance policy's grace period does which of the following?
The grace period provision allows the policyholder more time beyond the due date to pay the premium.
When employees leave an employer and are no longer insured by the employer's group coverage, how does their departure affect the group?
The group continues coverage as before.
Which of the following statements regarding the underwriting of group disability income insurance is correct?
The group is underwritten as a whole.
A group of friends in a quilting club decide to shop for a group health insurance plan. Which statement is correct?
The group may be eligible for group insurance, depending on the number of people in the group.
Harry is 67 years old and covered by his employer's group health plan. When Harry files a claim, how will it be paid?
The group plan is the primary payor, and Medicare is the secondary payor.
What happens if an insured stops paying premiums for an insurance policy?
The insurance company is released from its promise to pay benefits and the contract expires.
Under the legal actions provision, when can an insured take legal action against an insurer?
The insured cannot take legal action against the insurer until at least 60 days after the insured provides proof of loss to the insurer.
Which statement is correct about the use of an HMO point-of-service plan?
The insured may get health care services outside the network, but the cost will be higher.
Which is NOT correct about Medicare coverage of hospice care?
The insured must satisfy a deductible before coverage begins.
Which is NOT correct about the physical examination and autopsy provision in a health insurance policy?
The insured pays for the required exam.
A person who smokes heavily and drinks alcohol to excess exhibits what kind of an insurance risk?
physical hazard
ABC Company terminates its group health plan. The insurer offers ABC the option to buy other group health coverage. If ABC buys another plan, what happens to any deductible or co-insurance payments the participants made?
The insurer applies them to the new plan.
Under a health insurance policy's unpaid premium provision, what may the insurer do with respect to unpaid premiums that the insured owes when a claim is made?
The insurer can deduct this amount from the benefit it pays the insured.
Which of the following statements about a guaranteed renewable disability income policy is correct?
The insurer can increase the premiums only if it increases the premium for all policies in the same class.
In noncancelable health insurance policies, which of the following is guaranteed?
The insurer cannot cancel the policy or increase the premium.
Warren filed a claim on his health insurance policy that he bought four years ago. In investigating the claim, however, the insurer discovered that Warren had misstated information about preexisting conditions on the original application. What can the insurer do?
The insurer cannot contest the policy and must pay the claim.
Jeff recently changed to a more hazardous job. Assuming that his disability income insurance policy contains the change of occupation provision, what is the likely result of this?
The insurer could reduce Jeff's benefits.
When may an Insurance company call a consumer on the Do Not Call list?
The insurer has an existing relationship with the consumer.
After Sandra submitted the initial premium with her application for an individual health insurance policy, the producer gave her a conditional receipt. The next week, Sandra suffered a serious injury in a car accident. If Sandra was found to be uninsurable as of the date of application, what is the insurer's responsibility?
The insurer is not liable for coverage but must refund the premium.
Lisa has an individual health insurance policy and is injured while attempting to rob a bank. The policy has an illegal occupation provision, which means that:
The insurer is not liable for the loss.
Eric's managed care plan states that he and his family must receive care from an approved network provider. If they receive care from an unapproved provider, what will happen?
The insurer may not cover the costs at all or may only partially cover them.
Which is NOT a small employer marketing requirement under the Health Insurance Portability and Accountability Act?
The insurer must guarantee renewable coverage for businesses with up to 100 employees.
Carl makes a claim two weeks into the 31-day grace period allowed by his health insurance plan. Assuming the claim is valid, what must the insurer do?
The insurer must pay the entire amount of Carl's claim but can deduct the amount of premium due from the claim amount.
An insured files a claim under his health insurance policy. What happens next under the claim forms provision?
The insurer must provide claim forms 15 days after receiving notice of the claim.
Carla was a construction worker when she bought her health insurance policy, but eight months later became a full-time homemaker and part-time insurance agent. Assuming that her policy contains a change of occupation provision, what is the likely result of Carla's having a less hazardous occupation?
The insurer must reduce the premium rate.
Nick's policy has been canceled and Nick has paid a premium that was not due. Under the cancellation provision, what must the insurer do?
The insurer must return it to Nick.
If a health insurance policy involves a death benefit, what will the insurer do if it receives proof the insured has died?
The insurer will pay the claim to the insured's beneficiary.
Which condition must exist for a risk to be considered insurable?
The loss must be ascertainable.
Which of the following is an exception to the rule that a health insurer may deny a claim arising from the use of narcotics under a health insurance policy's intoxicants and narcotics provision?
The loss was sustained because the insured was under the influence of a narcotic administered on the advice of a physician
How does the owner of a flexible spending account (FSA) access its funds to pay for a covered medical expense?
The owner submits a claim and proof of payment to the FSA administrator, and is then reimbursed from the FSA.
With respect to partial disability benefits in a disability income insurance policy, which of the following statements about partial disability benefits is NOT correct?
The partial disability benefit is also called a residual disability benefit.
Which is NOT necessary for Medicare Part A to cover the cost of skilled nursing care?
The patient must have supplementary health insurance.
What does the fact that a person is eligible for Medicare coverage under Part A mean?
The person is at least 65 years old and eligible for Social Security retirement benefits, or has received Social Security disability benefits.
What happens if a person does not apply for Social Security retirement benefits at age 65 but still wants Medicare?
The person must enroll in Medicare Part A.
With respect to group health insurance plan sponsors and participants, which of the following is correct?
The plan sponsor owns the plan and pays its premiums, and the individual group members are the insureds.
Which is NOT a disadvantage of a basic medical expense policy?
The policy has a high deductible.
Under a disability income insurance policy's social insurance supplement rider, what happens to the policy's benefit payments if the disabled insured qualifies for Social Security disability benefits?
The policy rider's benefit payments are decreased or terminated.
Anne lives in State A and buys a health insurance policy issued by an insurer domiciled in State B. How does the conformity with state statutes provision resolve provisions in the policy that conflict with the laws of State A?
The policy will automatically be amended to meet the minimum legal requirements of State A.
Jason bought a disability income policy with a cost of living adjustment (COLA) rider. What happens if he becomes disabled during a time of inflation?
The policy will automatically increase his disability benefit payments to help keep pace with inflation.
Mr. Smith, a shoe store owner, is insured under a business overhead expense policy that pays a maximum monthly benefit of $2,500. If Mr. Smith becomes disabled and has actual monthly expenses of $3,000, which of the following is correct?
The policy will pay $2,500 as a monthly benefit.
Camilla is a surgeon and injured her hand. Because she can no longer perform her normal work-related duties, she files a claim under her disability income policy. What will happen if the policy contains an own occupation definition of total disability?
The policy will pay benefits because she cannot perform her normal work duties.
Jackson has a critical illness policy that covers cancer and leukemia. What will happen if he is diagnosed with terminal cancer?
The policy will pay benefits when Jackson is diagnosed with cancer.
Cara is buying an individual disability income policy. Calvin is enrolling in his employer's group disability income insurance plan. Which statement about their policies is correct?
The premium for Calvin's policy will be lower than for Cara's policy.
Which is not correct about the agency contract between the insurance company and the agent it appoints to represent it?
The principal has express authority; the agent does not.
With respect to the duties of a producer in the sale of a health insurance policy, which of the following statements is correct?
The producer must determine the suitability of the recommended product for the applicant's needs and circumstances.
Which statement about HMOs is NOT correct?
The provider network is limited to a town or city.
Under the conformity with state statutes provision of a health insurance policy, which of the following will happen if provisions of an insurer's health insurance policies are contrary to state law?
The provisions will automatically be changed to meet the minimum requirements of the law.
What guarantee does COBRA provide an individual who voluntarily leaves a job or who is terminated for reasons other than gross misconduct?
The right to continue the former employer's group insurance coverage at the individual's own expense for up to 18 months.
Why does an insured pay a different amount for group insurance than for a comparable individual plan?
The risk for a group is spread over many people.
How is the term "immediately" defined under a health insurance policy's time payment of claims provision?
The term "immediately" is defined by individual states.
If a terminated employee chooses to continue his or her group health insurance coverage under COBRA, which of the following statements is true?
The terminated employee can continue coverage by paying 100 percent of the full premium plus an additional 2 percent.
Jim owns an individual disability income policy. He is also covered by a group disability income policy. If he suffers a disabling injury and his personal disability income policy contains a relation-to-earnings provision, what will happen?
The total amount he can receive from both policies cannot exceed his current wages.
Which is correct about underwriting group health insurance policies?
The underwriter will consider the group as a whole.
Which statement about the right to continue group health insurance under COBRA is NOT correct?
The younger spouse of a participant who becomes eligible for Medicare benefits is not eligible for continued group coverage.
Brittany Importers is headquartered in Florida and would like to purchase a group health plan to cover its employees. What is the minimum number of employees that Brittany Importers must have to be eligible for group insurance?
There is no minimum.
All of the following statements about future increase option riders in individual disability income policies are correct, EXCEPT:
They allow the insured to buy additional coverage under the policy at no additional charge.
Which statement about health savings accounts is correct?
They are available on an individual or group basis.
Which is true about warranties in an insurance contract?
They are guaranteed to be true.
Which statement regarding benefit triggers under a tax-qualified plan is correct?
They are more stringent than those for a non-tax qualified plan.
Agent Holly routinely charges her clients an extra amount in addition to the premium stated in the life insurance policy to cover her own personal administrative expenses. What is true about Holly's actions?
They are unlawful.
Which of the following statements correctly describes the tax treatment of individual medical and long-term care insurance premiums paid by self-employed individuals?
They can be taken as an 'above the line' deduction to directly reduce taxable income.
How can persons who are not covered by Social Security enroll in the Medicare program?
They can enroll for Medicare during the month of their 65th birthday.
Initial open enrollment for Medicare Part D prescription drug insurance began in 2005. What happens every year, as people become eligible for Social Security?
They can enroll in Medicare Part D during the last two months of the year.
How do independent agents differ from captive agents?
They can sell policies for several insurers.
Which statement correctly describes managed care plans such as HMOs?
They connect the financing and delivery of health care.
With respect to disability buy-out policies, which of the following statements is correct?
They have a very long elimination period.
Which statement is correct about HMO plans that offer a POS option?
They offer more health care provider options.
Which is NOT a characteristic of Blue Cross Blue Shield plans?
They only provide individual health insurance.
All of the following statements regarding basic hospital, surgical, and physician policies are generally correct EXCEPT:
They restrict the insured's right to choose a health care provider.
With respect to a disability buy-out policies, which of the following statements is correct?
They typically give policyowners the option to receive benefits in a lump sum payment.
Marilyn, 72, pays a lot for medical expenses. She wants to transfer assets to her son so that she can qualify for Medicaid. How will Medicaid's look-back rules apply to her?
They will consider any transfers of assets she made during the 60 months before she applied for Medicaid.
Why does an insurer require that a minimum percentage of eligible members participate in a group health insurance plan?
This requirement protects the insurer against adverse selection and keeps the cost of coverage in line with the cost of administering the plan.
Tina is covered by a group short-term disability plan. Earl is covered by a group long-term disability plan. Their employers pay the premiums. Both are disabled. What benefits can each expect?
Tina will get benefits for up to two years, while Earl may receive benefits for more than two years.
All of the following statements about group eligibility for group health insurance are correct, EXCEPT:
To be eligible for group health insurance, the group must qualify based on the intent and purpose of its members.
Which example illustrates the concept of adverse selection?
Tom, a heavy smoker, seeks employment so he can group health insurance.
Tori has a health insurance policy from ABC Insurers. ABC denies a claim because Tori failed to notify it in a timely manner of the loss. Tori argues that the policy's instructions on filing claims are confusing. A court that reviews the policy's instructions will probably resolve any ambiguities in favor of:
Tori
What does underwriting a health insurance policy mean?
Underwriting means assessing risk based upon a person's health and medical history.
All of the following statements about point-of-service (POS) managed care plan are correct, EXCEPT:
Unlike a PPO, a POS plan does not charge members a deductible if they go outside the network for medical care.
How long can a pre-existing condition be excluded from coverage under a group health insurance plan, if the plan has "grandfather" status under the Affordable Care Act?
Up to 12 months
Which of the following statements about the delivery of newly issued health insurance policies to the customer is correct?
When delivering the policy, the producer should review the policy to ensure that its terms and conditions match those the client applied for.
Fran has an agency contract with ABC Insurance Company to represent the company. The contract gives her express authority to perform certain duties. Which is correct with respect to Fran's actions?
When she acts within her authority, she binds the company by her actions.
A disability income policy will typically pay benefits for disability arising from:
accidental injuries
A disability income policy's benefit period is the maximum period during which monthly benefits are paid for an insured's ongoing disability. Which of the following statements about benefit periods is NOT correct?
While benefit periods can vary, they cannot last for the duration of the insured's life.
Will's employer pays the premiums for his group disability income insurance policy. Which statement is correct about the tax treatment of the premiums and benefits?
Will cannot deduct the premiums that the company pays on his behalf.
All of the following statements about family coverage under a medical insurance policy are correct, EXCEPT:
With family coverage, each dependent is covered under a separate policy.
A pregnant woman marries and is covered by her spouse's employer's group health plan. Will the plan cover the child?
Yes, from the moment of birth.
While completing an application for a life insurance policy, Ken withholds information about his health history to avoid paying a higher premium. He has been in excellent health for the past five years. Has he committed fraud?
Yes, because he made a misstatement with the intent to deceive the insurance company.
Alex sold an insurance policy before his license lapsed and earned a commission on the sale. Is he entitled to a commission if the policy is renewed?
Yes, because he was licensed when the policy was sold.
May one person qualify as a group and be eligible for group health insurance coverage?
Yes, in some states a business group of one can qualify as a small group.
While taking an insurance application, Betty recommends backdating it so that the proposed insured will appear to be a year younger on the form. Can Betty do this?
Yes. Backdating is permitted if it is for six months or less and authorized by the insurer.
An agent who sells insurance for an insurance company that does not have a certificate of authority to operate in the state represents:
a non-admitted insurer
For tax purposes, the term "self-employed person" includes all of the following, EXCEPT:
a C corporation's officers
Total disability will be presumed under a presumption of disability provision if an insured suffers any of the following physical losses, EXCEPT:
a broken leg
In which situation might a state try to recover Medicaid payments following the death of a Medicaid recipient?
a claim against Sharon's stocks and bonds, the income from which is used to support her adult children
With respect to the Patient Protection and Affordable Care Act, the terms platinum level, gold level, silver level, and bronze level refer to which of the following?
a classification of health insurance plans that differentiates them by the percentage of medical expense costs paid by the plan
Charles consulted a physician outside his HMO's network. When making a claim for benefits, he learned that none of his costs are covered because he is enrolled in:
a closed panel HMO
Which employer is exempt from the requirements of COBRA?
a company that employs 19 people
A life insurance application asks Steven whether he has had heart problems. He does not answer the question even though he had heart surgery three years ago because he is afraid his application will be denied. Steven's failure to give his entire medical history is:
a concealment
Bethany loses her job and group health coverage but is soon employed again. When she enrolls in her employer's group health plan, the protections she gets from federal law do NOT include:
a continuation of coverage under the same insurer
Which of the following penalties may the Office of Insurance Regulation impose if an agent intentionally represents an unauthorized insurer in Florida?
a fine of up to $10,000
Carla incurs $7,000 in covered medical expenses. She pays $500 of those expenses, and the policy bases its benefit payment on the remaining $6,500. What kind of deductible does Carla have?
a flat deductible
An expense that the IRS considers a deductible medical expense is eligible for reimbursement from:
a flexible spending account
Which of the following allows insureds to increase a policy's level of benefits in the future without having to prove insurability?
a guaranteed insurability rider
Under a health insurance policy's intoxicants and narcotics provision, a health insurer may exclude insurer liability if which of the following occurs?
a loss results from intoxication or the use of non-prescribed narcotics
All of the following are eligible for group health insurance in the small employer market EXCEPT
a manufacturing business that employs 75 employees
On what do basic hospital policies typically base payment for covered expenses?
a maximum per-day benefit for a certain number of days, e.g., a basic hospital policy may provide a hospital benefit of $200 per day for up to 30 days
Jay's medical expense policy uses a benefits schedule. After he incurs a covered medical expense, what amount will the insurer pay?
a percentage of or the entire unit value assigned to the medical procedure
Jim is a member of an HMO with a point-of-service plan. If he chooses a doctor outside of the provider network, he can expect to pay:
a percentage of the cost
Which person would not be considered competent to enter into an insurance contract?
a person under the influence of alcohol
After Todd was injured, he received occupational therapy to help him return to work. His disability income policy covered the treatment because it has:
a rehabilitation provision
Which is NOT typically a cause of rising health-care costs?
a shortage of hospital beds
While traditional major medical policies control costs through deductibles and coinsurance, HMOs control costs by imposing:
a small co-payment for each doctor visit or health service
Ward applies for an individual disability income policy. He is in poor health, is reckless in his avocations, and has a family history of major illness. Ward will probably be classified as:
a substandard risk
Which of the following integrates with a basic medical expense policy to cover costs exceeding the basic policy's coverage?
a supplementary major medical policy
During the underwriting period, an insurance company can provide the applicant with limited, temporary coverage through either a conditional receipt or:
a temporary insurance receipt
Which of the following is the basis today for determining basic surgical expense policy benefits?
a usual, customary, and reasonable (UCR) method
John buys a $1 million life insurance policy. He dies two years later and the insurer pays the $1 million benefit. Even though the premiums never came close to the benefit amount, the insurer pays the full benefit because the insurance policy is type of contract?
a valued contract
The most comprehensive coverage of health-related risks can be obtained by buying:
a variety of insurance policies
All of the following sources are often used in underwriting health insurance policies, EXCEPT: a. private investigator's observations b. the agent's, or producer's, report c. an attending physician's statement d. an MIB report
a. private investigator's observations
In an agency relationship between the agent and the insurance company, which of the following is not a type of authority granted to the agent?
absolute authority
Health insurance provides protection against the financial risks posed by:
accidental injury and illness
A fiduciary must be named to administer a health plan in a financially responsible manner and in the best interests of its enrollees in accordance with ERISA's requirements for:
accountability
When taking an insurance application, what should an agent try to accomplish?
accuracy, thoroughness, and clarity
Jennifer applied for a $500,000 whole life insurance policy. The insurer issued the policy but classified her as a substandard risk, which cost her a higher premium. Which type of policy delivery is recommended in this situation?
actual delivery
Which would NOT be promoted as a service offered by an HMO?
acute onset diabetic care
Unlike those who own a non-tax-qualified long-term care insurance (LTC) policy, people who own a tax-qualified LTC plan can:
add their premium (within limits) to other out-of-pocket medical expenses in qualifying for a medical expense deduction
Because an applicant for an insurance policy cannot negotiate the terms of the policy, the policy is what kind of contract?
adhesion
Because the insurance company and the insurance applicant do not negotiate the terms of an insurance policy, the policy is what kind of contract?
adhesion
An innocent misstatement of age or sex on an insurance application would most likely result in:
adjustment of policy benefits
Blackstone Insurers is incorporated in New York, where it also has a certificate of authority to transact insurance. What type of insurer is Blackstone in New York?
admitted insurer
Jeremy has had an individual health insurance policy for many years because of his family's history of cancer. The tendency of someone like Jeremy to buy and maintain insurance is known as:
adverse selection
Which of the following correctly identifies the way(s) in which major medical expense insurance policies are generally available?
as a supplement to a basic plan or as a comprehensive stand-alone plan
Samantha spends 182 days in the hospital. At what point in her hospital stay will Medicare Part A no longer pay any benefits unless she draws from her lifetime reserve?
after 90 days
When benefits are triggered under a long-term care insurance policy, when do benefit payments begin?
after any elimination period
Ed is totally disabled from an accident and is now eligible for Social Security disability benefits. When will benefit payments begin?
after five months
Under the Patient Protection and Affordable Care Act (PPACA), until what age are dependent children eligible to be covered under their parent's group medical insurance policy?
age 26
When an insurer employs field agents, who is responsible for delivering a new policy to a policyholder?
agent
An errors and omissions insurance policy protects the:
agent or producer
After paying the initial premium for a disability income policy, Suri was injured in an accident. She received disability income payments for the next 12 months. These payments were far more than the amount of the premium she paid. This is characteristic of contracts that are
aleatory
Peggy ended her employment with ABC Company. After she exhausts her benefits under COBRA, HIPAA will guarantee that:
all insurance companies that sell individual health insurance plans must offer them to eligible people who have lost their group coverage, regardless of their health
A schedule of benefits in a group health insurance plan does NOT:
allow individual selection
When qualifying for Medicaid, the concept of "spending down" assets means that an applicant must:
almost exhaust his or her savings
A health plan that offers the insured a limited choice of health care providers is:
an HMO or PPO plan
Ken has a history of severe back pain. He applies for disability income coverage. Concerned about early and significant disability claims, what may the insurer add to address that special risk?
an impairment rider
A person who is covered by an individual medical expense insurance plan is:
an insured
An HMO that provides services or coverage outside its network is:
an open-panel plan
Most major medical policies have which of the following types of deductibles?
annual deductibles
Disability products that are marketed to blue-collar workers and manual laborers typically contain which definition of total disability?
any occupation
Tom, a carpenter, applies for an individual disability income insurance policy. Which definition of total disability will the insurer probably use when issuing the policy?
any occupation
Medical expense insurance may or may not define who the insured can use to provide the medical care. What is this distinction called?
any provider vs. limited choice of providers
ABC Insurance Company fires Renee, a producer. She continues to interview prospects, make sales presentations with company materials, and collect premiums. When dealing with Renee, the prospects believe that she has what kind of authority from ABC?
apparent
An agent for ABC Insurance Company meets with a client. The agent shows the client ABC's sample policies, refers to the ABC rate book, and gives the client an ABC business card. The client assumes that ABC has appointed the agent to represent it. What kind of authority does the agent have?
apparent authority
For a life insurance contract to be enforceable, which of the following must be legally competent to enter into the agreement?
applicant and insurer
In forming the insurance contract, who gives something of value as consideration?
applicant and insurer
Which of the following is generally regarded as the primary source of underwriting information for an applicant for health insurance?
application
The special needs plan (SNP) under Medicare Advantage is NOT available to those persons who:
are suffering from minor chronic medical conditions
How often may an insurer require an insured to submit to a physical examination during a pending claim?
as often as reasonably necessary
A health-care provider submits the bill for medical services directly to the insurer, and the insurer sends payment to the provider. What is this arrangement called?
assigning benefits
Medicare supplement policies were originally designed to:
assist with co-payments and deductibles
When may a disability income insurance policyowner exercise the future increase option rider?
at specified dates in the future, without the need to provide evidence of insurability
Sam's contract with the insurer he represents authorizes him to solicit insurance applications. Which of the following is implied by Sam's authority?
authority to contact prospective clients to arrange sales meetings
Which action by an agent would legally bind the insurance company that the agent represents?
authorized acts
What is the goal of the relation of earnings to insurance provision?
avoid overinsurance
Which of the following would cover daily hospital room and board and miscellaneous expenses, such as drugs, X-rays, lab fees, dressings, and use of the operating room and supplies?
basic hospital expense (indemnity) policies
Which of the following medical expense plans provides coverage for a specific form of medical care, reimbursing insureds for the medical expenses they incur?
basic medical expense (indemnity) plans
Which of the following policies were initially developed to pay for doctors' visits only while the insured was hospitalized but now covers all routine doctor office visits?
basic physician expense policy
Which of the following covers surgeons' fees and costs associated with surgery, which can include fees for an assistant surgeon, anesthesiologist, or even the operating room if it is not covered as a miscellaneous hospital item?
basic surgical expense (indemnity) policy
Which is not a necessary element of a legally enforceable contract?
beneficiary
Under an individual disability income policy, which provision specifies the length of time for which the insured can receive benefits?
benefit period provision
Sandy's insurance company has assigned a price or dollar amount to a surgical procedure that she will undergo. The insurer will pay Sandy a percentage of this assigned price. Coverage is based on the:
benefits schedule
When the insurer assigns a dollar amount or unit value to each medical treatment, procedure, or expense, the insurer will pay benefits on the basis of the policy's:
benefits schedule
Which of these entities regulates group health insurance?
both the state and federal governments
Max is an unmarried senior citizen without children. He wants to buy a major medical expense policy but is concerned that no one will care for him if he cannot perform routine daily functions such as eating and bathing. Besides buying a long-term care insurance policy, how can Max best address his concern?
buy a long-term care rider under his health insurance policy
A guaranteed insurability rider lets a disability income insurance policyowner:
buy additional amounts of coverage on specified dates, without having to provide evidence of insurability
An insured fears that his medical expense insurance policy will not provide enough coverage if he sustains a catastrophic illness. What is his best course of action?
buy an extended stay rider
Lucy receives 24-hour skilled nursing care at a long-term care facility, which is paid for by Medicaid. When she dies, her estate consists of a car, $1,000 in cash, and a home valued at $150,000. If Medicaid has paid $160,000 for Lucy's long-term care, Medicaid:
can seek recovery from all of Lucy's assets
Due to a significant drop in sales this year, Agent Smith has been soliciting current clients and encouraging them to use the policy values in their existing life insurance policies to purchase new policies in order to increase his commissions. Which unfair trade practice has Agent Smith committed?
churning
Which is NOT a factor states use to determine eligibility for Medicaid?
citizenship
Which of the following is NOT a Medicaid qualification requirement?
citizenship limitations
Written rules for how claims and appeals are handled must be fair and timely in accordance with ERISA's requirements for:
claims procedures and appeals
What are HMOs that do not provide services or coverage outside their network called?
closed panel
An HMO that does not offer services beyond its provider network is what type of HMO?
closed panel HMO
Which type of managed health care plan exercises the most control over health-care costs?
closed panel HMO
Which of the following provisions, found in all major medical insurance policies, states that the insured must pay a certain percentage of the covered costs after the deductible is satisfied?
co-insurance provision
Joshua's major medical policy requires him to pay $50 every time he goes to see his doctor. What is this payment called?
co-payment
What can an employee expect to pay under an employer's prepaid dental plan?
co-payment for each service received
Mallory has a major medical policy that requires her to pay a deductible and then 20 percent of the first $10,000 of medical expenses she incurs. What is this percentage called?
coinsurance
As a field underwriter, what does an agent do for the insurance company?
collect information from an applicant
Which of the following types of group health plans base premiums on characteristics of similar groups in the region where the group exists?
community-rated plans
A typical errors and omissions (E&O) policy covers all the following , EXCEPT: A. completing and signing an application for an applicant without that person's knowledge B. professional negligence C. failing to perform due diligence placing insurance with insurers who are not authorized to conduct business in the state
completing and signing an application for an applicant without that person's knowledge
Medicare Part C (Medicare Advantage) provides for which kind of coverage?
comprehensive alternative to Parts A and B
Which is NOT offered in a basic medical expense plan?
comprehensive coverage
Which type of health plan covers a variety of conditions or medical services?
comprehensive plan
An insurance company keeps a policy in force only if the policyowner pays the premium because the policy is what kind of a contract?
conditional
William buys a $250,000 life insurance policy. He worries that he will not have coverage during the policy review and underwriting period. Which will cover William during this time?
conditional insurance receipt
Carol applies for a $250,000 life insurance policy. Her agent gives her a document that provides limited coverage during the underwriting period. What is this document?
conditional receipt
An Oregon resident buys a health insurance policy from a company domiciled in New York. The policy says that if any provision is in conflict with Oregon laws, the laws of Oregon will prevail. Which provision states this?
conformity with state statutes
HMOs are managed care plans that:
connect the financing and the delivery of health care
Conrad obtained a life insurance agent's license primarily to write insurance for his family members and friends. Which unfair trade practice has Conrad engaged in?
controlled business
What right permits an insured to change from group health coverage under an employer's policy to an individual policy without having to prove insurability?
conversion
Which of the following best defines the role of a primary care physician (PCP) in a managed care plan?
coordinate the plan member's health care treatment and access to medical specialists in the network
An insured is covered by both his employer's group health insurance plan and by his wife's group plan. Which provision ensures that any benefits paid to him will not exceed his expenses?
coordination of benefits
Jake is covered by his own group health insurance plan as well as by his wife's group plan. Which provision in Jake's plan will prevent overinsurance?
coordination of benefits
Which of the following health insurance principles underlie the 'other insurance with this insurer' and the 'other insurance with other insurer(s)' provision of a disability income insurance policy?
coordination of benefits
Wiley bought an extended stay rider to supplement his health insurance coverage. What can he expect from this rider?
coverage for longer hospital stays
Which of the following is NOT characteristic of a major medical plan?
coverage of cosmetic surgery
Perry lives alone and needs help with routine tasks such as bathing, eating, and dressing. Which type of long-term care does Perry need?
custodial care
Which of the following levels of long-term care can be provided in adult day-care centers, respite centers, a nursing home, or a person's home?
custodial care
Which of the following levels of long-term care is provided to help a person meet daily living requirements, like bathing, dressing, or eating?
custodial care
Before a Medicare Part A beneficiary receives benefits, the beneficiary must pay an annually adjusted:
deductible
Larry's major medical policy requires him to pay the first $1,000 of expenses before the policy pays any benefits. This amount is the:
deductible
When meeting with a prospect to discuss life insurance, Agent Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Agent Tyler committed?
defamation
In qualifying for Medicare coverage, care in a nursing home need NOT:
depend on the patient's ability to pay
Insurers use usual, customary, and reasonable (UCR) fees to:
determine the appropriate amount payable for a given service
The purpose of utilization review in a managed care plan is to:
develop managed care standards for providers
The number of people covered under individual health insurance plans has:
diminished
Which of the following provides funds to buy out the business interest of a business owner or partner who becomes disabled?
disability buy-out insurance
Which of the following types of business health insurance would serve the needs of two business owners who want to fund their buy-sell plan in the event one of them becomes totally disabled?
disability buy-out insurance
With what type of health insurance policies are guaranteed insurability riders typically associated?
disability income and long-term care insurance policies only
Self-employed persons can deduct the premiums paid for insurance that covers them, their spouses, and their dependents for all the following types of insurance EXCEPT:
disability income insurance
Because of the risk assumed by the insurer, noncancelable provisions are only included in which type of policy?
disability income insurance policies issued to insureds in white-collar (such as clerical) and professional occupations
Which type of health insurance benefit is paid weekly or monthly due to injury or sickness and is based on the insured's wages?
disability insurance
A valid insurance contract does not require:
disinterested witnesses
Which group would present the lowest underwriting risk for a health insurance company?
dog trainers
Which expenses are NOT eligible for reimbursement from a flexible spending account (FSA)?
elective cosmetic surgery and visits to non-licensed medical practitioners
Which is NOT a potential consequence of a health insurance policy rider?
elimination of medical expenses
Daniel is hospitalized with a neck injury. When he checks his disability income policy, he learns that he will not be eligible for benefits for 60 days, which means that his policy has a 60-day:
elimination period
An agent will violate the prohibition against controlled business if she sells most of her insurance policies to whom?
employees of a business owned by her husband
Which sets the criteria for eligibility in an employer's group health plan?
employer
Who buys the health insurance policy that covers a group?
employer or sponsor of the group
Which is NOT a method that managed care plans use to control costs?
encouraging hospitalization
When eligible employees enroll in a group health plans, they do NOT have to:
enroll all family members in the plan.
Which of the following health insurance policy provisions is required to be in all health insurance policies?
entire contract
Which provision in a health insurance policy prevents agreements outside of the policy from changing the terms of the contract?
entire contract provision
When underwriting an individual health insurance policy, the insurer will NOT consider the applicant's:
estimated future earnings
An insurer sends a premium statement to a former policyowner. However, the policy has lapsed for non-payment of premiums. Believing that the policy is still in effect, the policyowner pays the premium, which the insurer accepts. The insured then suffers a loss and makes a claim on the policy. What legal doctrine prevents the insurer from denying the claim?
estoppel
Agents must act in the best interests of applicants and insureds. What does this require them to do?
give all important information about a proposed policy
Jerry's life insurance policy instructs him to pay the premium to the insurer's home office. However, he has sent his payments to his agent for many years, and the agent has forwarded them to the insurer. What legal principal will prevent the insurer from now requiring that Jerry send the premiums to the home office?
estoppel
Jim's policy expired due to nonpayment of premium. His agent sends him a statement the following month without noting the lapse. If Jim pays the premium and later suffers a loss for which he files a claim, what will prevent the insurer from denying the claim?
estoppel
In 1997, traditional Medicare (Parts A and B) was expanded to include Part C, which:
expands Medicare to new health-care providers and programs that offer all Medicare services to participants
Sky Corporation applies for a group health insurance plan. During the underwriting process, the insurer examines Sky's past claims experience and the composition of its group. Which rating method is the insurer using?
experience rating
Which group health plan gives employers the most flexibility in designing and arranging the plan's benefits?
experience-rated plans
To make legal delivery of a health policy with an exclusion rider, a producer must:
explain the rider to the client and have the client accept the rider in writing.
Stacey is a captive agent for Best Rates Insurance Company. Her agency contract gives her permission to print and use business cards with the company's logo and submit applications for its policies. Which type of authority does Stacey have to take these actions?
express
Suppose an agent's contract with the insurer gives the agent permission to sell and solicit business for the insurer. What kind of authority does the contract grant to the agent?
express
For which of the following will a Medicare participant have to pay all of the costs?
eyeglasses
The Department cannot suspend or revoke an agent's license for which of the following reasons?
failing to meet projected sales goals
Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in Florida?
failing to promptly settle a claim for which liability is uncertain
When underwriting an individual disability income policy, the insurer will NOT consider which as a source of income and insurance protection?
family income and inheritances available to the applicant
At what level of government is group health insurance regulated?
federal and state
Jonah has a traditional medical expense insurance policy. He pays each health-care provider for services rendered, and the insurer reimburses him for the costs incurred. What type of policy is this?
fee-for-service
Under Harry's medical expense plan, he pays his doctor for each medical service he receives, and the insurer reimburses Harry. Which type of payment system is this?
fee-for-service
Which type of payment arrangement do indemnity insurance policies typically use?
fee-for-service
What are common benefit limits in long-term care insurance policies?
flat daily amounts
Carla incurs $7,000 in covered medical expenses. She must pay $500 of those expenses, and the policy will base how much benefit it pays on the remaining $6,500. What kind of deductible does Carla have?
flat deductible
Each year, Marco defers part of his pre-tax compensation into an account to pay health-care expenses not reimbursed by his employer's group plan. At the end of the year, he has $300 in his account, and he has until March 15 to use these funds. Which type of health savings arrangement does he have?
flexible spending account
Which finances health-care costs without being tied to a high-deductible insurance plan?
flexible spending accounts (FSAs)
In order for Medicare Part A to pay for hospital services, the services must be:
for any medically necessary and reasonable treatment, with a benefit period that begins on the day of admission to the hospital and ends 60 days after release.
An insurance company with a home office in Wisconsin that does business in Illinois is a domestic company in Wisconsin. What kind of company is it in Illinois?
foreign
Long Life Insurance Company is incorporated in Georgia but transacts insurance in Florida. Which type of insurer is Long Life considered in Florida?
foreign
Which term applies to an insurance company domiciled in one state but operating in another, from the perspective of the state in which it operates?
foreign company
What type of organization is a non-profit entity that operates on the lodge system, has no capital stock, and sells insurance mainly to its members?
fraternal benefit society
A policyowner intentionally misstates material information on an insurance application to get coverage for a lower premium. This kind of deception is:
fraud
What unfair trade practice has a person committed if he knowingly and with intent to defraud files an insurance claim that is false?
fraud
Newborn children are automatically covered under an insured's individual health insurance policy for how long?
from birth to 30 days
Medicare Part A does NOT cover which home health care services?
full-time skilled care
If Chris is eligible for Social Security disability benefits, what is his work status?
fully insured
Allison would like to buy a disability income policy. She wants to ensure that she will be able to buy additional coverage under the policy sometime in the future without having to provide evidence of insurability. Which rider should Allison choose?
future increase option rider
Access to an HMO's network of doctors and hospitals is controlled by a primary care physician who is sometimes called a:
gatekeeper
Connie is a member of an HMO and wants to see a specialist. The HMO requires her to see her primary care physician for a referral to a specialist. This primary care physician is the:
gatekeeper
Marvin is enrolled in an HMO. His primary care physician provides his health care or refers Marvin to a specialist. In what capacity is his physician acting?
gatekeeper
The HMO point-of-service (POS) option allows members to get:
get treatment outside the HMO network
An agent meets with a prospect and learns that he already owns a life insurance policy. He is interested in replacing it with a new policy. Which must the agent do?
give the applicant the 'Notice Regarding Replacement'
An insurance company sends a proposed insurance policy to an applicant with instructions to accept the policy in writing by December 15 or it will be withdrawn. What must the applicant do to accept the policy?
give written notice on or before December 15
Whittier Insurance Company is a newly incorporated insurer in Florida. In which of the following investments would it typically NOT be allowed to invest?
gold and currencies
Jackson was traveling through Europe when he realized that he forgot to pay the premium for his health insurance policy. Which provision will keep the policy in force until he pays the premium?
grace period
Todd lost his job and his group health coverage. He applies for an individual health policy. The insurer must sell him a policy if he meets all of the following requirements EXCEPT:
group coverage ended due to plan termination
An employer's health insurance policy provides $1,000 of coverage for every month an employee cannot work. What kind of policy provides this protection?
group disability income policy
How do most people get coverage for health care in the United States?
group plans
When applying for Medicaid, the limits and the types of income and assets counted vary depending on whether the applicant:
has a spouse who requires support
The general types of coverage that Medicaid may provide, depending on the state, include all of the following, EXCEPT:
health care received outside the United States, skilled nursing facility care, cosmetic surgery, and personal comfort items
Long-term care insurance is NOT designed to cover:
health care services for the poor
HMOs may use which terms to describe their services when in marketing them?
health maintenance organization
Medical savings accounts (MSAs) have been replaced by:
health savings accounts (HSAs)
The federal government's contribution to the control of health care costs includes:
health savings accounts (HSAs)
Which of the following types of healthcare reimbursement programs is currently available, used with high-deductible health insurance plans, and features tax deductible contributions that accumulate on a tax-free basis?
health savings accounts (HSAs)
The waiver of premium provision provides that premiums will be waived by the insurance company under what circumstances?
if the insured becomes disabled
Per HIPAA, an insurance company can cancel an insured's medical insurance coverage in which of the following circumstances?
if the insured committed fraud, does not pay the policy's premiums, leaves the group (in the case of group insurance) or the insurer no longer sells the type of policy covering the insured
An insured sustains a gunshot wound. The investigation shows that the insured was injured while committing a robbery. Which provision protects the insurer from paying a claim for this injury?
illegal occupation
Health insurance insures against all of the following common perils, EXCEPT:
illness-related death
Suzanne was employed by Alpha Company. Its group health plan has a three-month waiting period for health insurance coverage. After six months with Alpha, she takes a new job with Delta Corporation. Delta's group plan also imposes a three-month waiting period for health coverage. How soon will Suzanne be covered?
immediately
An insurance company can exclude coverage for a specific medical condition by including which type of rider in a health insurance policy?
impairment
HMOs are considered pre-paid managed care plans because they:
impose no deductibles
An insured is injured on a construction job and cannot continue his line of work. He takes a teaching position at a vocational college, earning $2,000 a month less than his previous salary. Which policy would address his need to restore his level of income to a pre-disability level?
income replacement policy
Which provision is required in a health insurance policy?
incontestability
What type of contract are medical expense insurance policies?
indemnity contracts
Another name for traditional or fee-for-service health insurance is:
indemnity insurance
Jan's health insurance plan pays benefits based on the actual amount of the loss, so she is repaid for some or all of the medical expenses she incurs. What type of health insurance plan does she have?
indemnity plan
Which plan is associated with traditional insurers and reimburses the insured for the cost of covered medical care received?
indemnity plans
Health insurance plans are divided into which two distinct classes?
indemnity plans and managed care plans
Methods that the federal government uses to encourage employer-provided health care coverage do NOT include:
individual retirement accounts (IRAs)
Patty is interested in buying a life insurance policy. Her agent asks if she has any existing policies. She does, and says that she would cancel her current policy if she bought the policy from the agent. What is the agent now obligated to do?
inform Patty of the consequences of replacing the policy
An insured undergoes a major medical procedure that resulted in a large claim on her health insurance policy. Under the proof of loss provision, who is responsible for proving the facts of the claim?
insured
If the parties disagree over the meaning of an insurance contract's terms, courts will usually interpret these terms in favor of the:
insured
Under a fee-for-service major medical policy, the insurer pays the claim to the:
insured
How is a person who is covered by a medical expense insurance plan commonly described?
insured or subscriber
Who is the primary care physician (PCP) in a managed care plan?
insured's physician who controls access to specialists
Which two parties form a contract for life insurance?
insurer and policyowner
Which level of long-term care provides ongoing care that is necessary to address a person's condition but is not needed 24 hours a day?
intermediate care
Which of the following levels of long-term care provides ongoing nursing care for a person's condition but is not needed all day?
intermediate care
An applicant for an insurance policy submits an application without the first premium. By doing so, what has the applicant done?
invited the insurer to make an offer
Eduardo buys an individual long-term care insurance policy and pays $1,500 in premiums this year. He can deduct from taxable income a portion of the premiums he paid only if he:
itemizes his deductions
Eddie bought a Medicare supplement policy five years ago and now suffers from dementia. What can the insurer do in light of Eddie's current health status?
keep the policy in force
Self-funded group health insurance plans are NOT common among:
large companies with many claims
Experience rating for group health insurance is usually applied to which of the following?
large groups
What are insurers legally required to maintain in order to guarantee the payment of insurance claims and benefits?
legal reserves
Which of the following is NOT required in order to operate as an HMO in Florida?
license of certification
Although most insurance policies are personal contracts between the insurer and the policyowner, which type is not a personal contract?
life insurance
The concept of adverse selection refers to:
likelihood of consumers who are in poor health to seek insurance
Which of the following types of health insurance covers specific conditions or provides benefits for specific health services?
limited benefits policies
When determining whether a prospect is an insurable risk for an individual disability income policy, the producer need NOT inquire about the:
location of the prospect's business
Medicare Part A hospital insurance does NOT cover:
long-term care costs
If a person requires more than 100 days of skilled nursing care and wants to preserve family assets, what should he or she probably have:
long-term care insurance
Marty has no surviving family members. He is concerned about how he will pay for custodial or nursing home care if he ever needs it. Which will provide sufficient coverage for this type of care?
long-term care insurance
Which is NOT a type of basic medical expense plan?
long-term care insurance
An insurance policy provides financial protection against:
losses caused by perils
Ed was injured while working at a construction site. He incurred $10,000 in medical expenses, $3,000 for vocational rehabilitation, and $25,000 in lost wages. Which of these costs will be covered by workers' compensation?
lost wages, medical expenses, and vocational rehabilitation expenses
Jana applies for a life insurance policy and submits the initial premium with her application to Acme Insurers. Acme offers her a modified policy at a higher premium. By doing so, Acme Insurers has:
made a counteroffer to Jana
An applicant for a $500,000 whole life insurance policy pays the initial premium when submitting the application. By doing this, the applicant has:
made an offer to the insurer
A primary purpose of long-term care is to:
maintain functionality
Which type of medical expense coverage pays the benefit directly to the insured?
major medical
To overcome the coverage limitations of basic medical expense insurance, the health insurance industry developed which of the following?
major medical insurance
Belinda's health insurance policy offers a $1 million lifetime benefit limit and covers hospital, surgical, and physician expenses. Each year, she pays a $500 deductible before benefits begin and 20 percent of all covered costs. What type of policy is Belinda covered by?
major medical policy
Denise wants a health insurance policy that will cover medical bills in the event of a major illness. Which policy is suitable for this?
major medical policy
Although Medicare Part A covers home health care, it does NOT cover:
managed care
In addition to traditional indemnity policies, group health insurance plans and coverages are available through:
managed care options
HIPAA's regulation of insurers doing business in the small employer market does NOT require them to:
market and sell plans as guaranteed renewable when the employer relocates outside the insurer's service area.
Which document addresses the agreement between the sponsor of a group health insurance plan and the insurer?
master policy
For a misrepresentation to affect the validity of an insurance policy, it must be:
material
What kind of misrepresentation on an insurance application gives the insurer reason to terminate a policy?
material fact
Which expenses do Blue Cross Blue Shield plans cover?
medical and surgical care
Which type of health coverage pays benefits for the cost of medical care, providing coverage that ranges from limited to broad for all kinds of medical care?
medical expense
Which of the following types of health insurance covers the cost of medical care and medical services?
medical expense insurance
Which is NOT a managed care provider?
medical expense plans (MEPs)
Which of the following health insurance plans insures against and covers the cost of care and services given for illness, sickness, accidents, and injuries?
medical expense policies
Although the employer sets the standards for employees' eligibility for group health insurance, the insurer may set the:
minimum participation standards
When asked about the payment of dividends by a prospect, Agent Maloney states that policy dividends are always guaranteed, even though they are not. Which unfair trade practice has the agent committed?
misrepresentation
Which is NOT among the 12 provisions that are required in health insurance policies?
misstatement of age
All of the following health insurance policy provisions are required to be in all health insurance policies, EXCEPT:
misstatement of age or sex
A Medicare SELECT enrollee who wants to use the services of a doctor who is beyond the provider's network will:
not have coverage
Which factor must insurers consider when setting the premium for health insurance policies?
morbidity rates
The amount of the benefit paid under an indemnity policy can never be:
more than the loss or the policy's face amount, whichever is less
The life insurance Buyer's Guide helps prospective buyers determine all of the following EXCEPT:
most qualified insurer
Anya owns an individual health insurance policy. For which reason may the insurer cancel her policy?
moving outside the insurer's network of providers
Which group brings together a number of small, unrelated employers to provide health insurance or employee welfare benefits?
multiple employer trusts
A conditionally renewable health insurance policy is one in which the insurer:
must renew the policy if the insured meets certain conditions necessary for renewal, though premiums may be increased
Which type of insurer is incorporated, owned by its policyholders, but does not have capital stock?
mutual insurer
One of the ways in which a PPO controls its members' medical costs is by:
negotiating fees with contracted physicians
When may an agent change the provisions of a health insurance policy?
never
While reviewing a life insurance policy issued by her home office, Angela notices that the premium is much higher than she quoted her client. The policy also has features that the client did not request. What should Angela do?
not present the policy to the insured until the home office reviews the policy and recalculates the premium
ABC Insurers orders a consumer report on an applicant for an individual health insurance policy. Which of the following must the applicant receive, according to the Fair Credit Reporting Act?
notice that an investigation and report have been requested
What can the insured under a health insurance policy do if it is not possible to notify the insurer of a covered loss within the required number of days?
notify the insurer as soon as reasonably possible
When classifying insurance risks, insurance underwriters most often use the:
numerical rating system
Which type of care are HMOs NOT required to provide?
nursing home care
Which is NOT among basic medical expense insurance?
nursing home insurance
Which of the following is a requirement to operate as an insurance agency in Florida?
obtaining a license or registration from the state
Which benefit is NOT usually a part of a worksite plan?
on-site dental care
When does a waiver of premium rider release the insured from paying the policy's premium?
only when the insured is totally disabled
Marcie is insured under her employer's health plan and wants to get additional benefits. When she asks about the additional coverage, she is told that she must wait until January to access these benefits. What is Marcie waiting for?
open enrollment period
If a doctor sees both HMO members and non-HMO patients, the doctor is in what kind of provider network?
open panel network
Dr. Jack provides services to HMO subscribers along with other nonmember patients. He is not an employee of the HMO and treats subscribers in his own office. Under which type of HMO does Dr. Jack work?
open-panel HMO
An agent's license can be suspended or revoked for all of the following reasons EXCEPT:
paying commissions to a licensed agency
After the insurer receives proof of loss of a claim under a health insurance policy, which provision specifies to whom payment will be made?
payment of claims
Medicare Advantage includes a private fee-for-service (PFFS) plan, which provides for:
payment of traditional Medicare services, plus certain additional services
Employer group health plans are prohibited from offering Medicare-covered employees or spouses coverage under a Medicare supplement plan that:
pays for services covered by Medicare.
Which is not a common source of underwriting information that an insurer uses?
peer references
An insured's major medical expense policy has a deductible under which the insured must pay separate deductibles for each illness and each accident. What type of deductible is this?
per cause deductible
Which characteristic about an insurance policy prevents the policyowner from transferring it to a third party without the insurer's consent?
personal
Which would NOT be included in the agent's report to assist the underwriter in determining whether to accept an insurance application?
personal opinions about the applicant's family
Kendra is covered by a group long-term disability plan. She is injured on the job and receives benefits under that plan. Which source of income will NOT affect her benefits?
personal savings
While completing an application for a health insurance policy, Dan discloses his partial blindness. The insurer will treat this blindness as a:
physical hazard
Medicare Part B covers which kind of expense?
physicians' services
What do medical expense policies rely upon to determine the delivery of medical services and care?
plan or policy
Which allows an HMO member to get medical service outside of the provider network?
point-of-service option
Because they impose no deductibles for health care provided in their network, require only a small co-payment for each doctor visit or health service, and do not involve claims forms, managed care coverage is considered to be:
pre-paid health care
HMOs commonly use which payment with health care providers?
pre-payment
Which type of payment arrangement do HMOs and PPOs typically use?
pre-payment
Which is considered a pre-paid health plan?
preferred provider organization
George applies for an individual disability income policy. He is in good health, does not have risky habits, works in a low-risk job, and has no family history of disability or illness at an early age. George is likely to be classified as a:
preferred risk
What is the consideration that the insured gives in exchange for the insurer's promise to cover losses under an insurance policy?
premium payment
Sal loses his sight in a chemical accident in his garage. His group disability insurance plan pays a monthly benefit but does not require proof of ongoing disability to continue benefit payments. Which policy provision exempts him from supplying this proof?
presumptive disability
Craig lost both of his legs in a car accident. Under what provision will he automatically qualify for his disability income policy's full benefit without having to provide periodic proof of loss in the future?
presumptive total disability
In trying to minimize health care costs, a managed care provider emphasizes:
prevention
In addition to covering care for illness or injury, HMOs emphasize what kind of care?
preventive care
To control health care costs, HMOs stress the importance of what kind of health care among their members?
preventive care
To minimize the risk of more costly care in the future, HMOs encourage members to obtain regular:
preventive care
The amount of benefits that a disabled person can expect to receive from Social Security is based on which of the following?
primary insurance amount at the time the disability occurred
The laws of agency govern the relationship between:
principal and agent
When an insurance company appoints an agent to represent it, who are the parties to the agency relationship?
principal and agent
John's new individual health insurance policy requires 30 days to pass between the policy's effective date and the time when coverage begins. What is this 30-day period called?
probationary period
The period that begins when a disability income policy is issued and during which illness-related disabilities are not covered is the
probationary period
Bob applied for a health insurance policy but did not submit the premium with his application. If the insurer issues the policy as applied for, the producer must then take all of the following actions, EXCEPT:
provide a binding receipt
An employee who suffers a short-term job-related injury may look to his or her employer to do which of the following?
provide coverage through workers' compensation insurance
James and Edwina have a 26-year-old daughter who is mentally handicapped and incapable of self-sustaining employment. To continue their daughter's health insurance coverage after she reaches the limiting age stated in their group policy, what must James and Edwina do?
provide proof of their daughter's incapacity to the insurer within 30 days after she reaches the limiting age
A disability income insurance policy's conditional renewability provision guarantees that the policyowner can renew coverage:
provided certain conditions are met regarding age and occupation
Which aspect of group health insurance is regulated at the federal level?
qualified plans
An agent assures an insurance applicant that she will be insured for a certain amount. If the coverage is denied and the applicant relied on the agent's assurance to her detriment, the insurer could be liable to the applicant on the basis of:
reasonable expectations
To boost her sales at the end of the year, Agent Trudy started offering potential clients a $250 cash gift card in exchange for purchasing a life insurance policy. Which ethical sales practice has Agent Trudy violated?
rebating
A tax-qualified long-term care insurance policy gives certain tax advantages to policyholders, who can deduct premiums as a medical expense and:
receive limited benefits tax free
Which entity spreads the cost of losses among its members by having each member pay a pro-rata share of these losses?
reciprocal insurer
Subrogation refers to what action taken by insurers?
recovery from other insurers, of excess or duplicate benefits paid
Under the 'relation of earnings to insurance' provision in a disability income insurance policy, what will the insurer do if it discovers a disabled insured is also collecting Social Security disability benefits such that the combined total of benefits exceeds to insured's pre-disability income?
reduce policy benefits proportionally and return premiums paid for that excess coverage
Jamie is 37 years old, but her friends insist that she looks younger than her age. She applies for a health insurance policy and on the application states that she is 27 years old. When the insurer discovers the truth, what will it probably do?
reduce the benefits
If Jack takes a new job that is less hazardous than the job he had when he obtained health coverage, what may the insurer do?
reduce the premium
Which of the following must an insurer do under a cancelable health insurance policy?
refund any advance premiums paid before canceling the policy
Which is NOT an optional provision in health insurance policies?
reinstatement
When Vincent began working for his employer, he earned $5,000 each month. His disability income coverage would pay a benefit of 60 percent of his salary, or $3,000 each month. He now works part time for 20 hours per week, and he earns half of his original salary. Which policy provision is likely to affect his disability benefit?
relation of earnings to insurance provision
Which of the following is NOT a level of long-term care?
remedial care
Which of the following provisions defines the insurer's rights to cancel or continue coverage?
renewability provision
Genevieve wants to renew her Florida insurance agent's license. Which of the following is not a condition for renewal?
report of insurance sales made in the last two years
A company pays the annual premium on a key employee disability income policy. When the key executive becomes disabled, the policy pays him an $8,000 monthly benefit. What is the executive required to do?
report the benefit as income
A client's answers on an application for insurance are considered to be:
representations
The statements that an applicant makes in an application for an insurance policy are treated as:
representations
The statements that an applicant makes on an application for insurance are treated as:
representations
Quest Publishing has six employees and applies for a group health plan. What may the insurer do when underwriting the policy?
require the employees to provide evidence of insurability
With the increasing cost of health insurance, what are more employers doing with respect to their group health insurance plans?
requiring their employees to contribute to the plan, typically through payroll deductions
Emily postpones buying a life insurance policy, believing that her family will use its savings to pay her final expenses if she dies prematurely. Which method is she using to deal with risk?
retention
What practice do insurance underwriters use to evaluate the risk that a proposed insured presents?
risk selection
What must employer group plans offer enrollees who are over 65 years old?
same coverage offered to younger employees
Adam is a Medicare beneficiary who is also eligible for his state's Medicaid program. In terms of his primary and secondary coverage, Medicaid will be considered Adam's:
secondary insurer, with Medicare as his primary insurer
Gracie has a Medicare Advantage policy and needs emergency care while traveling. However, there are no network providers nearby. What should she do?
see any suitable provider even if outside the network
Medical savings accounts (MSAs) were specifically created for:
self-employed people and employees of small employers
A third-party administrator (TPA) is associated with what type of health care plan?
self-insured
Johnson Industries funds its workers' compensation program. It will use these funds to pay employee's claims. What type of insurer is Johnson Industries?
self-insurer
The federal Risk Retention Act of 1986 applies to which businesses?
self-insuring businesses
Which of the following transactions requires an insurance producer to have more than one insurance license?
selling variable life insurance
HMOs operate within geographic areas that are called:
service areas
How long is the entire initial enrollment period (IEP) under Medicare?
seven months
Dorothy, who just turned 65, is not yet receiving Social Security retirement benefits, but can enroll voluntarily in Medicare. How long is her enrollment period?
seven months, ending three months after her 65th birthday
An insured may require professional medical or nursing assistance at any time. What level of long-term care might be appropriate for this person?
skilled nursing care
Which level of long-term care is almost always delivered in a nursing home?
skilled nursing care
Which level of long-term care provides continuous, 24-hour care delivered by licensed medical professionals, under the direct supervision of a doctor or physician?
skilled nursing care
When selling individual life insurance, Mary tells prospects that Florida law requires them to purchase a long-term care rider, even though this is not true. Which unfair trade practice has Mary committed?
sliding
Which type of health policy offers coverage for treatment of a specified disease or condition, such as heart disease or cancer?
specified
Which type of medical expense coverage may be limited to a particular form of care?
specified
Major medical policies do NOT have which of these characteristic?
specified coverage
What kind of policy only covers cancer, stroke, heart attack, and Parkinson's disease?
specified disease policy
When an applicant must reduce assets to qualify for Medicaid, the process of depleting the assets is known as:
spending down
Congress amended the Medicaid spend-down rules to eliminate:
spousal impoverishment
Which entity does NOT determine the size of a group health insurance plan?
state's attorney general
Which type of insurance company pays dividends to its stockholders?
stock company
Brian incurs $50,000 of covered medical expenses. After paying the deductible, he owes $9,800 under the policy's coinsurance provision. However, the amount of out-of-pocket expenses he is responsible for is limited to $5,000. Which policy provision provided this protection?
stop-loss feature
Master Manufacturers self-insures its health benefits but wants to protect itself from unexpectedly large claims. What type of policy should Master buy?
stop-loss policy
Which of the following features of major medical policies protects the insured by limiting the out-of-pocket dollar amount the insured must pay?
stop-loss provision
Tammy is covered by her employer's group health plan and her husband's employer's plan. She incurs $6,000 in medical costs and submits a claim to her group plan, which pays $4,000 in benefits. What can Tammy do to pay the remaining $2,000?
submit a claim for $2,000 to her husband's group plan
Becky was injured in an auto accident. Her insurance company covered her claims and then tried to recover its payments from the other driver's insurance company. Her insurer's right to do this known as:
subrogation
An enrollee in a managed care plan is referred to as the:
subscriber or participant
Jim applied for a health insurance policy, which was issued with a waiver excluding any loss associated with cardiac illness. From a risk perspective, how has Jim been classified?
substandard
Which of the following correctly describes a comparison between a supplemental major medical policy and a comprehensive major medical policy?
supplemental policies generally have a higher deductible than comprehensive policies
Over time, basic physician expense coverage has been expanded to provide coverage for all of the following, EXCEPT:
surgeon fees
What two types of long-term care insurance policies resulted from the Health Insurance Portability and Accountability Act?
tax qualified and non-tax qualified
For tax purposes, long-term care insurance policies are either:
tax qualified or non-tax qualified
Funds in a health savings account that are withdrawn but not used for qualified medical expenses are:
taxed as income
Which of the following activities does not violate the insurance code?
telling clients that an agent holds a chartered financial consultant (ChFC) designation
A cancellable, nonrenewable health insurance policy that provides coverage for a specified short-term period only is called a:
term health insurance policy
What does the insurer guarantee in health insurance policies that are guaranteed renewable?
that during the guaranteed renewable period, it will not cancel the policy and will increase premiums only on all policies of the same class
Changes to a disability income insurance policy's benefits under the cost-of-living adjustment (COLA) rider are typically based on:
the Consumer Price Index
The 12 mandatory provisions included in health insurance policies originated with:
the NAIC
Under an income replacement disability insurance policy, the monthly benefit is equal to:
the actual amount of lost income
Which does a basic physician expense policy specify?
the maximum benefit per visit, and a maximum number of visits per injury or illness
An agent's apparent authority is defined by:
the customer's perceptions
Petra is self-employed and pays premiums each year for medical, dental, long-term care, and disability income insurance. She can fully deduct the premiums paid for all of the following policies EXCEPT:
the disability income policy
Standard Coal Company has 325 employees and applies for a group health insurance plan. When underwriting the plan, the insurer will examine the risk characteristics of
the group as a whole
The time limit on certain defenses provision in a health insurance policy is largely the same as which provision in life insurance?
the incontestable clause
According to a health insurance policy's entire contract provision, which of the following would not be considered part of the contract?
the insurance company's sales agreement with its agents
Benefits under a long-term care policy can be triggered by all of the following, EXCEPT:
the insured becoming hospitalized
A guaranteed insurability rider guarantees an individual disability income policyowner's right to buy additional coverage even if:
the insured cannot provide satisfactory evidence of insurability
In which of the following instances is a disability income insurance policy's 'other insurance with other insurers' provision likely to come into play?
the insured has coverage from a state's workers' compensation program
In health insurance policies with a guaranteed renewability provision, the policy is typically guaranteed renewable until:
the insured reaches age 65.
Beth's insurer asks her to take a physical examination before it will issue her a health insurance plan. Who pays for the exam?
the insurer
Which of the following provisions defines the period during which the insured can take legal action against the insurer because it denied a claim?
the legal actions provision
Medical expense insurance is categorized as either fee-for-service or pre-paid, which differentiates them by:
the manner of payment for health-care services
Which of the following optional provisions addresses the situation in which an insured provides the wrong age on the application for insurance?
the misstatement of age provision
Which of the following provisions requires the insured to notify the insurer within a certain number of days after he or she has a covered loss?
the notice of claim provision
Which is a required provision in a health insurance policy?
the order in which a policy will pay benefits if coverage exists from other sources
Which of the following optional provisions limits the total coverage that the insurer will permit a disability income insurance policyowner to have with that insurer?
the other insurance in this insurer provision
Which of the following optional provisions addresses a situation in which a disability income insurance policyowner has coverage for the same risk with another insurer but has not notified this insurer of this other coverage?
the other insurance with other insurer provision
With respect to penalties and fines for noncompliance with the coverage requirements of the Patient Protection and Affordable Care Act, all of the following statements are correct EXCEPT:
the penalty for noncoverage is the same for adults and children
Which of the following provisions allows the insurer to require the insured to take a physical exam during the claims investigation process?
the physical examination and autopsy provision
When children are covered by the health plans of two employed parents, which plan will provide primary coverage?
the plan of the parent whose birthday occurs first in the year
Mary is covered under a medical insurance plan sponsored by her employer and also under a medical insurance plan sponsored by her husband's employer. In this case, what is Mary's employer's plan considered?
the primary plan
Each application for health insurance requires the signature of which party?
the proposed insured, the producer, and all adults to be covered by the policy
Which of the following optional health insurance policy provisions applies specifically to disability income insurance policies?
the relation of earnings to insurance provision
In addition to defining the insurer's rights to cancel coverage, what else do renewability provisions define?
the right of policyowners to continue the policy's coverage beyond the current coverage period
Ben is covered by his employer's group health insurance plan and is also eligible for Medicare benefits. In Ben's case, what is Medicare considered?
the secondary payor
Under both the benefit schedule and the usual and customary payment approach, what is the amount a policy pays based on?
the stipulated amount or the actual amount charged for the care or service, whichever is lower
Which of the following health insurance policy provisions requires the insurer to pay claims immediately after receiving proper proof of loss?
the time payment of claims provision
The other insurance in this insurer provision in a health insurance policy limits:
the total coverage the insurer provides to a particular insured
Which of the following optional health insurance policy provisions addresses premiums that the insured owes at the time of a claim?
the unpaid premium provision
The fee schedules that were once used to determine appropriate costs of medical care and services have been replaced by:
the usual, customary, and reasonable fee standard
John owns a life insurance policy. The policy insures Mary, his wife. This is possible through what kind of policy ownership?
third-party
Into how many classes do many dental plans group their covered treatment and benefits?
three
What is the purpose of a disability reducing term insurance policy?
to cover any outstanding loans a business might have if the business owner becomes disabled
Why does an insurance company issue a conditional receipt to a new policyowner?
to cover the proposed insured before the policy is issued
Which of the following best describes the purpose for the laws of agency?
to govern the authority granted agents to represent insurers
Why would a business self-insure instead of buying an insurance policy?
to insure against frequent low-severity losses
Which of the following is not a duty that an agent owes to an insurance applicant?
to offer a rebate on the premium
Which of the following is not a requirement for an insurance agent?
to request referrals from a client
What is the purpose of the legal actions provision in a health insurance policy?
to specify the period in which the insured can take legal action against the insurer
What is the reason for requiring a minimum group size when underwriting group health insurance?
to spread the risk and the administrative costs over many participants
Best Insurance Company issues health insurance policies that reimburse insureds for expenses instead of offering medical services through a provider network. What type of plan does Best Insurance sell?
traditional indemnity
Any provider coverage without regard to a network of providers is typical of what type of plan?
traditional indemnity policy
Allison has a medical plan that allows her to choose any provider she wishes. She most likely is insured under which of the following?
traditional medical expense plan
An insured's medical expense plan requires him to get medical care from certain providers if the cost of the care is to be covered. What type of insurance does the insured NOT have?
traditional medical expense plan
Frank compares the Medicare supplement policy he offers with one that his customer owns from a competitor. Frank convinces the customer that the competitor's policy will not pay benefits as stated in the contract and offers to sell the customer a new policy. Frank is engaging in:
twisting
When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. What has Melanie engaged in?
twisting
Which can qualify for group health insurance in the small employer market?
two or more persons
What are common benefits periods in a long-term care insurance policy?
two to six years
Harold has a short-term disability income policy. If he is disabled, benefits will typically be payable for no more than:
two years
Benefit periods for short-term disability income policies are typically limited to:
two years or less
Which of the following is NOT a characteristic of an HMO?
typically providing more health-care services than major medical plans
Transacting insurance includes all of the following EXCEPT:
underwriting insurance contracts
Which of the following is a characteristic not usually found outside the context of insurance contracts?
unilateral
Which is NOT a common health insurance rider? a. automatic increase option b. benefit integration c. transplant coverage d. unlimited coverage
unlimited coverage
Basic hospital, surgical, and physician policies offer insureds all of the following benefits, EXCEPT:
unlimited coverage and no ceiling on the amounts that the insurer will pay
For those who are not disabled, the Medicare Part A enrollment period is:
up to three months before or up to three months after the month they turn age 65
A major medical policy with an 80/20 coinsurance clause pays 80 percent of medical expenses until the stop/loss or maximum out-of-pocket limit is reached. Then the policy pays costs based on the:
usual and customary charge
Part B of the Medicare program provides additional benefits beyond hospitalization with the exception of:
vaccinations and routine eye care and eyeglasses
An accidental death and dismemberment policy will pay $10,000 for the loss of one arm and $30,000 for the loss of one eye. On which basis is the policy written?
valued
An accidental death and dismemberment (AD&D) insurance policy is an example of a(n):
valued contract
Danielle owns a limited benefit health insurance policy that pays $2,500 if she incurs a specified disease. This is an example of a:
valued contract
With respect to the Patient Protection and Affordable Care Act (ACA), essential health benefits (EHBs) are best described as:
various medical services that must be covered without restriction in all ACA-compliant health plans
The term used to describe the voluntarily surrender of a known right is:
waiver
In which case is the amount payable for a covered service based on the amount that is typical for the area in which the service is performed?
when coverage is paid on a usual and customary or usual, customary, and reasonable (UCR) basis
When does a health insurer have the right to have an autopsy performed on the deceased insured?
when it is not prohibited by law
When must a producer deliver an outline of coverage for Medicare supplement policies?
when taking the application
When does an insurance policy take effect?
when the first premium is paid
Which of the following correctly describes when a person becomes eligible for hospice care under Medicare Part A?
when the person has been certified by a doctor as terminally ill (with a life expectancy of six months or less)
If a Health Savings Account (HSA) account holder takes money out of the fund but does not use it to cover medical costs, the withdrawal:
will be subject to ordinary income taxes and a possible 20 percent penalty tax
A health insurer provides a 10-day grace period in all of its policies. However, one state in which the insurer sells policies requires a 30 day grace period. The Conformity with State Statute provision means that the insurer:
will change the grace period in that state to 30 days, but maintain a 10-day grace period in all other states
Sandra has a Section 125 cafeteria plan. To pay for her benefits, the employer will:
withhold part of her pre-tax salary
The typical disability income insurance policy excludes coverage for losses related to a pre-existing condition that arises:
within 12 to 24 months after policy issue
James is a licensed agent who lives in Florida. He moves to Georgia. When must he notify the Department of Financial Services of his move?
within 30 days
Which group would present the greatest risk to an underwriter of a group health insurance policy?
yachtsmen
Dental insurance typically does NOT cover what kind of treatment?
cosmetic treatment
Insurers have responded to the rising costs of health care with what control measures?
cost containment
Which is characteristic of basic hospital, surgical, and physician policies?
first-dollar coverage
Insurers must keep records of their insurance transactions for how many years after the transaction was completed?
five
What are the responsibilities of the Office of Insurance Regulation and the Department of Financial Services?
issuing rules and regulations to administer the insurance laws
John's health insurance policy is reinstated on the tenth of the month. He gets sick on the eighteenth and is treated. The policy has a $1,000 deductible and 80/20 coinsurance on the next $5,000 of expenses. His expenses total $9,500. How much, if anything, will the policy pay for his expenses?
$0
A small business owner wants to join other small employers so they can shop for affordable group health coverage for their employees. He can do this through:
a multiple employer trust (MET)
In a conditionally renewable health insurance policy, the insurer can:
cancel the policy if the insured does not meet certain conditions not associated with the insured's health, and increase premiums
An insured reports a claim for a covered loss more than three weeks after the loss occurred. What should the agent do when reporting the claim to the insurer?
Determine the reason for the delay and report it to the insurer.
Alicia wants to buy a disability income policy that will provide her with a $1,000 monthly benefit. If she chooses a 30-day elimination period instead of a 90-day elimination period, what impact will this have on the premium?
Her annual premium will be higher.
Dee is insured under her employer-sponsored health plan. Which is a characteristic of this plan?
Her cost for coverage is less than what she would pay for an individual policy.
Which of the following statements about the purpose of Medicare supplement insurance is correct?
Medicare supplement insurance is designed to cover what Medicare doesn't cover.
A cancellable health insurance policy gives the insurer the right to do which of the following?
cancel the policy or increase the premium at any time by giving written notice
In addition to charges for a hospital room, hospital expense policies cover miscellaneous hospital charges up to an amount that is generally defined as:
a multiple of the daily room and board rate (such as 20 times the daily benefit for hospital room and board), or as a maximum dollar amount.
INC Corp. owns and pays the premiums on disability buy-out insurance policies covering the lives of its three owners. When one owner became permanently disabled, INC received the policy's proceeds and bought out the disabled owner's interest. What are the tax consequences?
The benefits are tax-free.
A health insurance policy that includes a cancellation provision allows the insurer to:
cancel the policy with as little as 10 days' notice, but only for nonpayment of premium
Which statement about apparent authority is correct?
The insurer is responsible for an agent's conduct while acting with apparent authority.
Under federal law, eligible persons who apply for a Medicare supplement policy:
cannot be denied coverage based on health status
Under a disability income insurance policy's 'other insurance with other insurer' provision, what must be done with any premiums paid by the policyowner for benefits that are not paid because they exceed the excess coverage limit?
The insurer must return them to the policyowner.
Tim applies for a life insurance policy. His agent gives him a receipt conditioned on Tim's passing a physical exam to meet underwriting standards. Tim passes the physical exam but dies before the policy is issued. Which of the following is correct?
The policy will pay the death benefit.
Tom is a career agent of ABC Insurance Company. He sells insurance products only for ABC. Tom is a:
captive agent
An HMO that does not provide services or coverage outside its network is:
a closed-panel plan
Which would NOT be relevant information for the purpose of underwriting a health insurance policy?
a copy of the applicant's high school diploma
Which is a non-admitted insurance company?
a domestic insurer without a certificate of authority
When holding insurance premiums and other funds, agents must act in a what role?
a fiduciary capacity
From an income tax deduction perspective, what are the premiums that a policyowner pays for individually owned medical expense insurance considered?
a medical expense
Disability income policies usually cover losses arising from:
accidental injuries
Mandy loses her job. She was covered by her employer's group health plan and wants to convert the coverage to an individual policy. What must she do?
apply for a conversion policy and pay the premium
Which of the following basic medical expense plans provides coverage for routine doctor visits?
basic physician expense policy
Regardless of unique differences, every state's workers' compensation program offers all of the following, EXCEPT:
benefits that are payable even if an injured worker sues for additional compensation
A person eligible for Medicare Part A or Part B who misses the initial enrollment period (IEP) can enroll during an annual enrollment period (AEP) that occurs:
between January 1 and March 31 each year
Groups whose members are not static but constantly changing, such as vacation cruise lines or commercial bus companies, are called:
blanket customer groups
Group long-term disability plans generally provide coverage for which of the following disabilities?
both non-occupational and occupational disabilities
Dave owns a small business. He wants disability coverage that would pay routine business expenses if he is unable to work. What kind of insurance would suit this need?
business overhead expense insurance
Don is a small business owner. Which of the following types of business health insurance would serve his needs if he wants coverage that will pay the bills if he becomes disabled and unable to work?
business overhead expense insurance
Which kind of insurance covers a business owner for overhead expenses resulting from the owner's disability?
business overhead expense insurance
Which of the following types of insurance covers a business' expenses if the business owner becomes disabled?
business overhead expense insurance
Workers' compensation plans offer all of the following benefits to covered workers EXCEPT:
business overhead expenses
Delta Inc. pays the premiums on a disability buy-out policy, a business overhead policy, and a key person disability policy. For which policies can it take an income tax deduction for the premiums it pays?
business overhead policy only
HIPAA imposes requirements on the way health insurers conduct business in the small employer market. How is the small employer market typically defined?
businesses employing 2 to 50 employees
Salvador takes an application for life insurance with the first premium. When the policy is ready for delivery, he personally delivers it to his insured. The next day, the insured decides she cannot afford it and rejects the policy. What should Salvador do?
cancel the policy and refund the premium because the policy is still in the free-look period
A health insurance policy's optionally renewable provision lets the insurer do all the following EXCEPT:
cancel the policy any time if the insured becomes uninsurable
A cancelable health insurance policy allows the insurer to do what?
cancel the policy at any time by providing written notice
Marge buys a Medicare supplement policy. Three weeks later, she remembers that she has another Medicare supplement policy from an earlier purchase. What can she do?
cancel the policy because it is still in the free-look period
An insurable risk is not:
catastrophic
ABC Insurance Company wants to become licensed in Florida to sell insurance products. Which of the following must it receive in order to transact insurance?
certificate of authority
Which indicates that an insured is a participant in a group health insurance plan?
certificate of coverage
What must an insurer give to its group policyholders for delivery to each insured person, as proof that the person is insured?
certificates of coverage
What is not required to obtain an insurance producer's license?
character assessment
When underwriting a group health insurance contract, a community rating considers the:
characteristics of the region in which the group operates
Which of the following may be eligible for Medicaid assistance?
children in families earning less than the federal poverty level
Under an indemnity plan, the insured is free to:
choose doctors and health-care providers
A major medical policy states that after the $500 deductible, the insured will pay 20 percent of the next $10,000 of medical expenses. The 20 percent represents the:
coinsurance payment
Which type of Medicare supplement marketing method fails to disclose that the purpose of the contact is the solicitation of insurance?
cold lead advertising
Dental insurance does NOT cover:
cosmetic treatment
Which medical plan covers doctor visits while the insured is in the hospital and physical therapy treatments following release from the hospital?
comprehensive major medical insurance
Bill's health policy provides coverage for routine doctor visits, hospital expenses, surgical care, and medical treatment. Which of the following types of plans does Bill have?
comprehensive plan
The act of deliberately withholding material facts when applying for insurance is called:
concealment
HIPAA does NOT require an employer-sponsored health insurance plan to offer:
continuation of coverage after loss of job
COBRA provides for which of these after a person loses group health coverage?
continuation of insurance coverage through an individual policy
A company offers a group health plan for its employees and pays 90 percent of the premium. The employees pay the balance. What type of group health plan does this employer offer?
contributory
In HMOs, primary care providers (PCPs) are called "gatekeepers" because they:
control member access to specialists
Brooke is covered by her company's group health plan. One of the plan's provisions specifies that if she is eligible for benefits under another policy, her group plan will be the primary plan. What is this provision called?
coordination of benefits provision
Frank is insured by his employer's group health plan, as well as by his wife's health plan. Which provision prevents him from receiving duplicate benefits from both plans?
coordination of benefits provision
An insured has a basic hospital plan with a supplementary major medical plan. She is hospitalized and incurs $10,000 in expenses, which are covered by her two plans. Her basic policy covers 100 percent of the first $3,000 of her costs. The supplementary plan has a $500 deductible. The basis for her supplementary plan benefit payments is $6,500. Which type of deductible does the basic hospital plan have?
corridor deductible
Michael's supplementary major medical policy has a $750 deductible that is payable after the basic medical plan pays its benefits but before the major medical plan pays any benefits. This describes what type of deductible?
corridor deductible
The medical expense deduction applies to qualified medical expenses as the IRS defines them. Which of the following is NOT a qualified medical expense?
cosmetic surgery
Which service is NOT covered by Medicaid?
cosmetic surgery
Which of the following cannot be excluded from coverage under an individual accident and health insurance policy?
cosmetic surgery to repair the insured's face that was scarred by fire
Comprehensive major medical plans provide a broad range of coverage. They most likely cover all of the following, EXCEPT:
cosmetic surgery, experimental procedures or treatment, and alcohol and drug abuse treatment
Statewide Insurers maintains its home office in Tampa, where it was incorporated. In Florida, Statewide Insurers is considered a:
domestic insurer
Which of the following terms categorize insurers by their location or domicile?
domestic, foreign, and alien
Manny lost both legs in a motorcycle accident. His health insurance policy paid double the normal benefits due to the accident. Which type of rider does Manny's policy contain?
double indemnity rider
Harvey's health insurance policy covers only treatment for cancer. What type of insurance policy does he have?
dread disease policy
Although HMOs provide additional benefits not covered by traditional medical expense plans, they do NOT cover:
dread diseases
Which is NOT considered an activity of daily living (ADL) for purposes of qualifying for long-term care insurance benefits?
driving
With respect to long-term care insurance, all the following are recognized as activities of daily living (ADLs) EXCEPT
driving a car
When underwriting an individual disability income policy, an insurer will NOT typically consider:
education level
Protection from damages resulting from a lawsuit brought by an insurance customer against an insurance producer for breach of fiduciary duties would be covered under what kind of policy?
errors and omissions insurance
A medical expense insurance policy that reimburses insureds for the medical services they pay for is called a:
fee-for-service plan
Adam is an independent agent and solicits policies for several insurers. What kind of relationship does he have with each insurer?
fiduciary
Which describes the type of relationship based on trust that exists between the insurer and its appointed agent?
fiduciary
Rob presents an individual health insurance policy to a prospective insured and collects data to help his insurance company decide whether to accept the risk. What role is Rob performing?
field underwriting
Acme Insurance Company wants to employ Anthony as an agent. To do so, what must Acme must do?
file an appointment application with the Department of Financial Services
Which is NOT a method that managed care systems use to control costs?
financial incentives to providers for limiting care
A principal factor that determines eligibility for Medicaid is:
financial need
All Medicare supplement policies cover:
first three pints of blood
A person must be totally disabled to qualify for Social Security disability benefits. In addition, a person must satisfy a waiting period of how long before benefits are paid?
five months
The Office of Insurance Regulation can examine the business transactions, accounts, and records of domestic insurers as often as necessary, but must do so at least once every how many years?
five years
The Health Insurance Portability and Accountability Act applies to which type of health plans?
group health plans that cover two or more people
Which group plan does the Health Insurance Portability and Accountability Act (HIPAA) regulate?
group insurance plans that cover two or more people
Gene is injured while on vacation. His employer's group disability plan pays benefits for over two years but reduces the amount paid by the benefits he receives under an individual disability policy. What kind of group coverage does Gene have?
group long-term disability plan
Jim is a skilled laborer with a stable job. In recent years he has experienced health complications resulting from a chronic illness. He would most easily qualify for what type of disability income policy?
group plan
An employer plan with a maximum benefit period of 18 months would most likely be which type of insurance?
group short-term disability plan
Lindsey can afford disability income coverage equal to 40% of her gross earnings. She wants to later increase the coverage to the maximum 60% permitted by the insurer, but worries that she might not be insurable in the future. Which rider should she buy?
guaranteed insurability
HIPAA guarantees that insurers that sell individual health insurance plans must offer them to eligible people who have lost group coverage, regardless of their health, under a requirement known as:
guaranteed issue
A health insurance policy states that the insurer can increase premium rates by class of insureds and can only cancel the policy if the insured fails to pay the premium. What type of policy is this?
guaranteed renewable
An insurer guarantees that its policy will be renewed up to age 65, though it reserves the right to change the premium for a particular class of insureds. What kind of renewability provision is this?
guaranteed renewable
ERISA protects enrollees in an employer-sponsored health care plan in each of these ways EXCEPT:
guaranteeing immediate processing of claims
Long-term care (LTC) insurance does NOT cover which type of services?
health services for the poor
Which is not among an agent's responsibilities to an applicant?
helping write an applicant's insurance policy
A supplemental major medical plan supplements a basic plan. A comprehensive major medical plan replaces a basic and a supplemental plan. Benefits under a comprehensive major medical plan are typically:
high
A health savings account (HSA) usually requires the insured to make which kind of payment combination?
high deductible, low premium
Jake has a consumer-driven health plan. What will the plan include to pay for expenses beyond the deductible?
high-deductible health plan
Which type of health insurance policy must the sponsor of a group health plan establish before it can offer a health savings account to its employees?
high-deductible health plan
Mary is terminally ill with a life expectancy of less than six months. Medicare Part A will cover which type of care?
hospice care
Long-term care (LTC) insurance policies generally cover all the following levels of care EXCEPT:
hospital care
Which of the following is NOT a type of care covered by long-term care (LTC) insurance?
hospital care
Roy's health insurance policy pays him a fixed sum for each day he is hospitalized. What type of insurance policy does he have?
hospital indemnity policy
Greg's basic hospital plan pays for hospital room and board for up to 30 days with a maximum benefit of $3,000. If he also had a supplementary major medical policy, what would the supplementary plan cover?
hospital room and board beginning on the 31st day and costs above $3,000
Janelle has a history of back problems. When she applies for a health insurance policy, the insurer issues a policy that does not cover loss or disability resulting from any spinal injury or disorder. Which kind of rider does the policy have?
impairment rider
An agent acting on behalf of an insurance company even though these acts are not specified in the agent's contract with the company but are necessary to carry out the company's express authority, exercises what kind of authority?
implied
If Tim wants to avoid paying taxes on the interest earned on his AD&D benefits, how should he receive the benefits?
in a lump sum
Which of the following does NOT trigger benefits under a long-term care policy?
inability to live independently
Which is a common benefit trigger in a long-term care insurance policy?
inability to perform activities of daily living
How do most disability income policies define partial disability?
inability to perform some usual work duties
Enrollees in a group health plan must be given a summary plan description in accordance with ERISA's requirements for:
information disclosure
In an insurance transaction, what does the applicant give to the insurer as consideration in exchange for the insurer's promise to cover the risk?
initial premium
Erica spends two days in the hospital following surgery. When she receives her benefit statement from Medicare, she learns that Part B will NOT cover her:
inpatient prescription drugs and meals
While meeting with her insurance customer, Ben, Ann sees that he is chain smoking. Yet he notes on his application that he is a nonsmoker. What should Ann do at this point in the application process?
insist that Ben be truthful and avoid misrepresentation
Which party makes the only enforceable promise in an insurance contract?
insurance company
An employer establishes flexible spending accounts for its employees. Which expenses will the accounts NOT cover?
insurance policy premiums
A primary appeal of a health savings account (HSA) is that it:
is a tax-favored account for which deposits are not taxed
ABC Insurers determined through the underwriting process that an applicant is more likely to file a future disability insurance claim than other applicants. What will ABC NOT do as a result?
issue the policy at a standard rate
ABC Company operates as a viatical settlement provider in Florida. For which of the following reasons can the Office of Insurance Regulation suspend or revoke ABC's license?
issuing viatical settlement contracts that were approved in Texas but not Florida
Felix buys an insurance policy that will pay benefits if he needs long-term care and also protects some assets from the spend-down requirement if he applies for Medicaid assistance. Which type of policy does Felix own?
long-term care partnership policy
Which health-care delivery plan shares the cost of the service and treatment with the provider?
managed care plan
The need to control increasing health-care costs led to the development of:
managed care plans
Which of the following are covered by Medicare Part C?
managed care plans, preferred provider organizations, and private fee-for-service plans
What was the forerunner to the health savings account (HSA)?
medical savings account (MSA)
A person who is insured under a managed care plan is considered a:
member
In-network HMO coverage requires what kind of deductible?
no annual deductible
What rights, if any, does an insured person have in a policy when another person owns the policy?
no rights
Group short-term disability income plans generally cover:
non-occupational disabilities only
Chloe has a health reimbursement account. She pays $1,000 for unreimbursed prescription drugs, $2,000 in premiums for a long-term care policy, $500 for eye glasses, and $100 for non-prescribed vitamins and herbal remedies. She cannot use her health reimbursement account (HRA) to pay for which expense?
non-prescribed vitamins and herbal remedies
Under which of the following type(s) of long-term care (LTC) insurance plans can 'medical necessity' be a benefit trigger?
non-tax-qualified LTC plans only
Theodore's health insurance policy states that the insurer cannot change the policy or cancel it unless he stops paying premiums. What kind of policy does Theodore have?
noncancelable
Which of the following policies puts the insurer at the greatest risk?
noncancelable
Laura was injured and incurred $1,000 in medical bills. Even though she was not disabled and did not lose any income, her disability income policy paid for these expenses. What provision does her policy have?
nondisabling injury provision
The Health Insurance Portability and Accountability Act (HIPAA) permits insurers to terminate group health coverage for which reason?
nonpayment of premiums
All of the following are standard health insurance renewability provisions EXCEPT:
nonrenewable
If a claim is filed because the insured died and the insurer has doubts about the cause, what can the insurer do?
order an autopsy to determine the cause of death
Brian is a certified public accountant and wants to buy a disability income insurance policy to provide income for his family in case he becomes disabled. Which definition of total disability will the insurer likely use in the policy?
own occupation
From an insured's perspective, which of the following is the preferred definition of total disability?
own occupation
From an insured's point of view, which definition of total disability is more advantageous?
own occupation
A prospective insured gives an agent a completed life insurance application with the first premium payment. What must the agent now give the applicant?
premium receipt
Which of the following provides enrollees with access to limited health-care services through an exclusive panel of providers?
prepaid limited health service organization (PLHSO)
Andrew has a dental policy with his group medical plan. The dental plan pays a monthly fixed amount to the dental care provider. What type of plan is this?
prepaid plan
What is the period of time that must pass before benefit payments begin under a newly-issued disability income policy?
probationary period
Which is not a means of regulating the insurance business?
producer peer review
Insurance agents are often called:
producers
A producer discovers that a client has Medicare Parts A and B and also owns Medicare supplement Plan A. The client wants more health insurance protection, so the producer recommends the purchase of another Medicare supplement policy. The producer's actions are:
prohibited
The sale of a Medicare supplement policy that results in the insured having coverage already provided under Medicare is:
prohibited in all cases
Which of the following health insurance policy provisions requires that insurers must receive written proof of loss within a certain number of days of the loss?
proof of loss provision
Before an insured is admitted to the hospital, what kind of utilization review may the insurer conduct to determine the appropriateness of the medical care?
prospective review
The Commissioner of the Office of Insurance Regulation issued an order prohibiting Agent Theo from describing himself as a financial planner and senior insurance expert in his advertising materials. Agent Theo continues to use the marketing materials, despite the order. Which penalty may the Commissioner NOT impose?
restitution
Health insurance policies are designed to indemnify, which means their goal is to:
return the insured to the financial position he or she was in before a covered loss
Jennifer purchases an individual health insurance policy on June 1. One week later, she loses her job and decides she can no longer afford the policy. What are her options?
returning the policy for a full refund of premiums
Which of the following health insurance policy provisions states that the insurer must provide claim forms to the insured within a certain number of days of receiving a notice of claim?
the claim forms provision
Information that is commonly asked on a health insurance application include all of the following EXCEPT:
the applicant's opinion regarding the risk of disability or illness occurring
All the following are factors an underwriter may consider when underwriting an individual disability income policy application EXCEPT:
the applicant's religion
According to the laws of agency, an insurance agent appointed by an insurance company acts on behalf of:
the appointing insurer
To which of the following are benefits paid under a key person disability income policy?
the business that purchased the policy
Which of the following provisions applies to cases in which the health insurance policy provides a death benefit and a beneficiary has been designated?
the change of beneficiary provision
Which of the following optional provisions either allows the insurer to reduce benefits or requires the insurer to reduce the premium rate under certain conditions?
the change of occupation provision
In modern disability income insurance policies with a noncancelable renewability provision, the policy is noncancelable until:
the insured's Social Security full retirement age
Which of the following types of health insurance is the traditional form of health-care coverage based on a written policy contract?
traditional medical expense policies
Individual and group health insurance policies must provide coverage for all of the following EXCEPT:
treatment for alcoholism and drug addiction
Your client's basic health insurance policy will pay a $10,000 benefit if he were to die in an accident. At the client's death, the policy instead pays a $30,000 benefit. Which type of rider did the policy include?
triple indemnity rider
Acme Insurance and Apogee Insurance agree to offer different premium rates for persons of equal risk within a particular class. They also agree to limit benefits paid to insureds within this class if the insureds live in certain towns in Florida. What are Acme and Apogee engaging in?
unfair and prohibited business practices
Sandy and Cindy are healthy, 45 years old, and have similar life expectancies. Though they are insured by the same company, Sandy's life insurance premiums are considerably lower than Cindy's. What may this indicate a case of?
unfair discrimination
A health plan that provides specific coverage is NOT likely to cover:
visits to doctors' offices
When Cooper was completing his application for an individual health insurance policy, he intentionally omitted information concerning his history of skin cancer. What will the insurer do when it discovers this omission one year later?
void the policy or exclude losses related to skin cancer
Bill believes he has a cause of action against his health insurer for its refusal to pay benefits on a claim. He filed written proof of loss on April 1. Not having received a response by May 1, he decides to take legal action. His attorney will probably advise him to do what?
wait
Jane asks her insurance agent to stop notifying her when her policy is due for renewal, and to notify her attorney instead. What has Jane done by giving up this right to get this notice?
waived a right
Which is not one of the 12 provisions that are required in all health insurance policies?
waiver of premium provision
Which is not necessary to create a legal contract?
warranty
