Health Underwriting

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax? $20,000 $14,000 $6,000 $0

$0 - benefit income is not federally taxable

When an insurance application is taken by a producer, which of these statements is true? The applicant should have an attorney present during the application process Any changes made on the application require the applicant's initials Any changes made on the application can later be initialed by the producer if the applicant is unavailable The producer has the discretion to ask or not to ask any of the questions listed on the application

any changes made on the application require the applicant's initials

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n) delayed effective date exclusion for the medical condition extended Contestable period Concealment clause

exclusion for the medical condition

An insurance company may NOT reject a prospective insured's insurance application on the basis of which of the following factors? Hobbies Weight Gender Medical history

gender

Which of these do NOT constitute policy delivery? Policy mailed to applicant Policy mailed to producer Policy delivered to the applicant by the producer Policy issued with a rating

policy issued with a rating

All of these are considered sources of underwriting information about an applicant EXCEPT Inspection Report Credit Report Rating Services Medical Information Bureau

rating services

Which of the following BEST describes how pre-admission certifications are used? Used to assist in underwriting Used to prevent nonessential medical costs Used to minimize hospital lawsuits Used to help process claims

used to prevent nonessential medical costs

Which parts of a health insurance policy are guaranteed to be true? Rating Representation Statement Warranty

warranty

Before a health insurance policy is issued, which of these components of the contract is required? Applicant's signature on application Beneficiary's signature A conditional receipt Attending Physician Statement (APS)

applicants signature

An incomplete health insurance application submitted to an insurer will result in which of these actions? Application will be returned to the writing producer Application will be approved with restrictions Application will be pending until a MIB report is sent to the insurer Application will be automatically declined

application will be returned to the writing producer

Any changes made on an insurance application requires the initials of whom? Insured Producer Applicant Beneficiary

applicant

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the producer applicant's spouse National Association of Insurance Commissioners (NAIC) applicant's physician

applicants physician

Who is NOT required to sign a health insurance application? Adult insured Policyowner Producer Beneficiary

beneficiary

Information obtained from a phone conversation to the proposed insured can be found in which of these reports? Agent's report MIB report Inspection report Attending physician's report

inspection report

Pre-hospitalization authorization is considered an example of managed care PPO care Medicaid Major Medical insurance

managed care

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company

complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company

K completes an application for a disability policy but does not pay the initial premium. The company approves the policy standard and the agent delivers the policy. K then pays her initial premium 3 days later. At what point does K's policy take effect? Date in which the appointment was made Date the application is approved Date the application is signed Date the initial premium is collected

date the initial premium is collected

An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to issue the policy only when the initial premium check has cleared determine if the applicant is insurable by investigating family health history issue the policy on a standard basis determine if the applicant is an acceptable risk by completing standard underwriting procedures

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

What action should a producer take if the initial premium is NOT submitted with the application? Keep the application until premium is paid Forward the application to the insurer after giving the applicant a binding receipt Forward the application to the insurer without the initial premium Forward the application to the insurer after giving the applicant a conditional receipt

forward the application without the initial premium

M completes an application for health insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT policy is delivered free-look period has expired insurance company issues policy initial premium is collected

free-look period has expired

Which of these actions should a producer take when submitting an insurance application to an insurer? Issue a binding receipt to applicant if no initial premium is submitted Disclose to the applicant the amount of commissions to be earned on this transaction Inform insurer of relevant information not included on the application Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer

inform insurer of relevant information not included on the application

What is being delivered during a policy delivery? A binding receipt to the proposed insured Insurance contract to the proposed insured Application and initial premium to the insurer Policy summary sheet and disclosure material to the proposed insured

insurance contract to the proposed insured

Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy? Issue the policy with a diabetes exclusion Issue the policy with an altered Time of Payment of Claims provision Issue the policy with a rating Decline the applicant

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

Which of the following are NOT managed care organizations? Point-of-Service plan (POS) Preferred Provider Organization (PPO) Medical Information Bureau (MIB) Health Maintenance Organization (HMO)

medical information bureau (MIB)

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company

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

Which of these terms accurately defines an underwriter's assessment of information on a health insurance application? Risk classification Warranty review Insurable interest Inspection report

risk classification

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take? Send the initial premium back to the applicant Send a notice to the applicant that the coverage was declined Send a notice to the MIB that the applicant was declined Send a notice to the agent that the applicant was declined

send a notice to the MIB that the applicant was declined

P is a producer who notices 5 questions on a health application were not answered. What actions should P take? Mail incomplete application to applicant to be completed and returned to the agent Submit the application as-is to the insurer Call the applicant and complete application over the phone Set up a meeting with the applicant to answer the remaining questions

set up a meeting with the applicant to answer the remaining questions

Which of the following statements about the classification of applicants is INCORRECT? Substandard applicants are never declined by underwriters Substandard applicants are occasionally declined by underwriters Preferred risk applicants typically have better premium rates than standard risk applicants An applicant can be classified as substandard risk because of a hazardous job

substandard applicants are never declined by underwriters

What would the Medical Information Bureau (MIB) identify? Testing positive for marijuana use from a previous screening Existing life insurance coverage with other carriers Credit scores Primary physician

testing positive for marijuana use from a previous screening

Why is an applicant's signature required on a health insurance application? To attest that the statements on the application are warranties To attest that the statements on the application are accurate to the best of the applicant's knowledge To give Power of Attorney to the producer if needed To attest that all statements on the application are guaranteed to be true

to attest that the statements on the application are accurate to the best of the applicants knowledge

Which type of plan normally includes hospice benefits? Short-term disability plans Group life plans Workers' Compensation Managed care plans

managed care plans

Which type of plan normally includes hospice benefits? Health Underwriting Short-term disability plans Group life plans Workers' Compensation Managed care plans

managed care plans

Which of these factors do NOT play a role in the underwriting of a health insurance policy? Avocations Credit status Marital status Occupation

marital status

Consumer reports requested by an underwriter during the application process of a health insurance policy can be used to determine driving history probability of making timely premium payments if applicant is a tobacco user overall health of the applicant

probability of making timely premium payments

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

benefits are taxable to T - when the employer pays the full premiums, it is the employer who gets tax benefit. the individual must pay taxes on benefits received

M applies for a health insurance policy and pays the initial premium. When the agent completes the application, a conditional receipt is left with the applicant. The insurance company's underwriting department request's M's medical records and determines that M has had asthma for many years. All of the following are probable underwriting outcomes EXCEPT Deny coverage Approve with a higher premium Changing the policy's provisions Attach a rider excluding specified coverages

changing the policy's provisions

K applies for a health insurance policy on herself and submits the initial premium with the application. She is given a receipt by the producer stating that coverage begins immediately if the application is approved. What kind of receipt was used? Binding Initial Premium Conditional Contingent

conditional (bc it says coverage starts once application is approved)

From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? Fair Credit Reporting Act Medical Information Bureau Part lll of the application Life Insurance Buyer's Guide

fair credit reporting act

Which Federal law allows an insurer to obtain an inspection report on a potential insured? Medical Information Bureau Act Freedom of Information Act Fair Credit Reporting Act Medical Information Act

fair credit reporting act

Which mode of payment is NOT used by health insurance policies? Monthly premium Annual premium Single premium Semi-annual premium

single premium