Heath test
Which statement about return of premium riders is NOT correct?
Return of premium riders are available in all states.
Andrea was earning $3,000 a month as a nurse when she was injured in a train accident. Now she works part-time and earns $1,500 a month. Her disability income policy provides a $2,000 monthly benefit for total disability. The policy uses a flat rate to determine benefits for partial disability. How much will Andrea
$1,000
Edwina was injured in a car accident that resulted in both of her legs being amputated. What is the minimum amount of benefit that she will receive under her specified accident policy?
$1,000 (A specified accident policy provides coverage for a specifically identified kind of accident, accidental death, or accidental death and dismemberment. It provides a benefit of at least $1,000 for accidental death, $1,000 for double dismemberment, and $500 for single dismemberment.)
Jerry was seriously injured in a car accident and spent 50 days in the hospital, at $250 per day, before being discharged. He is insured under a basic hospital expense indemnity policy, which pays a hospital benefit of $250 per day for up to 45 days. What amount of the hospital stay is Jerry responsible for?
$1,250 (Basic hospital medical expense policies normally provide a maximum per-day benefit for a certain number of days. However, if an insured incurs hospital costs over the per-day maximum or remains in the hospital over the specified maximum period, he or she must pay costs associated with the treatment or care that extends beyond the policy's coverage. Jerry must therefore pay for five days of care, or $1,250.)
Policyowners who buy a health insurance policy issued in Pennsylvania are entitled to review the policy without obligation for at least how many days after it is delivered?
10 (The right to examine provision of health insurance policies issued in Pennsylvania entitles a policyowner to review the policy for at least ten days after it is delivered. If unsatisfied with it for any reason, the policyowner can return it to the insurer for a full refund of the premium paid)
Roberto let his individual health insurance policy lapse two months ago. Fearing that he might have cancer, Roberto now wants to reinstate the policy. Assuming the policy is reinstated, how many days must Roberto wait before any illnesses will be covered?
10 (Under reinstated health insurance policies, accidents are covered immediately. However, claims resulting from sickness require a ten-day waiting period before being covered.)
The optional cancellation provision in an individual health policy allows the insurer to cancel the policy for failure to pay premiums. However, the insurer must give the policy owner how many days' notice before canceling in this case?
10 days
A group health insurance policy issued in Pennsylvania can exclude coverage for pre-existing conditions for no longer than
12 months after the enrollment date (Health insurers may exclude coverage for pre-existing conditions for up to 12 months following the enrollment date. However, this exclusionary period is reduced by any periods of creditable coverage.)
The Family and Medical Leave Act (FMLA) gives certain employees up to how much time of unpaid leave while protecting their employment status?
12 weeks per year . (The Family and Medical Leave Act gives certain employees up to 12 weeks of unpaid leave per year while protecting their employed status. Employees can take leave for family and medical reasons. Group health benefits must be maintained through this period.)
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 (HIPAA guarantees the availability of health insurance coverage in the individual market for eligible individuals who have had at least 18 months of aggregate creditable coverage.)
Bethany was injured in a car accident on May 1. Within how many days must she typically notify her health insurance company about the claim?
20
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 (A claimant on a health insurance policy must give written notice of the claim to the insurer within 20 days after a loss or as soon thereafter as reasonably possible.)
A producer's commission for the sale of a Medicare supplement policy in the first year following its effective date cannot exceed what percentage of the commission paid for servicing the policy in the second year?
200 (A producer's commission for the sale of a Medicare supplement policy in the first year following its effective date cannot exceed 200 percent of the commission paid for servicing the policy in the second year.)
To be considered totally disabled under a disability income policy, the insured must be unable to perform all of the substantial and material duties of his or her regular occupation for how many months after a loss begins?
24 (For the first 24 months after a loss begins, total disability is defined as the inability of the insured to perform all of the substantial and material duties of his or her regular occupation.)
Which of the following is the most likely elimination period used in disability income policies that are purchased by a company for disability buy-out purposes?
24 months
A health insurance policy must cover children until what age?
26 (Children and stepchildren must be covered under a family health insurance policy until age 26.)
If a group health insurance policy terminates, an employee can elect to convert coverage provided he or she has been insured under the plan for how long before it terminates?
3 months (To be eligible to convert to an individual policy, an employee or member must have been continuously insured for at least three months before the date of termination.)
BBC Insurers filed premium rates for its new line of variable products on January 15. Within how many days must the Commissioner approve or disapprove the rates?
30 (All rate filings are subject to a 30-day waiting period before they become effective. The Commissioner must hold a hearing before disapproving any rates.)
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 (Medicare supplement policies issued in Pennsylvania must provide a free-look period of at least 30 days, during which time the insured can return the policy for any reason and receive a full refund of the premium.)
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 (A policyholder is entitled to a 31-day grace period in which to pay the premium due on an annually renewable health insurance policy.(
Tony's individual health insurance policy contains a cancelation provision. If the insurer decides to cancel the policy, it must provide Tony with how much notice before doing so?
45 days . (The optional cancelation provision enables an insurer to cancel the policy at any time with 45 days' notice. The insurer must still pay any outstanding claim that the insured submitted to the company before the policy was canceled.)
John's disability income policy provides that benefits will be reduced once he reaches age 62. At this point, his benefits must be equal to at least what amount that was payable before age 62?
50 (Disability income protection policies must provide that periodic payments that are payable after age 62 and reduced solely on the basis of age are at least 50 percent of the amounts payable before age 62.)
A flat benefit amount is usually what percent of the full disability benefit?
50 percent (A flat benefit payment for a partial disability is stated in the policy as a percentage of what would be paid for a total disability. This amount is typically 50 percent.)
Carolyn buys a long-term care insurance policy through her alumnae group. Her policy cannot define a pre-existing condition more restrictively than a condition for which medical advice or treatment was recommended or received by a provider of health-care services within how many months before the effective date of coverage?
6 (Pre-existing exclusion periods in long-term care insurance policies may not exceed six months)
What is the maximum length of time that a Medicare supplement policy can exclude individuals from coverage based on pre-existing medical conditions?
6 months (A Medicare supplement policy can exclude benefits during the first six months of coverage on the basis of a pre-existing condition for which the insured received treatment or was diagnosed during the six months before the effective date of coverage.)
Which statement about the conversion provision in group health insurance policies is correct?
A person will not have the right to convert a policy if it was terminated due to nonpayment of premium. (A person does not have a conversion right if a group health insurance policy was terminated due to nonpayment of premium, fraudulent actions in connection with the policy, or intentional misrepresentation under the policy.)
A residual benefit payment for partial disability is based on the percentage of income that is actually lost. Which of the following statements about residual benefit payments 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. (If an insured's income loss drops below 20 percent, residual disability benefits normally end)
Which statement about HIV/AIDS testing by health insurers is correct?
Applicants must give their informed written consent before they can be tested for HIV. (When underwriting an individual health insurance policy, an insurer can require an HIV test only if the individual gives his or her written consent to the test.)
When a person starts receiving Social Security disability benefits, what happens to disability benefits provided by a social insurance supplement (SIS) rider?
Benefits provided by the SIS rider end or are reduced, depending on the provisions of the rider. (The disability income provided under a SIS rider may be reduced or stopped when Social Security disability benefits are paid, depending on the provisions of the rider.)
An insurer may nonrenew or discontinue individual health coverage if the insured no longer lives within the service area of the insurer's network of providers.
C corporation owners (The term "self-employed person" for taxation purposes includes sole proprietors, partners, and S corporation owners.)
Kim lives in an urban area with a high cost of living. Grace lives in a rural area where the cost of living is much lower. Both Kim and Grace have medical expense plans that pay claims on a usual, customary, and reasonable (UCR) basis. Grace would seem to pay an unfair share of her medical costs if the insurer based payments on the costs in Kim's urban area. How do insurers 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 is an example of formal care in the context of long-term care?
Dennis performs homemaker chores through an agency. (Formal caregivers are those associated with a service system, as opposed to family members or friends.)
Bruce, an HMO member, cannot get covered health-care services outside the HMO's provider network. What must Bruce do if he wants to use services outside the network but not pay for them?
He must buy a point-of-service (POS) option.
Each HMO member signs up with one primary care physician (PCP). The PCP must refer the member to a specialist before any treatment from the specialist is covered. The PCP can be a doctor in general practice or a doctor specializing in any of the following, EXCEPT
Geriatrics (The PCP can be a doctor in general practice or can specialize in family practice, internal medicine, pediatrics, or obstetrics and gynecology.)
Receiving health care through an HMO is subject to certain conditions, limitations, and restrictions. All of the following statements describe such conditions, limitations, and restrictions EXCEPT:
If a member is outside the HMO's service area, the member must contact the HMO within one hour of receiving treatment . (The HMO controls when, where, and how the member can receive treatment.)
All of the following statements about the delivery of health insurance policies are correct, EXCEPT
If an applicant applies for a policy without paying the first premium, the producer must collect the first premium along with a surcharge when delivering the policy. (An applicant may sometimes submit an application without the first premium. If a policy is then issued as applied for, the producer must deliver the policy, collect the initial premium, and get a written statement from the insured regarding his or her continued good health. A surcharge will not be imposed.)
Before delivering a health insurance policy to a client, the producer alters the insuring clause in a way that he believes will benefit the insurance company. Which of the following statements is correct regarding this alteration?
It is prohibited by the entire contract provision . (Under the entire contract provision, changes to an insurance policy are invalid unless they are approved and endorsed by an officer of the insurance company. A producer cannot unilaterally change the terms of the policy.)
Which of the following is NOT a correct statement about the insuring clause found in a health insurance policy?
It lists the coverage exceptions and exclusions.
What Medicare supplement plans provide for payments to limit a person's annual out-of-pocket medical costs related to coinsurance, copays, and deductibles?
K and L (he out-of-pocket annual limit plans K and L pay 100 percent of Medicare coinsurance, co-pays, and deductibles after charges reach annually adjusted limits.)
Mr. Johnson's disability income policy has a probationary period of 20 days. He falls and breaks his ankle 10 days after buying the policy. Which of the following is true regarding Mr. Johnson's coverage?
Lost income benefits will be paid effective immediately. (The probationary period applies to pre-existing sickness or illness, not injury. So even though the injury occurred during the probationary period, benefits will be paid.)
Which of the following is a required health insurance policy provision?
Martha's policy establishes the order in which plans will pay if she is covered by other insurance. (A coordination of benefits provision is required to establish the priority in which insurers will pay benefits for the same loss, and to avoid duplication of benefits. Coverage for alcoholism is not required.and policies are not required to insure dependents.)
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.
Cindy's health insurance policy provides maternity benefits but excludes coverage for involuntary complications of pregnancy. Cindy is insured under which of the following?
Medicaid (Health insurance policies that provide maternity benefits must have a provision that they do not exclude, reduce, or otherwise limit coverage, deductibles, or coinsurance provisions specifically with respect to involuntary complications of pregnancy. However, this requirement does not apply to Medicare or Medicaid patients.)
Nick is enrolled in Medicare Parts A and B and is now eligible for his state's Medicaid program. He incurred $500 in doctors' fees this month. How will this expense be paid?
Medicare must pay benefits first. (For Medicare beneficiaries who are eligible for their state's Medicaid program, Medicaid serves as the secondary insurer. Medicare is the primary insurer.)
INC Corporation 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?
No tax is due on the benefits . (Under a disability buy-out insurance policy, the corporation receives the proceeds tax free. The business can then use the funds to buy the disabled owner's interest.)
Mallory submitted a notice of claim with ABC Insurers after breaking her leg in a skiing accident. Three weeks later, ABC Insurers had not yet sent the claim forms. What are Mallory's options?
She can submit a written statement describing the nature and extent of the loss.
Stacey and Edna are both 45 years old, and each owns an individual long-term care policy with a two-year benefit period and a $150 daily benefit. However, 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.
Jay's medical expense policy uses a benefits schedule. After Jay incurs a covered medical expense, what is the amount the insurer pays?
The amount the insurer pays Jay is some percentage of the assigned price (such as 80 percent), or the insurer may pay the full amount.
Which of the following is true about the range of Medicare supplement plans?
The coverages provided in each individual plan is the same across insurers. (The provisions of each plan are the same among insurers. That is, all Plan As, Bs, etc. are the same among insurers. Insurers cannot design their own unique Medicare supplement policies.)
Which of the following statements about elimination periods in disability income policies is CORRECT?
The disability must last through the elimination period before the insured can receive benefits.
What will result if an insured decides to stop paying premiums for his or her insurance policy?
The insurance company is released from its promise to pay benefits and the contract expires. (In an insurance contract, the insured promises to pay the first premium only (a requirement for policy issue). After that, there is no ongoing requirement for the insured to continue to pay premiums and the insurance company cannot require the insured to continue paying premiums. An insured who fails to pay premiums has not breached the terms of the contract.)
Hannah forgot to pay the premium for her individual health insurance policy this month. Her policy contains an unpaid premium provision. What can the insurer do if a claim arises?
The insurer can deduct the amount of the unpaid premium from the total benefit it owes Hannah. (The unpaid premium optional provision addresses any premiums the insured may not have paid at the time of a claim. In such a case, the insurer can deduct this amount from the total benefit it owes the insured.)
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 (The producer gave Sandra a conditional receipt. Therefore, the insurer is not liable for coverage because Sandra was found uninsurable.)
You have a Medicare SELECT client who wants to choose her own doctor. The doctor is not part of the provider network. What can you tell her to expect?
The plan will not cover the services . (The coverage a SELECT plan offers is the same as the coverage provided under a standard plan. However, participants must obtain covered services through the plan's network.)
A person is injured in an accident five days after buying his disability income policy and loses income as a result. What will the policy pay?
The policy will pay benefits even though the accident occurred during the probationary period.
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. (The option to buy additional insurance under this rider usually has to be chosen by a specified age, such as 45 or 55.)
Which statement about health savings accounts is correct?
They are available on an individual or group basis. (Health savings accounts are available on an individual or group basis, not on a tax-exempt basis.)
Tina is covered by a group short-term disability plan, while Earl is covered by a group long-term disability plan. Their employers pay the premiums for the policies, and both subsequently become disabled. What is the result?
Tina can expect to receive benefits for up to two years, while Earl may receive benefits for more than two years. (Group plans with maximum benefit periods of less than two years are short-term disability plans. Those with maximum benefit periods of two years or more are long-term disability plans. Both types of benefits are taxable as ordinary income.)
Parts A and B have gaps in their coverage, where Medicare subscribers must pay the costs. Which of the following was done to fill these gaps in standard Medicare coverage?
To fill the gaps in standard Medicare coverage, the insurance industry created Medicare supplement policies.
Which of the following describes an optional provision under the insured's health insurance policy?
Under Lindsey's policy, the insurer is not liable for any loss in which she is intoxicated . (A provision that the insurer is not liable for any loss occurring while the insured is intoxicated is optional)
To qualify for an insurance producer's license, a person must have all of the following EXCEPT:
a college degree (To qualify for a license, an applicant must be at least 18 years old, complete a prelicensing education program, pay the licensing fees, submit a set of fingerprints, and pass the required state examination.)
When holding insurance premiums and other funds, agents must act in what role?
a fiduciary capacity (Licensed individuals hold insurance premiums and other funds in a fiduciary capacity. They must account for and remit premiums to the insurer, according to the terms of their contract.)
What is the purpose of health insurance?
to provide financial protection against the financial risks posed by certain hazards
Agent Jill received a letter from the Department of Insurance asking her to submit verification of having completed the continuing education requirements for the previous licensing period. Three weeks later, the Department sent another letter. Which penalty may the Department impose if Jill still has not responded to its request one month later?
a fine of up to $100 per day per violation (A producer who does not respond to a written inquiry from the Department within 30 days has 15 days in which to correct the violation after receiving notice from the Department specifying the corrective action to be taken. If a producer fails to do so, the Department may assess a fine of up to $100 per day per violation.)
Joan is 65 years of age. She has a health insurance policy through her employer that provides $1,000 of coverage for every month she cannot work. Which of the following policies does Joan have?
a group disability income policy (Even though Joan is Medicare eligible, she is covered under her company's disability income policy.)
Which of the following policies may include a pre-existing condition exclusion?
a group health insurance policy issued to a corporation (A pre-existing condition exclusion may not be used in a blanket policy, group student accident and sickness insurance policy, or group mortgage disability insurance policy.)
Ashleigh is searching for a job. Although she knows she will eventually be covered by an employer's plan, she needs health insurance while she is unemployed. Under these circumstances, what should Ashleigh consider?
a nonrenewable term policy
When selling a long-term care insurance policy, the insurer or agent must provide the applicant with all of the following EXCEPT:
a suitability guide (Long-term care insurers must use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the applicant's needs. However, they are not required to give applicants a suitability guide.)
All of the following are examples of risks covered by a special risk policy EXCEPT
a tourist who buys a travel insurance policy before a cruise (Limited risk policies (not special risk policies) define a specific type of risk and provide benefits if death or dismemberment result from that risk. An example is a traveler who buys an insurance policy before a cruise or plane trip. Benefits would be paid only for losses associated with that specific trip.)
Health insurance insures against all of the following common perils, EXCEPT
accidental death
Disability income policies usually contain certain exclusions for which no coverage is provided. Common exclusions include all of the following, EXCEPT
accidental injuries (Disability income policies typically exclude coverage for injuries resulting from pre-existing conditions. These are health conditions for which the insured sought medical care or treatment within a specified period before policy issue.)
Jeremy and his brothers each purchased individual health insurance policies at a young age, and have kept their policies in force over the years, because of their family history of cancer . Which of the following describes the tendency of Jeremy and his brothers to seek insurance?
adverse selection
How often may an insurer require an insured to submit to a physical examination during a pending claim?
as often as reasonably necessary (Policy provisions state that the insurer at its own expense has the right to examine the insured when and as often as it may reasonably require during a pending claim.)
Delta Inc. pays the premiums on a disability buy-out policy, a business overhead policy, and a key executive disability policy. For which policies can it take an income tax deduction for the premiums it pays?
business overhead policy
Lacy, age 90, has been receiving 24-hour skilled nursing care at a long-term care facility, which is paid for by Medicaid. At Lacy's death, her estate consists of one car, $1,000 in a savings account, and a home valued at $150,000 that her husband lived in until his death two weeks earlier. If Medicaid has paid $160,000 for Lacy's long-term care, Medicaid
can seek recovery from all of Lacy's assets. (If any assets are left in a Medicaid recipient's estate, Medicaid can seek reimbursement for benefits it paid by filing a lien or claim against the estate. Assets that were previously exempt when applying for Medicaid (such as a person's home) will be considered part of the estate against which Medicaid may recover.)
Under a health insurance policy with an optionally renewable provision, which of the following does the insurer have the right to do?
cancel the policy on a date specified in the contract (The insurer has the right to cancel the policy on a date specified in the contract, not to increase the premiums for the coverage.)
Which of the following is not an optional provision of health insurance policies issued in Pennsylvania?
change of beneficiary (The change of beneficiary provision is required in health insurance policies issued in Pennsylvania. It provides that, unless the insured makes an irrevocable beneficiary designation, the insured retains the right to change the beneficiary by giving written notice to the insurer.)
What are HMOs that do not provide services or coverage outside their network called?
closed panel (Preferred provider organizations are another form of managed care but are not HMOs.)
Which of the following is a benefit trigger under a long-term care insurance policy?
cognitive impairment (Activities of daily living and cognitive impairment may be used to measure an insured's need for long-term care.)
Which type of Medicare supplement marketing method fails to disclose that the purpose of the contact is the solicitation of insurance?
cold lead advertising (Producers and insurers are prohibited from engaging in cold lead advertising, or failing to disclose that the intent of the advertising is to sell insurance and that a producer or insurance company will contact the prospect.)
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 (Any provider coverage means the insured can use any health-care provider.)
Which of the following types of health plans covers a variety of conditions or medical services?
comprehensive plans (Comprehensive coverage means the policy covers a variety of conditions or medical services.)
Because a policyowner must do certain things for the insurance company to fulfill its requirements, an insurance contract is considered which of the following?
conditional (A unilateral contract means that only one party—the insurer—makes an enforceable promise. The insured makes no enforceable promise and must only continue paying premiums to keep the policy in force)
What must the recipient pay after the Medicare Part A deductible is paid?
daily hospital coinsurance or co-payment for the 61st to the 90th day After the deductible is paid, the recipient must pay a daily hospital coinsurance or co-payment for the 61st to 90th day.)
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 (It is considered defamation to publish or circulate a false, deceptive, or misleading statement about—or a statement that is maliciously critical of or derogatory to—the financial condition of an insurer, when such a statement is designed to injure anyone in the insurance business.)
Under which type of dental plan is the insured reimbursed for the cost of covered dental care he or she receives?
dental indemnity plan
HMOs often provide additional benefits not covered by traditional medical expense plans. These include all of the following types of care, EXCEPT
dread disease policies. (HMOs generally provide family planning and treatment for infertility. In addition, HMOs often provide such additional benefits as supplemental dental and vision care, well-baby care, and adult and child immunizations.)
All of the following are generally considered activities of daily living (ADLs) for purposes of qualifying for long-term care insurance EXCEPT:
driving (ctivities of daily living (ADLs) include bathing, eating, dressing, transferring (i.e., mobility), toileting, and continence. An insured will qualify for benefits under a long-term care policy if he or she is unable to perform at least two activities of daily living.)
Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in Pennsylvania?
failing to promptly settle a claim for which liability is uncertain (An insurer is not obligated to settle a claim for which it is not clearly liable.)
Which type of payment arrangement do indemnity insurance policies typically use?
fee-for-service (Traditional indemnity policies typically use fee-for-service.)
Which of the following is a characteristic of basic hospital, surgical, and physician policies?
first-dollar coverage (Basic hospital, surgical, and physician policies give insureds three valuable benefits: first-dollar coverage with no deductibles, 100 percent reimbursement with no co-payments (up to specified maximums per charge, per treatment, and/or per policy term), and the right to choose a health-care provider.)
The Commissioner of Insurance can examine the business transactions, accounts, and records of insurers and producers as often as necessary but must do so at least once in how many years?
five (The Commissioner can examine the business transactions, accounts, and records of insurers and producers as often as necessary but must do so at least once every five years.)
To qualify for Social Security disability benefits, a worker must satisfy a waiting period of how many months?
five months (Disabled workers are not required to wait six months before Social Security disability benefits will begin.)
What of the following uses employee withholdings to fund out-of-pocket costs for health and medical care that insurance does not reimburse, including annual deductibles and co-payments?
flexible spending account (FSA)
An outline of coverage contains all of the following information for a health insurance policyholder EXCEPT:
governing provisions of the policy (While the outline of coverage contains important information for the health insurance policyholder, it only summarizes the policy terms and refers the policyholder to the policy itself for the governing provisions.)
After the deductible is paid, Medicare Part A pays full benefits for the first 60 days of hospitalization. What else does Medicare pay benefits for?
he remaining time in the benefit period from the 61st day to the 90th day (Medicare also pays benefits for the remaining time in the benefit period from the 61st day to the 90th day.)
Which of the following statements describing the difference between health insurance and life insurance is correct?
health insurance coordinates benefits with similar policies covering the insured, while life insurance does not. (Individual health policies recognize that a person may be covered under more than one plan or policy. The plan specifies how benefits will be coordinated with other plans. Both health insurance and life insurance include exclusions, a free-look period usually lasting 10 days, and are issued only after underwriting by the insurer.)
A health savings account (HSA) usually requires which of the following payment combinations for the insured?
high deductible, low premium (An HSA plan combines a very high-deductible, high out-of-pocket cost insurance plan with a tax-favored savings account. Because of the high deductible, it is available at a low premium.)
Medicare Part A covers home health care. Covered services include all of the following EXCEPT
home registered nursing services (Medicare Part A covers home health aide services, not registered nursing services.)
Which of the following is not a remedy available to the Pennsylvania Commissioner of Insurance for committing an unfair method of competition?
imprisonment (If the Commissioner determines that a violation of the insurance laws has occurred, the Commissioner may revoke or suspend a license or impose a fine.)
Persons who commit crimes of dishonesty while engaged in interstate insurance transactions can be sentenced to all of the following EXCEPT:
imprisonment for up to 25 years (Persons who are convicted of committing crimes of dishonesty while engaged in interstate insurance transactions are subject to a fine of up to $50,000 for every violation, or the amount of compensation that the person received or offered for the illegal conduct, whichever is greater.)
In conditionally renewable policies, the insurer cannot cancel coverage as long as the insured meets the required conditions. What can the insurer do?
increase the premiums for the coverage (Proof of continuing insurability is not required.)
If the parties disagree over the terms of an insurance contract, courts will typically interpret anything unclear in the contract in favor of which party?
insured (Because the insurer drafts the insurance contract and offers it to the applicant "as is," applicants have little or no ability to change the terms of the policy. As a result, courts typically rule in favor of a policyowner if policy provisions are not clear.)
During the underwriting process, ABC Insurers determined that Joel was more likely to file a future disability insurance claim than other applicants. Which action is the insurer not likely to take?
issue the policy at a standard rate (If the underwriter feels that an applicant poses a higher disability risk than other applicants, the insurer may classify the applicant as a special or substandard risk or may deny coverage. An insurer may also issue coverage but with special exclusions or conditions or may charge a higher premium or add a longer elimination period.)
A conditional renewability provision is normally found in the context of all of the following EXCEPT:
long-term care policies (A conditionally renewable provision is normally found in health insurance policies issued to insureds in high-risk occupations.)
An insurance policy provides financial protection against which of the following?
losses caused by perils
Anya owns an individual health insurance policy. For which reason may the insurer cancel her policy?
moving outside the insurer's network of providers (An insurer may nonrenew or discontinue individual health coverage if the insured no longer lives within the service area of the insurer's network of providers.)
Traditional major medical plans control costs through a system of deductibles and coinsurance. In contrast, HMOs control costs by imposing which of the following?
no deductibles for any health care provided in their networks and only a small co-payment for each doctor visit or health service (HMOs impose no deductibles for any health care provided in their networks. In addition, they generally require only a small co-payment for each doctor visit or health service, such as $15 or $30.)
To protect a policy from unintentionally lapsing, long-term care applicants may designate a person to receive notice of lapse or termination of the policy due to nonpayment of premium. How often must insureds be given the right to change this written designation?
once every two years (Insurers must notify insureds of the right to change their written designation at least once every two years.)
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. (Employers are prohibited from offering employees or spouses on Medicare a supplement plan that pays for services already covered by Medicare.)
Which of the following is the cafeteria plan benefit through which employee withholdings fund premium contributions to an employer's group health plan on a before-tax basis?
pre-tax health insurance premium deductions (Unreimbursed medical expenses are one of the two benefits covered by cafeteria plans. Employee withholdings fund out-of-pocket costs for health and medical care that insurance does not reimburse, including annual deductibles and co-payments.)
HMOs cover care to treat an illness or to recover from an injury already ongoing. What other type of care do HMOs emphasize?
preventive care as a way to avoid more costly care to treat an illness (HMOs do not emphasize care for long-term disability.)
What is the term for the initial period that must pass after a disability income policy has been issued and before the insurer will pay benefits?
probationary period
Any sale of a Medicare supplement policy that results in the insured having more than one such policy is
prohibited in all cases. (Any sale of a Medicare supplement policy that results in the insured having more than one Medicare supplement policy is prohibited.)
Which of the following is not a power granted to the Pennsylvania Commissioner of Insurance?
prosecuting individuals for violating the insurance laws (The Commissioner examines insurers and individuals to determine whether they have engaged in unfair methods of competition or deceptive acts or practices but does not prosecute individuals for violating the insurance laws.)
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. (After the insurer issues the policy, the producer must deliver the policy. The producer will review the policy to ensure that its term and conditions match those that Bob applied for.)
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 (Agents cannot offer anything of value to induce someone to buy insurance, including a rebate of the premium, dividends, stocks or bonds, or paid employment. They also cannot pay or offer to pay anything of value that is not specified in the insurance contract. This unfair trade practice is known as rebating.)
Which of the following describes a group whose members pay a pro-rata share of the losses suffered by other members in the group?
reciprocal insurer (A reciprocal insurer is a group of people or businesses that exchange this promise: each member agrees to pay a pro-rata share of any loss suffered by any other member. A reciprocal insurer is essentially a formal risk-sharing arrangement.)
Tori's accident and health insurance policy contains a change of occupation provision. When she applied for the policy, she worked as an accountant, but she now works as a construction worker. What can the insurer do?
reduce benefits (If a policy contains a change of occupation provision, and the insured changes his or her occupation to one that is more hazardous, the insurer's risk increases. The provision allows the insurer to reduce benefits.)
Which optional provision in an individual health insurance policy describes the manner in which the insurer will restrict coverage so that benefits do not exceed the insured's income?
relation of earnings to insurance (The relation of earnings to insurance provision applies to individual health insurance policies that provide income payments if the insured becomes disabled. Its intent is to avoid overinsurance. The other insurance with this insurer provision, also optional, limits the total coverage the insurer will permit the insured to have with that insurer.)
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
Emily is married, has two children, and is the primary breadwinner in the family. She knows that her family would suffer serious financial consequences if she were to die prematurely. However, she continues to put off purchasing a life insurance policy, saying that her family would use its savings to take care of final expenses should she die prematurely. Which method is Emily using to deal with risk?
retention (Rather than taking measures to reduce the risk to her family, such as purchasing life insurance, Emily has chosen to do nothing and live with the exposure to the risk. This method of handling risk is known as risk retention.)
In contrast to years past, the number of people now covered under individual health insurance plans is which of the following?
smaller (Most people today buy health insurance through a group insurance plan rather than individually.)
Brian had a heart attack and incurred $50,000 of covered medical expenses. After paying the deductible, he owed $9,800 under the policy's coinsurance provision. However, the amount of out-of-pocket expenses he was responsible for was limited to $5,000. Which policy provision provided this protection?
stop-loss feature (A stop-loss feature protects the insured under a major medical expense plan by limiting the out-of-pocket dollar amount he or she must pay. This amount is usually defined on an annual basis. Once an insured's total deductibles and co-payments equal the stop-loss limit, the policy will pay 100 percent of all other covered costs for that year.)
Medicare Parts A and B have gaps in their coverage, where Medicare subscribers must pay the costs. What do these gaps include?
the Part A deductible and daily co-payments for hospitalization and nursing home care, and the Part B deductible and its required 20 percent coinsurance or co-payments
Under an income replacement disability insurance policy, what is the monthly benefit payable equal to?
the actual amount of income lost
Under medical expense insurance the insurer assigns a price—a certain dollar amount or unit value—to each specific medical cost, procedure, charge, or aspect of coverage. What is this system?
the policy's benefits schedule
Health insurance protects against many risks that could impact all of the following, EXCEPT
the prosperity of the person's business.
Which of the following is the cafeteria plan benefit through which employee withholdings fund out-of-pocket costs for health and medical care that insurance does not reimburse, including annual deductibles and co-payments?
unreimbursed medical expenses
ABC Insurance Company diligently maintains files of advertisements it uses to market its health insurance policies. How long is it required to keep them before it can purge them?
until the Commissioner's next examination or four years, whichever occurs last (Every insurer must keep a file of every advertisement used to market its health insurance policies. The insurer must maintain this file for at least four years or until the Commissioner's next examination of the insurer, whichever occurs last.)
Jake learns that his new employer-sponsored health insurance plan is governed by HIPAA. He may find all of the following available to him EXCEPT:
up to 36 months in benefit continuation if he loses his job (Coverage continuation privileges are made possible by COBRA, not HIPAA.)
Part B of the Medicare program, available to those who choose its coverage, provides additional benefits beyond hospitalization. These benefits include all of the following EXCEPT
vaccinations and routine eye care and eyeglasses
To protect his family in case he died prematurely, John applied for a $1 million life insurance policy. When he died two years later, the insurer paid $1 million in benefits, even though John was unemployed when he died. What is this type of insurance contract?
valued contract
Fred's health plan provides specific coverage, which means it is likely to cover any of the following, EXCEPT
visits to doctors' offices
Hospice care is for terminally ill Medicare beneficiaries. When is hospice care covered?
when the person has been certified by a doctor as terminally ill (with a life expectancy of six months or less)