Insurance Ch 9

Question 10 of 15 Under a Key Person disability income policy, premium payments A Are made by the business and are not tax-deductible. B Are made by the employee and are not tax-deductible. C Are made by the employee and are tax-free. D Are made by the business and are tax-deductible. Correct! Premiums are nondeductible to the business; however, benefits are received tax-free by the business.

a

Question 4 of 15 Under which of the following employer-provided plans are the benefits taxable to an employee in proportion to the amount of premium paid by the employer? A Disability Income B Major Medical C Dental Expense D Basic Medical Expense Correct! The part of the benefit that is provided by the employer's contribution is income taxable to the employee.

a

Question 5 of 15 The purpose of managed care health insurance plans is to A Control health insurance claims expenses. B Provide for the continuation of coverage when an employee leaves the plan. C Give the insured an unlimited choice of providers. D Coordinate benefits. Correct! Managed care is a system of delivering health care and health care services, characterized by arrangements with selected providers, programs of ongoing quality control and utilization review and financial incentives for members to use providers and procedures covered by the plan.

a

Question 9 of 15 Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? A Employee benefits are tax deductible the year in which they were received. B Benefits received by the employee are free from federal income tax. C Premiums paid by the employer are deductible as a business expense. D Employee paid premiums may be deducted if certain conditions are met. Correct! For group medical and dental expense insurance any premium paid by the employer is deductible as a business expense. However, any premiums provided by the employee are only deductible if certain conditions are met. Group medical and dental expense benefits are received income tax free by the employee.

a

Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as A Own occupation - less restrictive than other definitions. B Any occupation - more restrictive than other definitions. C Any occupation - less restrictive than other definitions. D Own occupation - more restrictive than other definitions. Correct! If total disability is defined as any occupation, it means the coverage will apply only if the insured cannot find any means of income whatsoever. This is more strict than own occupation, where a person merely has to prove that they cannot perform the job for which they were previously trained.

b

Question 1 of 15 A provision found in insurance policies which prevents the insured from collecting twice for the same loss is called A Appraisal. B Subrogation. C Consent to settle loss. D Right of salvage. Correct! When the insureds accept loss payment from the insurance company, they must transfer their rights to recovery to the insurer. This prevents the insured from collecting twice for the same loss, and allows the insurer to indemnify the insurance company.

b

Question 13 of 15 Which of the following is NOT a metal level of coverage offered under the Patient Protection and Affordable Care Act? A Bronze B Iron C Gold D Silver Incorrect! The metal tiers of coverage required under the PPACA include platinum, gold, silver and bronze.

b

Question 14 of 15 Which statement accurately describes the Change of Beneficiary provision? A Changing beneficiaries requires the consent of the original beneficiary. B Any policy that has a death benefit must also have a Change of Beneficiary provision. C Spouses are automatically irrevocable beneficiaries, with the exception of divorce or death. D Beneficiaries can only be changed in the event of divorce, death, or severe psychiatric disorders. Incorrect! Any policy that has a death benefit must also have a Change of Beneficiary provision. This allows the policyowner to change beneficiaries without the original beneficiary's consent, unless that person was designated as an irrevocable beneficiary.

b

Question 15 of 15 Which of the following is NOT true regarding Workers Compensation? A Benefits are regulated by the state government. B Benefits are offered by the insurer. C Benefits are not regulated by the federal government. D Benefits vary from state to state. Correct! The state government regulates Workers Compensation benefits, which vary slightly from state to state.

b

Question 2 of 15 A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid? A The insured will have to select a plan from which to collect benefits. B The benefits will be coordinated. C Neither plan would pay. D Each plan will pay in equal shares. Correct! Benefits will be coordinated when individuals are covered under two or more health plans.

b

Question 6 of 15 Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability? A Income replacement B Residual disability C Recurrent disability D Partial disability Correct! A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss.

b

Question 11 of 15 According to the PPACA metal levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that? A Silver B Gold C Platinum D Bronze Correct! Bronze level benefit plans pay 60% of expected health care costs; silver level plans pay 70%; gold level plans pay 80%, and platinum level plans pay 90%.

c

Question 12 of 15 For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense? A 50% B 60% C 90% D 100% Correct! For group medical and dental expense insurance any premium paid by the employer is deductible as a business expense.

d

Question 3 of 15 A man works for Company A and his wife works for Company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim, A The insurance through his wife's company is primary. B The insurance plans will split the coverage evenly. C Both plans will pay the full amount of the claim. D The insurance through his company is primary. Correct! The policy that covers the person filing the claim will be considered the primary policy.

d

Question 8 of 15 Which of the following would best describe total disability? A A person's inability to perform one of the regular duties of his/her occupation. B A person's total loss of income. C A person's inability to qualify for insurance coverage. D A person's ability to work is significantly reduced or eliminated for the rest of his/her life. Correct! While different policies might define "total disability" differently, any definition would imply that under a total disability a person's ability to work is significantly reduced or eliminated for the rest of his/her life.

d