Minnesota State License Exam
what is considered to be a characteristic of a conditionally renewable health insurance policy? premiums may increase at time of renewal premiums may increase at any time policy may be renewed at the discretion of the insured policy may be amended by the insurer at any time
premiums may increase at time of renewal
An assignment of benefits of a health policy transfers payments to someone other than the policyowner is prohibited by state law is allowed only on policies dates after 1992 transfers rights from the company to the policyholder
transfers payments to someone other than the policyowner
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? before the appointment is scheduled upon completion of the application at the policy's delivery when the insurer receives the MIB report
upon completion of the application
The provision in a group health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the grace period waiting period postponement period elimination period
waiting period
For an individual health policy that is paid for on a monthly basis, the grace period provision is a minimum of how many days? 7 10 15 31
10
The policyholder has how many days to return an accident/health insurance policy and receive a full refund on premiums? 5 10 15 30
10 free-look period
XYZ Company pays the entire premium for its group health plan. the minimum percentage of eligible employees that must be covered is 25% 50% 75% 100%
100%
what is the maximum social security disability benefit amount an insured can receive? 50% of the insureds PIA 75% of the insureds PIA 100% of the insureds PIA 100% of the insureds PIA minus any monies received from a retirement plan
100% of the insureds PIA
What year was the McCarran Ferguson Act enacted? 1944 1945 1946 1947
1945
insurers may request a hearing within __ if their policy is rejected 20 30 60 90
20
According to the mandatory uniform policy provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid? 7 10 31 60
31
who elects the governing body of a mutual insurance company? chairman of the board bondholders stockholders policyholders
policyholders
If an insurer becomes insolvent, the minnesota life and health guaranty association guarantees individual health claims up to 100,000 300,000 500,000 750,000
500,000 maximum
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
What does Medicare Parts A and B cover? Part A covers hospitalization, Part B covers long-term care Part A covers doctors services, Part B covers hospitalization Part A covers hospitalization, Part B covers doctors services Part A covers prescription drugs, Part B covers disability
Part A covers hospitalization, Part B covers doctors services
What is medicare? a disability program a hospital and medical expense insurance program offers assistance in making health insurance premiums par d provides payment for surgeon expenses
a hospital and medical expense insurance program
people with higher loss exposure have the tendency to purchase insurance more often than those at average risk. this is called risk retention preexisting conditions law of large numbers adverse selection
adverse selection
the amount the insured will pay in premiums is unequal to the amount that the insurer will pay in the event of a loss
aleatory
in order to establish a health reimbursement arrangement (HRA), it MUST be offered in conjunction with other employer provided health benefits limit the benefits to prescription drugs only be established by the employer limit the amount of money the employee can contribute toward the account
be established by the employer
All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT bilateral unilateral aleatory adhesion
bilateral
the provision in a group health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the grace period waiting period postponement period elimination period
waiting period the rights to delay coverage for a covered sickness for a specified number of days
What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled accidental death and dismemberment rider disability income rider guaranteed insurability rider waiver of premium rider
waiver of premium rider if a policyowner covered under an accident and health policy wanted to ensure the policy will continue if they ever become totally disabled, they would want to add a waiver of premium rider
A producer who fails to renew a license may reapply for a license without an examination: within two years after no renewal within one year after no renewal within three years after no renewal at anytime
within one year after no renewal a producer who fails to renew a license may reapply for a license without an examination within one year after no renewal. A penalty of twice the unpaid renewal fee must be paid
The cause of a loss is referred to as a hazard adversity peril risk
peril
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 requests 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 provision attach a rider excluding specified coverages
changing the policy's provisions
A disability income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim? Claim will be paid and coverage will remain in force claim will be denied and coverage will remain in force claim will be denied and coverage will be cancelled claim will be denied, the coverage cancelled, and all premiums paid will be refunded
claim will be paid and coverage will remain in force after a policy has been in force for 2, sometimes 3 years, it enters the incontestable period, in which the insurer may not deny a claim based on information not disclosed at the time of application
the situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a closed panel open panel co-op panel capitation panel
closed panel
which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures administrative-services-only plan commercial insurer preferred provider organization health maintenance organization
commercial insurer
insurance contracts are known as __ because certain future conditions or acts must occur before any claims can be paid consideration unilateral aleatory conditional
conditional
An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. which of the following clauses details the conditions that E did not meet? Entire contract clause mib clause insuring clause consideration clause
consideration clause a health insurance contract is valid only if the insured provides consideration in the form of the full minimum premium and the statements made in the application
Insurance policies are offered on a take it or leave it basis, which make them: conditional contracts aleatory contracts unilateral contracts contracts of adhesion
contracts of adhesion
Which of the following BEST describes a Hospital Indemnity policy?
coverage that pays a stated amount per day of a covered hospitalization
a business overhead expense policy covers any loss of income by the business owner covers business expenses such as rent and utilities covers employee wages only reimburses the company for any reduction in sales due to the owners disability
covers business expenses such as rent and utilities
Producers would be in violation of the minnesota insurance laws pertaining to medicare supplement policies if they took which of the following actions? insisted that a person was eligible for medicare by reason of age sold a plan that provided coverage for the part b deductible delivered a policy to an applicant more than 7 business days after they received it for delivery sold life insurance and medicare supplement policies to an individual
delivered a policy to an applicant more than 7 business days after they received it for delivery
K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income? indemnity major medical travel disability income
disability income
which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual accident and health insurance? disability income policy premiums are not tax deductible disability income policy premiums are tax deductible major medical policy benefits are normally not taxed disability income policy benefits are normally not taxed
disability income policy premiums are tax deductible
which of the following statements BEST describes the intent of a coinsurance clause in a major medical policy? discourages over utilization of the insurance coverage minimizes the need for deductibles discourages adverse selection minimizes the waiting period
discourages overutilization of the insurance coverage
In a Disability Income policy, which of these clauses acts as a deductible? elimination period waiver period deductible period probationary period
elimination period
in a disability income policy, which of these clauses acts as a deductible? elimination period waiver period deductible period probationary period
elimination period
which of these is NOT a characteristic of a health reimbursement arrangement? employee funds the HRA entirely employer funds the HRA entirely HRAs can be offered with other health plans HRAs allow reimbursement for eligible medical expenses
employee funds the HRA entirely
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 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 to the insurer without the initial premium
S wants to open a tax-exempt health savings account. to qualify for this type of account, federal law dictates that S must be enrolled in a: low-deductible health plan medicare supplement high-deductible health plan flexible savings plan
high-deductible health plan HDHP
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? if the primary beneficiary is a minor at the time of the insured's death if the primary beneficiary dies before the insured if the insured died of accidental causes if the insured died of natural causes
if the primary beneficiary dies before the insured a contingent beneficiary will receive the policy proceeds if the primary beneficiary dies before the insured's death
An insurer receives proof of loss for an acceptable medical expense claim under an individual health insurance policy. under the time of payment of claims provision, the insurer MUST pay the benefits: immediately within a maximum of three months within a reasonable amount of time at least monthly
immediately the insurer must pay the benefits immediately after receiving proof of loss
Medicare part b does NOT cover occupational therapy inpatient hospital services physician and surgeon services medical equipment rental
inpatient hospital services
Information obtained from a phone conversation to the proposed insured can be found in which of these reports? agents report MIB report inspection report attending physicians report
inspection report
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
if a contract of adhesion contains complicated language, to whom would the interpretation be in favor of? insurer beneficiary reinsurer insured
insured
An insurance company normally has 2 years to contest information provided on an accident and health application. this 2 year period begins on the date that the medical examination is given producer completes the applicaiton insurer dates the policy the first premium is paid
insurer dates the policy
The phrase "this policy will only pay for a semi-private room" is an example of maximum policy limit internal limit stop loss participation percentage
internal limit
A life insurance arrangement which circumvents insurable interest statutes is called: a contract of adhesion an indemnity contract key person insurance investor-originated life insurance
investor-originated life insurance this is done when an investor or stranger persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor
stranger originated life insurance (STOLI) has been found to be in violation of which of the following contractual elements? consideration competent parties offer/acceptance legal purpose
legal purpose
which of the following health insurance coverages is BEST suited for meeting the expenses of catastrophic illness? major medical hospital expense surgical expense hospital income
major medical
the health insurance program which is administered by each state and funded by both the federal and state governments is called : long-term care medicaid medicare supplemental program medicare
medicaid
Which of the following characteristics is associated with a large group disability income policy? no waiting periods no medical underwriting no elimination periods no limit of benefits
no medical underwriting
the notice of claims provision requires a policyowner to provide proof of loss to an insurer within a specified time notify an insurer of a claim within a specified time wait 60 days after filing a claim to initiate a lawsuit against an insurer notify their physician of a claim within a specified time
notify an insurer of claim within a specified time
The benefits under a Disability Buy-Out policy are: normally paid in installments taxable to the beneficiary payable to the company or another shareholder normally paid after a short elimination period
payable to the company or another shareholder
insurance policies are considered aleatory contracts because they are take it or leave it contracts both parties consent to the contract performance is conditioned upon a future occurrence the contract is voidable upon proof of fraud
performance is conditioned upon a future occurance
What is the purpose of the Time of Payment of Claims provision? requires the insured to wait 60 days after submitting proof of loss before filing a lawsuit prevents delayed claim payments made by the insurer requires a probation period for each claim filed by the insured protects the insurer from frivolous lawsuits
prevents delayed claim payments made by the insurer
An individual who in any manner sells, solicits, or negotiates insurance on behalf of insurance companies for compensation is an insurance: solicitor adjuster producer representative
producer
what is the consideration given by an insurer in the consideration clause of a life policy? promise to never cancel coverage promise to pay a death benefit to a named beneficiary promise to not raise premiums promise to accept an insureds assignment of benefits
promise to pay a death benefit to a named beneficiary
the legal actions provision of an insurance contract is designed to do all of the following, except provide the insurer adequate time to research a claim protect the insured from having claim research delayed protect the producer give the insured guidelines
protect the producter
K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation? free-look reinstatement grace period consideration
reinstatement
T is covered by an Accidental Death and Dismemberment policy that has an irrevocable beneficiary. what action will the insurance company take if T requests a change of beneficiary request will be accepted only if in writing by the insured change will be made only if premiums are paid current change will be made immediately request of change will be refused
request of change will be refused. you need written consent of the beneficiary
R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity? residual disability recurrent disability presumptive disability occupational disability
residual disability usually a percentage of the total disability benefit for periods when the insured is unable to perform some of the duties of his/her occupation
Which provision allows a portion of any used medical benefits to be restored following a particular amount of benefit has been used, or after the policy has been in effect for a particular period of time? reimbursement benefit restoration of unused benefit restoration of used benefit medical offset benefit
restoration of used benefit
The percentage of an individuals primary insurance amount (PIA) determines the benefits paid in which of the following programs? social security disability income mediare supplements medicaid COBRA
social security disability income
which of the following is the reimbursement of benefits for the treatments of a beneficiary's injuries caused by a third party? indemnity subrogation legal action consideration
subrogation
Which of the following services is NOT covered under a hospitalization expense policy? daily room and board surgeons fees intensive care miscellaneous expenses
surgeons fees
T was insured under an individual disability income policy and was severely burned in a fire. as a result, T became totally disabled. the insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. what actions will the insurer take? the insurer will rescind the policy, deny the claim, and recover all payments made due to the policy not being post-claim underwritten, the insurer must continue to pay this claim claim will be rejected because of this criminal act, but no recovery of payments will be made claim will be denied but the policy will remain in force without further premium payments due to the insureds total disability
the insurer will rescind the policy, deny the claim, and recover all payments made
the consideration clause of an insurance contract includes the buyers guide a summary of the coverage provided the named beneficiaries the schedule and amount of premium payments
the schedule and amount of premium payments
Which of the following statements is true about most Blue Cross/Blue Shield organizations? they are the same as private insurance companies they are federally sponsored they are nonprofit organizations they are owned by hospitals and physicians
they are nonprofit organizations
Medicare is intended for all of the following groups, EXCEPT those enrolled as a full-time student those receiving social security disability benefits for at least 24 months those afflicted with chronic kidney failure those 65 and older
those enrolled as a full-time student
A disability elimination period is best described as a: time deductible dollar deductible eligibility deductible probation period
time deductible
the policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is grace period physical exam entire contract time limit on certain defenses
time limit on certain defenses
What is the elimination period of an individual disability policy? time period an insured must wait before coverage begins time period a disabled person must wait before benefits are paid time period after the policy issue date in which the provisions are still contestable the point in time when benefits are no longer payable
time period a disabled person must wait before benefits are paid
A business disability buyout plan policy is designed: as an incurred expense plan with a very short elimination period to pay benefits to the corporation or other shareholders to pay benefits to the insureds spouse
to pay benefits to the corporation or other shareholders
