Practice Exam Questions
A policyowner has an indemnity policy in which he is responsible for 30% of usual and customary costs and the insurer is responsible for the remaining 70%. After the insured's visit to a doctor, the insurance company is sent a bill for $330. The customary cost of services in this case is $300. How much will the insured need to pay?
$120. the insurer will pay up to 70% of customary costs. this leaves the insured responsible for the remaining 30% (300 X .30=90) in addition the insured must pay any amount above the usual and customary costs (330-300=30) therefore the insured must pay $120 (90+30=120)
If a producers license lapses, how much time does the producer have to apply for reinstatement without having to take an exam?
12 months
Health insurance carriers who wish to stop doing business in the small employers market must notify the commissioner and each small employer how many days in advance?
180 days
During each licensing period, every licensee subject to Minnesota's continuing education requirement must complete a minimum of
24 credit hours
To be entitled to have small employers health coverage issued on a guaranteed basis how many eligible employees must participate in a health benefit plan?
75%
Which of the following reports will provide the underwriter with the information about a consumer's credit?
Consumer Report
Which of the following is a specified dollar amount that the insured must pay before the policy benefits begin?
Deductible
Under which of the following employer-provided plans are the benefits taxable to an employee in proportion to the amount of premium paid?
Disability Income
Two individuals are in the same risk and age class; yet they are charged different rated for their insurance policies due to an insignificant factor. What is this called?
Discrimination
In disability insurance, a deductible stated in days instead of dollars is known as
Elimination Period
Which of the following homeowners coverage forms applies to personal property and does NOT include structure coverage?
H0-4
A Medicare SELECT policy does all of the following EXCEPT
prohibit payment for regularly covered services if provided by non-network providers
Incontestability, consideration and payment of premiums are examples of policy
provisions
Which type of insurance is based on mutual agreements among subscribers?
reciprocal insurance
Which of the following features is available in term life insurance?
renewabiliity
Which health insurance provision describes the insured's right to cancel coverage?
renewal provision
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
Concerning group Medical and Dental insurance, which of the following statements is INCORRECT
Employee benefiits are tax deductible the year in which they were received
Which of the following is an advantage of buying an annually renewable term policy?
Evidence of insurability is not required at renewal
Which of the following statements is NOT correct?
Medicare Advantage must be provided through HMO's
Which characteristics does NOT describe managed care?
Unlimited access to providers
The conversion privilege allows a person to change coverage from
a group policy to an individual policy without evidence of insurability
Which one of the following is an eligibility requirement for Social Security disability income benefits?
fully insured status
As it pertains to group health insurance COBRA stipulates that
group coverage must be extended for teminated employees up to a certain period of time at the former employees expense
All of the following are covered by Part A of Medicare EXCEPT
physicians and surgeons services
All of the following statements are true regarding a noncontributory group life insurance plan EXCEPT
up to 25% of employees may contribute to the premium
How long must insurers keep records related to advertisement of insurance policies?
3 years
Prior to purchasing a Medigap policy, a person must be enrolled in which of the following?
Parts A and B of Medicare
Which of the following insurers owned by stockholders who have the usual rights of ownership, including the right of voting?
Stock
Under the commercial property basic form, all of the following caused of loss will be covered EXCEPT
falling objects
Units with the same or similar exposures to loss are referred to as
homogeneous
What is the purpose of blanket life insurance?
to cover groupd of people who are exposed to a common hazard
Which of the following are perils that are NOT insured against?
exclusions
Which of the following is correct regarding the taxation of group medical expense premiums and benefits?
Premiums are tax deductible and benefits are not taxed
Which of the following of life insurance coverage is designed for groups of people who are exposed to a common hazard?
blanket
All of the following are benefits of cafeteria plans EXCEPT
carrying money from one year to the next
In a group health policy, a probationary period is intended for people
who joined the group after the effective date
Medical payment coverage on a homeowners policy applies to medical costs incurred within how many years of the accident?
3
The free-look period for long-term care policies sold in Minnesota is
30 days
Which health insurance provision describes the insureds right to cancel coverage?
Renewal Provision
Cafeteria plans must pass all of the following discrimination tests EXCEPT
demographics
What are 2 types of losses?
direct and consequential
Social Security disability definition includes all of the following EXCEPT
disability expected to last for at least 6 months
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party?
insurer to the insured
Concerning Medicare Part B, which statement is INCORRECT?
it is fully funded by social security taxes (FICA)
An insurer can use MBI for all of the following EXCEPT
justifying denial of a policy
Under workers compensation, which of the following benefits are NOT included?
legal benefits
All of the following are types of indemnity plans EXCEPT
limited
Which of the following types of groups are formed when several similar or related small companies join forces to create a large pool of people that the insurer will accept as a group?
multiple-employer trusts
If a plan provides coverage for mental health and chemical dependency, the coverage
must be the same as for any other hospital and medical services
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
not taxable since the IRS treats them as a return of a portion of the premium paid
What is the purpose of a certificate of insurance?
to provide an individual insured with evidence of insurance
What is the maximum number of employees allowed in order for a group to qualify for a guaranteed-issue group plan?
50
An insured owes, his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this?
Unpaid premium
Which of the following is a feature of a disability buyout plan?
a lump-sum benefit payment option
Under a Key Person disability income policy, premium payments
are made by the business and are not tax-deductible
Annuities are purchased to
liquidate an estate
What is moral hazard?
living behaviors that tend to put an individual at greater risk of injury
Which of the following is true regarding elimination periods and the cost of coverage?
the longer the elimination period the lower the cost of coverage
The following are all types of disability income insurance EXCEPT
builders risk disability
Money that an individual pays for health care services after a deductible has been paid is called
coinsurance
Which of the following options may allow a vanishing premium in life insurance policies?
dividends
Which policy provision outlines the specific responsibilities of the insured in the event of a loss?
duties of the insured
All of the following are differences between individual and group health insurance EXCEPT
individual insurance does not require medical examinations, while group insurance does require medical examinations
A stop-loss limit provision puts a cap on which of the following?
coinsurance a policyholder must pay
Which of the following terms is defined as the reduction of value of the person or property insured in a policy?
loss
A participating insurance policy may do which of the following?
pay dividends to the policyowner
When a group Medicare Supplement policy is terminated by the policyholder and not replaced, the issuer must offer each certificate holder
an individual policy
Coverage under a group accident and health cannot contain any provision regarding pre-existing conditions for
hadicapped dependents of the insured
Which of the following statements is true regarding group health insurance underwriting?
medical insurance underwriting is typically not necessary for large groups but may be required for small groups
Which of the following is NOT among the components that make up a commercial package policy (CPP)?
dwelling
In variable life policies where is the cash value invested?
in seperate accounts
Which of the following provisions specifies the dollar amount that the insured must pay before the insurer will start to pay policy benefits?
deductible
After a persons employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is not true?
by law, the new, individual policy must provide the same benefits as the group policy
A term life insurance policy that may be changed into a whole life insurance policy is
convertible
Which of the following is the portion of a loss that is considered the responsibility of the insured?
deductible
Which of the following provisions states what must be included for an insurance contract to be considered complete?
entire contract
Which of the following is NOT a mandatory provision in health insurance policies?
illegal occupation
Which clause prevents an insurer from denying a claim due to statements in an application after a specific period of time?
incontestability
A modified premium is
increase a pre-specified time and then over the life of the policy
To purchase insurance, the policyowner must face the possibility of a financial loss or the loss of something else. What is this concept called?
insurable interest
Which of the following best describes the unfair trade practice of defamation?
making derogatory oral statements about another insurers finacial condition
Which of the following policy provisions states that the insured is required to notify the insurer in writing if events leading to a possible claim have occurred?
notice of claim
A guaranteed renewable health insurance policy allows the
policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class
A small business owner is the insured under a disability policy that funds a buy- sell agreement. If the owner dies or becomes disabled, the policy would provide which of the following?
cash to the owner's business partner to accomplish a buyout
This type of liability refers to damage caused by defective products, even when the manufacturers fault or negligence cannot be proven
strict
The comprehensive health association contracts with all of the following entities to provide coverage for their subscribers EXCEPT
surplus lines insurers
Whose responsibility is it to determine if all of the questions on an application have been answered?
the agent
Which of the following is a characteristic of a Reciprocal Insurance Exchange?
the chied administrator of the insurer is called an "attorney-in-fact"
In Minnesota, an HMO must hold a certificate of authority granted by
the commissioner
An insured submitted a notice of claim to the insurer, but never received claims forms. He later submitted proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true?
the insured was in compliance with the policy requirements regarding claims
Which of the following is NOT a feature of a guaranteed renewable provision?
the insurer can increase the policy premium on an individual basis
A woman's health insurance policy dictates which doctors she is allowed to see. Her health providers share an assumed risk for their patients and encourage preventative care. What best describes the health system that the woman is using?
managed care
A corporation that contracts for health services for subscribers in exchange for the periodic payment by or on behalf of the subscribers and that does not bill the subscriber directly but bills the service plan is classified as a
nonprofit health service plan corporation
Which of the following provision states that it is the insureds responsibility to notify the insurer of a loss within a specified number of days?
notice of claim
If more than one policy is in force and covering the same risk at the time of loss, which provision defines how each policy will respond?
other insurance
In insurance, an offer is usually made when
the completed application is submitted
The period of time immediately following a disability during which benefits are not payable is
the elimination period
To what organization must all admitted insurers belong?
the insurance guaranty association