RMI Exam 4
Betty's personal property is insured for $100,000 under her Homeowners 3 policy. If she usually keeps some personal property at a mountain cabin that she owns, how much coverage for this property is available under her homeowners policy? A) $10,000 B) $20,000 C) $40,000 D) $50,000
A) $10,000
Which of the following statements regarding health care expenditures in the United States is (are) true? I.As a nation, the U.S. spends significantly more per-person on health care than most other industrialized nations. II.Health care expenditures in the U.S. are high because everyone is covered by a health insurance plan. A) I only B) II only C) both I and II D) neither I nor II
A) I only
Which of the following statements about coverage for loss of use (Coverage D) under the Homeowners 3 policy is true? A) If a covered loss makes the home unfit for living, the insurer pays additional living expenses the insured may incur as a result of the loss. B) The duration of payments for additional living expenses is limited to a maximum of 30 days. C) There is no coverage for loss of rent if an insured peril makes the part of the premises rented to others uninhabitable. D) There is coverage for loss of business income if an insured peril forces a home business to be terminated.
A) If a covered loss makes the home unfit for living, the insurer pays additional living expenses the insured may incur as a result of the loss.
Which of the following statements about the Homeowners 6 (unit-owners form) policy is true? A) It includes personal liability coverage. B) It covers personal property on an open-perils basis. C) It covers the dwelling on an open-perils basis. D) It is designed for tenants who rent an apartment or a home.
A) It includes personal liability coverage.
Some managed care plans use physicians, hospitals, and health care organizations that agree to make medical services available to insureds at discounted fees. Insureds are not required to use these entities, but if they do, health care costs are less than if these entities are not used. Such health care entities are called A) Preferred Provider Organizations (PPOs). B) Health Maintenance Organizations (HMOs). C) Blue Cross/Blue Shield Plans. D) Health savings accounts (HSAs).
A) Preferred Provider Organizations (PPOs).
All of the following statements about long-term care insurance are true EXCEPT A) Premiums can be reduced by electing shorter elimination periods. B) A common benefits trigger is the inability to perform a certain number of activities of daily living. C) Protection against inflation is usually made available as an optional benefit. D) Policies currently sold are guaranteed renewable.
A) Premiums can be reduced by electing shorter elimination periods.
Which of the following statements about the coverage for other structures (Coverage B) under the Homeowners 3 policy is true? A) The coverage applies to a detached garage or tool shed on the residence premises. B) Structures attached to the dwelling by a fence or utility line are considered to be part of the dwelling rather than other structures. C) Coverage applies even if the other structure is used for business purposes. D) There is no coverage for a private garage if it is rented to a tenant of the dwelling.
A) The coverage applies to a detached garage or tool shed on the residence premises.
Which of the following statements about covered perils under the personal property coverage (Coverage C) of the Homeowners 3 policy is true? A) Theft losses to boats and watercraft are covered only if they occur at the insured's residence. B) Damage from an explosion is covered only if the explosion is the result of fire or lightning. C) Property damage from vehicles is covered only if it is caused by the insured. D) Smoke damage is covered only if it arises from agricultural or industrial operations.
A) Theft losses to boats and watercraft are covered only if they occur at the insured's residence.
Which of the following statements about the additional coverages under Section I of the Homeowners 3 policy is true? A) There is coverage for the reasonable cost incurred to protect property from further damage after a covered loss occurs. B) There is unlimited coverage for furnishings of the landlord in an apartment on the premises that is rented to others. C) Property removed from the premises because it is endangered by an insured peril is covered on a named-perils basis while it is outside the insured premises. D) There is no coverage for the increased cost of construction or repair to comply with an ordinance or law.
A) There is coverage for the reasonable cost incurred to protect property from further damage after a covered loss occurs.
All of the following are typical characteristics of individual medical expense coverage EXCEPT A) annual benefit limits. B) essential health benefits. C) deductibles. D) coinsurance.
A) annual benefit limits.
The Affordable Care Act requires all new medical expense plans to provide a comprehensive set of coverages and services. This comprehensive set of coverages and services that must be provided are called A) essential health benefits. B) dread disease benefits. C) long-term care benefits. D) respite care benefits.
A) essential health benefits.
Section I of the Homeowners 3 policy provides coverage for which of the following? A) loss of use B) personal liability C) disability of the homeowner D) medical payments
A) loss of use
One additional coverage under the homeowners policy makes available up to 10 percent of the Coverage A limit to cover increased repair costs after a loss in order to comply with a stricter building code. This additional coverage is called A) ordinance or law. B) reasonable repairs. C) concurrent causation. D) debris removal.
A) ordinance or law.
One provision of the Affordable Care Act is designed to benefit young adults up to age 26. This provision allows these young adults to A) remain covered under their parents' health insurance policies. B) receive a tax credit for their health insurance premium if they are unemployed. C) receive low-interest government loans to finance their health insurance. D) receive coverage under Medicare if they are not covered by a private health insurance plan.
A) remain covered under their parents' health insurance policies.
The major difference between the dwelling coverage (Part A) of the Homeowners 2 (Broad From) policy and the Homeowners 3 (Special Form) policy is that A) the HO-3 provides open perils ("all risks") coverage and the HO-2 provides named-perils coverage. B) the HO-3 provides actual cash value coverage, the HO-2 provides replacement cost coverage. C) the HO-3 is always written without a deductible, the HO-2 always written with a deductible. D) the HO-3 can be used for any type of construction, the HO-2 is limited to wood frame homes.
A) the HO-3 provides open perils ("all risks") coverage and the HO-2 provides named-perils coverage.
All of the following are duties of the mortgagee under the standard mortgage clause EXCEPT A) to reimburse the insurer for any loss payments. B) to notify the insurer of any change in ownership of the property of which the mortgagee is aware. C) to provide a proof of loss form if the insured fails to do so. D) to pay the premium if the insured fails to do so.
A) to reimburse the insurer for any loss payments.
Darla purchased an unendorsed Homeowners 3 policy. While the policy was in force, a fire occurred that destroyed a living room set. The living room set cost $4,000 new, but was 25 percent depreciated when the loss occurred. Replacement furniture will cost $4,400. Assuming no deductible, how much will Darla receive from her insurer? A) $3,000 B) $3,300 C) $3,400 D) $4,400
B) $3,300
Kristen has an individual medical expense policy with a $1,000 calendar-year deductible, a $5,000 annual out-of-pocket limit, and a 20 percent coinsurance requirement. Kristen was hospitalized for a surgical procedure in March, her first health care treatment received during the year. The total bill was $20,000. Considering the deductible and coinsurance, how much of this amount must Kristen pay? A) $4,400 B) $4,800 C) $5,000 D) $5,100
B) $4,800
All of the following statements about the cancellation of a Homeowners 3 policy are true EXCEPT A) The insurer may cancel a new policy for any reason if it has been in force for less than 60 days and is not a renewal policy. B) At least 100 days' notice of cancellation must be given if an insurer cancels a policy for nonpayment of premium. C) A policy written for longer than 1 year can be cancelled for any reason on the anniversary date by giving the insured at least 30 days' notice of cancellation. D) After a policy has been in force for at least 60 days, it can be cancelled by the insurer if the risk has increased substantially since the policy was issued. Answer: B
B) At least 100 days' notice of cancellation must be given if an insurer cancels a policy for nonpayment of premium.
Which of the following statements concerning the coverage of collapse of the dwelling under an unendorsed Homeowners 3 policy is true? A) There is no coverage for collapse, regardless of the cause of the collapse. B) Collapse is covered if it is caused by one of the Coverage C perils. C) If collapse is caused by an earthquake, the loss is covered. D) There is no coverage for collapse unless the proper endorsement is added to the policy.
B) Collapse is covered if it is caused by one of the Coverage C perils.
All of the following statements about the tax treatment of Health Savings Accounts (HSAs) are true EXCEPT A) Contributions to a qualified HSA are tax deductible. B) Distributions from a qualified HSA used to fund medical expenses are taxable income. C) Investment income in a qualified HSA accumulates income tax free. D) Distributions from a qualified HSA prior to age 65 for nonmedical purposes are subject to a 10 percent penalty tax.
B) Distributions from a qualified HSA used to fund medical expenses are taxable income.
Which of the following statements about the replacement cost provision of the Homeowners 3 policy is true? A) It applies to personal property losses only. B) Except for small losses, the insured must repair or replace the damaged property in order to receive full replacement cost. C) The insured is required to carry an amount of insurance equal to 100 percent of the replacement value of the insured property. D) Loss settlements are equal to 50 percent of the value of the loss if the insured is carrying less than the required amount of insurance.
B) Except for small losses, the insured must repair or replace the damaged property in order to receive full replacement cost.
Which homeowners policy is designed for the tenants of a rented premises? A) Homeowners 2 B) Homeowners 4 C) Homeowners 6 D) Homeowners 8
B) Homeowners 4
Which of the following statements about disability and disability income insurance is (are) true? I.Most disability income policies replace 100 percent of gross earnings. II.The probability of being disabled before age 65 is much higher than commonly believed. A) I only B) II only C) both I and II D) neither I nor II
B) II only
Which of the following statements about eligibility requirements for homeowners insurance is (are) true? I.A contract can be written on a twenty-unit apartment complex as long as the tenants are families. II.Separate forms are available for renters and condominium owners. A) I only B) II only C) both I and II D) neither I nor II
B) II only
Which of the following statements about eligibility requirements for qualified Health Savings Accounts (HSAs) is (are) true? I.Only individuals who are eligible for Medicare benefits can establish a qualified HSA. II.Applicants must be covered by a high deductible health plan and not be covered by any other comprehensive health plan to establish a qualified HSA. A) I only B) II only C) both I and II D) neither I nor II
B) II only
Which of the following statements about individual disability income policies that use a two-part definition of total disability is (are) true? I.During the initial period of disability, the insured must be unable to perform the duties of any gainful occupation. II.After the initial period of disability, the insured must be unable to perform the duties of any occupation for which he or she is reasonably fitted by education, training, and experience. A) I only B) II only C) both I and II D) neither I nor II
B) II only
Which of the following statements about long-term care insurance is (are) true? I.Long-term care insurance is inexpensive, especially if purchased at older ages. II.Purchasers have a choice of daily benefits and benefit periods. A) I only B) II only C) both I and II D) neither I nor II
B) II only
Which of the following statements about the appraisal clause in the Homeowners 3 policy is (are) true? I.It is used to determine a value for personal property when the policy is issued. II.It is used to help settle disputes over the amount of a loss after a loss has occurred. A) I only B) II only C) both I and II D) neither I nor II
B) II only
Which of the following statements is (are) true regarding how the Homeowners 3 policy handles the peril of collapse? I.Collapse is specifically excluded, and there are no exceptions to the exclusion. II.Collapse that is caused by a Coverage C peril is covered. A) I only B) II only C) both I and II D) neither I nor II
B) II only
Which of the following statements is true regarding disability income insurance? A) The purchase of disability income insurance is not necessary if you are covered under workers compensation. B) Increasing the elimination period reduces the premium for disability income insurance. C) Disability income insurance usually replaces 100 percent of lost income. D) A uniform definition of disability appears in all disability income policies.
B) Increasing the elimination period reduces the premium for disability income insurance.
Which of the following is a general exclusion under Section I of the Homeowners 3 policy? A) Water damage caused by accidental discharge from a household appliance. B) Losses due to the failure of the insured to use all reasonable means to save and preserve property after the time of a loss. C) Losses resulting from a power failure caused by an insured peril at the residence premises. D) Losses due to a windstorm.
B) Losses due to the failure of the insured to use all reasonable means to save and preserve property after the time of a loss.
Which of the following statements about health savings accounts (HSAs) is true? A) There are no limits to annual contributions that an individual may make to his or her HSA. B) Once an individual has reached age 65 or is covered by Medicare, no additional contributions to the HSA may be made. C) The health insurance plan covering the HSA account beneficiary is not permitted to use a deductible. D) HSAs offer no tax benefits for the individual who establishes the account.
B) Once an individual has reached age 65 or is covered by Medicare, no additional contributions to the HSA may be made.
Which of the following statements about covered perils and loss settlement under an unendorsed Homeowners 3 policy is true? A) The dwelling is covered on a named-perils basis. B) Personal property losses are settled on an actual cash value basis. C) Losses to the dwelling are always settled on an actual cash value basis. D) Personal property is covered on an open-perils basis.
B) Personal property losses are settled on an actual cash value basis.
Michelle had four matching end tables in her home. A fire damaged the home, destroying two of the end tables. Michelle's home was covered by an unendorsed Homeowners 3 policy. Which of the following is true with regard to the settlement for the end tables in this case? A) Loss to a pair or set is excluded under the policy. B) The insurer will pay the difference in actual cash value of the property before and after the loss. C) The insurer will pay the replacement cost of the loss. D) If a partial loss to a pair or set occurs, the insurer is liable for replacement of the entire pair or set. Answer: B
B) The insurer will pay the difference in actual cash value of the property before and after the loss.
Which statement is true regarding the advanced premium tax credits for individuals and families under the Affordable Care Act? A) The tax credit is the same flat amount for individuals and families. B) The tax credit is based on income and is designed to limit the amount spent on health insurance premiums to make the insurance affordable. C) The tax credit is only available to high-income individuals and families. D) The tax credit is an expenses that lowers taxable income.
B) The tax credit is based on income and is designed to limit the amount spent on health insurance premiums to make the insurance affordable.
Which of the following property is covered under the personal property coverage (Coverage C) of the Homeowners 3 policy? A) a pet dog owned by the named insured B) a bicycle owned by a foster child living with the named insured C) a motor vehicle owned by the named insured D) a stamp collection insured under a separate policy
B) a bicycle owned by a foster child living with the named insured
Ellen believes the value of the loss to her home is $30,000. The insurer has offered $18,000 to settle the loss. If Ellen and the insurer cannot agree on the value of the loss, which homeowners policy provision specifies how this dispute will be settled? A) insurer's option B) appraisal clause C) loss payment clause D) mortgage clause
B) appraisal clause
Which of the following is an additional coverage provided under Section I of the Homeowners 3 policy? A) medical payments to others B) debris removal C) personal liability D) intentional property damage caused by an insured
B) debris removal
Ellen purchased a health insurance policy. Under the provisions of the Affordable Care Act, which of the following renewal provisions must the insurer use in the policy? A) cancellable B) guaranteed issue C) renewable at the insurer's option D) conditionally renewable
B) guaranteed issue
Because of the Affordable Care Act, all new medical expense plans that offer individual and group coverage must accept all individuals and employers in the state who apply for coverage. These insurers are required to continue to renew the coverage at the option of the individual or plan sponsor. Thus, under the Affordable Care Act, the renewal provision is A) conditionally renewable. B) guaranteed issue. C) nonrenewable. D) renewable at the insurer's option.
B) guaranteed issue.
Kevin has an individual disability income policy that his insurer agrees to keep in force until age 60. However, the company has the right to increase the premium each year for the underwriting class in which Kevin has been placed. Which renewal provision is found in Kevin's policy? A) noncancellable B) guaranteed renewable C) conditionally renewable D) nonrenewable.
B) guaranteed renewable
Greta purchased a long-term care policy. Under a typical policy, Greta's eligibility for benefits may be triggered by A) how long premiums have been paid. B) inability to perform activities of daily living. C) continuous hospitalization for at least 60 days. D) eligibility for Medicare benefits.
B) inability to perform activities of daily living.
The Affordable Care Act has provisions that improve the quality of health care and lower costs. All of the following are examples of these provisions EXCEPT A) reducing paperwork and administrative expenses. B) increasing the number of medical specialists and reducing the number of primary care physicians. C) compensating physicians based on value rather than on the volume of services. D) cracking down on healthcare fraud.
B) increasing the number of medical specialists and reducing the number of primary care physicians.
Under the Affordable Care Act, if a health insurer does not meet the minimum loss ratio requirement, the insurer must A) pay a fine to the federal government. B) issue rebates to the people the insurer covered. C) not sell any health insurance for a period of one year. D) reduce the premium on the policies it sells the following year.
B) issue rebates to the people the insurer covered.
Individual medical expense insurance sold in the Health Insurance Marketplace is characterized by which of the following? A) narrow range of benefits B) no lifetime benefit limits C) no exclusions D) first-dollar coverage
B) no lifetime benefit limits
Prior to passage of the Affordable Care Act, insurance policies typically contained a provision excluding coverage for impairments that were present or were treated during a specified period prior to the effective date of the policy. This provision is a(n) A) time limit on certain defenses. B) preexisting-conditions clause. C) benefit period provision. D) incontestable clause.
B) preexisting-conditions clause.
Linda wants to purchase a homeowners policy. She has some valuable personal property to which internal policy limits apply. Her agent said that she could obtain coverage under her homeowners policy by attaching a list of this valuable property with specific amounts of insurance. Such a listing is called a(n) A) binder. B) schedule. C) application. D) warranty.
B) schedule
All the following are common exclusions in a medical expense insurance policy EXCEPT A) dental care. B) surgeons' fees. C) long-term care. D) routine eye care.
B) surgeons' fees.
The Affordable Care Act includes a provision designed to help small employers make health insurance coverage available to their employees. This provision allows small employers to reduce their federal income tax by a percentage of the employer's contribution to health insurance for employees. This subsidy, in the form of reduction of income taxes, is called a A) marginal tax rate. B) tax credit. C) tax bracket. D) tax deduction.
B) tax credit.
All of the following are covered under the dwelling coverage (Coverage A) of the Homeowners 3 policy EXCEPT A) any structure attached to the dwelling. B) the land on which the insured dwelling is located. C) materials and supplies intended for alteration or repair of the dwelling. D) materials and supplies intended for construction of a detached garage.
B) the land on which the insured dwelling is located.
If there is a conflict between state law and a provision in a homeowners policy, A) the policy wording takes precedence. B) the state law takes precedence. C) the policyholder is entitled to whichever provides broader coverage. D) the policy is null and void.
B) the state law takes precedence.
A dwelling with a replacement cost of $150,000 was insured under a Homeowners 3 policy for $100,000 at the time the roof was destroyed by a windstorm. The actual cash value of the loss was $9,000, but it will cost $12,000 to replace the roof. Ignoring any deductible, what will the insurer pay to settle this loss? A) $8,000 B) $9,000 C) $10,000 D) $12,000
C) $10,000
David has a Homeowners 3 policy that provides $280,000 of insurance on his dwelling, which has a current replacement value of $400,000. Ignoring any deductible, how much will David collect if a roof with a replacement value of $16,000 but an actual cash value of $10,000 is destroyed in a fire? A) $10,000 B) $12,000 C) $14,000 D) $16,000
C) $14,000
All of the following statements about optional disability income benefits are true EXCEPT A) Under a cost-of-living rider, benefits are periodically adjusted for inflation. B) A Social Security rider pays additional benefits if the insured is turned down for Social Security disability benefits. C) Adding a return of premium rider results in a lower initial premium. D) Under an option to purchase additional insurance, the insured has the right to buy additional insurance at specified times without evidence of insurability.
C) Adding a return of premium rider results in a lower initial premium.
Cal is renting an apartment. Which homeowners policy is specially designed to insure renters? A) HO-2 B) HO-3 C) HO-4 D) HO-6
C) HO-4
Brian purchased an unendorsed Homeowners 3 policy. Under the policy, Brian's detached garage is also covered. Which of the following statements regarding coverage on the garage is true? A) The garage is covered on a named-perils basis. B) Any losses to the garage are settled on an actual cash value basis. C) The cost of removing debris is included in the policy limit on the garage, but if the damage and cost of removing debris exceed the limit, an additional five percent of the policy limit is available. D) The garage is covered under the dwelling coverage, Part A.
C) The cost of removing debris is included in the policy limit on the garage, but if the damage and cost of removing debris exceed the limit, an additional five percent of the policy limit is available.
A fire destroyed the home next door to Brad's home. The fire department chief was concerned that the damaged home would collapse on to Brad's home, so he ordered Brad to evacuate his home. Which of the following statements is true concerning the cost of Brad's hotel room while he is complying with the fire chief's order? A) The cost of the hotel room is not covered, as Brad's home was not directly damaged. B) The cost of the hotel room is covered under the "fair rental value" coverage of Part D. C) The cost of the hotel room is covered under the "prohibited use" coverage of Part D. D) The cost of the hotel room is covered under the dwelling coverage of Part A.
C) The cost of the hotel room is covered under the "prohibited use" coverage of Part D.
The Homeowners 3 policy limits the amount of coverage provided on certain personal property (e.g. coin collections and silverware). This personal property can be adequately insured by A) lowering the deductible which applies to personal property losses. B) storing the property away from the home at another location. C) adding a schedule to the policy listing the property with specific amounts of insurance. D) adding an appraisal clause to the policy.
C) adding a schedule to the policy listing the property with specific amounts of insurance.
Persons insured under Section I of the Homeowners 3 policy include which of the following? I.A spouse of the named insured if living in the same household II.The named insured's children who are under age 24 and who are full-time college students A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
Problems with the health care system in the United States that led to implementation of the Affordable Care Act included I.Rising healthcare expenditures II.Considerable waste and inefficiency in the healthcare system A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
Purposes of the coinsurance provision in medical expense insurance policies include which of the following? I.to reduce premiums II.to prevent overutilization of policy benefits A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
Under the Affordable Care Act, which of the following statements are true? I.Health insurers cannot use pre-existing conditions exclusions. II.Health insurers cannot impose annual benefit limits and lifetime benefit limits. A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
Which of the following is (are) included among the duties of an insured following a loss covered under the Homeowners 3 policy? I.To file a proof of loss within a specified time period after the insurer's request II.To prepare an inventory of damaged personal property A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
Which of the following statements about high deductible health insurance plans is (are) true? I.Coverage under a high deductible health plan is necessary to establish a qualified health savings account (HSA). II.High deductible health plans provide a maximum limit on annual out-of-pocket expenses. A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
Which of the following statements about the personal property coverage (Coverage C) of the Homeowners 3 policy is (are) true? There are special limits of liability that apply to certain types of personal property. The full amount of coverage applies only if the property is permanently located at any residence of the insured. A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
Which of the following statements concerning individual medical expense insurance is (are) correct? I.Once the deductible is satisfied, no additional deductible is payable during the calendar year. II.Family deductibles are substantially higher than individual deductibles. A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
Which of the following statements is (are) true concerning benefit payments under long-term care insurance? I.Expense-incurred policies pay for actual charges up to a specified daily limit. II.Per diem policies pay a specified daily benefit regardless of the charges incurred. A) I only B) II only C) both I and II D) neither I nor II
C) both I and II
The homeowners policy excludes a loss brought about by two or more perils where one peril is covered under the policy and the other perils are excluded. This situation is called A) ordinance or law. B) proximate cause. C) concurrent causation. D) nullification.
C) concurrent causation.
Which of the following losses to a dwelling would be covered under an unendorsed Homeowners 3 policy? A) smoke damage resulting from agricultural operations of a neighboring farmer B) damage to the structure caused by a flash flood C) damage to the structure caused by the weight of heavy snow on the roof D) damage to a floor caused by water backing up through a sewer pipe
C) damage to the structure caused by the weight of heavy snow on the roof
All of the following are additional coverages under Section I of the Homeowners 3 policy EXCEPT A) the reasonable expenses of removing debris after an insured loss. B) fire department service charges for which the insured is liable by contract or agreement. C) damage to trees and shrubs caused by a windstorm. D) losses incurred from the unauthorized use of a stolen credit card.
C) damage to trees and shrubs caused by a windstorm.
Mike and Susan built their "dream home." They insured their home for its full replacement cost. They also added an endorsement that will pay up to an additional 20 percent of the policy limit in case the cost of rebuilding the home after a loss is greater than the policy limit. The basis under which Mike and Susan insured their home is called A) actual cash value. B) valued policy coverage. C) extended replacement cost. D) guaranteed replacement cost.
C) extended replacement cost.
The Affordable Care Act requires that most U.S. citizens and legal residents have qualifying health insurance or pay a financial penalty. This provision of the Affordable Care Act is known as the A) Health Insurance Marketplace option. B) public option. C) individual mandate. D) premium subsidy option.
C) individual mandate.
If the insurer broadens coverage during the policy period without an increase in premium, and the broadened coverage is not part of a general program revision, the insured is entitled to the broadened coverage under which policy provision? A) waiver of policy provisions B) subrogation C) liberalization clause D) pair or set clause
C) liberalization clause
Beth's disability income insurance policy provides benefits for accidental death, dismemberment, and loss of sight. The maximum amount payable under this benefit is known as the A) face value. B) cash value. C) principal sum. D) monthly benefit.
C) principal sum.
Prior to passage of the Affordable Care Act, insurers could go back to the date a health insurance policy became effective and render the policy void due to a clerical error. This practice, which is prohibited under the Affordable Care Act except in cases of fraud or intentional misrepresentation of a material fact, is called A) estoppel. B) retention. C) rescission. D) reformation.
C) rescission.
All of the following are methods used to fund the Affordable Care Act EXCEPT A) an excise tax on the sale of medical devices. B) reduced payments to Medicare Advantage plans. C) tort reform measures that reduce medical malpractice claims. D) savings in the Medicare and Medicaid programs from reduced fraud and abuse.
C) tort reform measures that reduce medical malpractice claims.
All of the following are historical reasons for the increase in health care expenditures in the U.S. EXCEPT A) cost insulation because of third-party payers. B) employer-sponsored health insurance. C) universal health insurance coverage. D) technological advances in health care.
C) universal health insurance coverage.
Which of the following is a covered peril under the personal property coverage (Coverage C) of an unendorsed Homeowners 3 policy? A) earthquake B) nuclear radiation C) windstorm D) flood
C) windstorm
Dirk required surgery for a kidney impairment. His total bill for medical services was $50,000. Dirk has a medical expense policy with a $1,000 calendar-year deductible and a $5,000 annual out-of-pocket limit. His coinsurance percentage is 20 percent. The out-of-pocket limit applies to coinsurance only. Assuming this surgery and hospitalization were the first medical care that Dirk received during the year and that all of the hospital services were eligible for coverage under the policy, how much of the $50,000 bill will the insurer pay? A) $39,000 B) $39,200 C) $40,000 D) $44,000
D) $44,000
Shauna purchased a condominium unit. Which homeowners policy is specially designed for condominium unit owners? A) HO-2 B) HO-3 C) HO-4 D) HO-6
D) HO-6
One provision of the Affordable Care Act provides creates in each state a transparent and competitive insurance marketplace where individuals and small firms can purchase affordable and qualified health coverage. This marketplace is called a A) Medicaid plan. B) Medicare plan. C) Health Maintenance Organization (HMO). D) Health Insurance Marketplace.
D) Health Insurance Marketplace.
Jose and Maria would like "open-perils" coverage on their home and their personal property. Which unendorsed homeowners form provides this coverage? A) Homeowners 2 B) Homeowners 3 C) Homeowners 4 D) Homeowners 5
D) Homeowners 5
Which of the following statements about individual disability income policies is true? A) Benefits are typically paid only for disabilities resulting from sickness. B) Benefits paid for partial disabilities are usually greater than benefits paid by the same policy for total disabilities. C) Most policies pay a benefit equal to 100 percent of the disabled person's lost income. D) Many policies provide or make available a residual disability benefit for persons who are able to work but at a reduced income.
D) Many policies provide or make available a residual disability benefit for persons who are able to work but at a reduced income.
The Affordable Care Act has a provision that expands a public assistance program designed to make health coverage available to low-income individuals by increasing the maximum amount of income that can be earned and still qualify for benefits. As a result, millions of individuals are eligible for coverage under this program. This public assistance program is called A) Medicare. B) Health Maintenance Organization. C) Health Insurance Marketplace Exchange. D) Medicaid.
D) Medicaid.
All of the following statements about individual disability income policies are true EXCEPT A) Premiums are often waived while a person is disabled but must be resumed if the insured recovers. B) At the time of purchase, the insured can choose the length of the benefit period from among several available options. C) In order to encourage rehabilitation, benefits may be continued during periods of vocational training. D) Most disability income insurance policies contain an elimination period of 10 or fewer days.
D) Most disability income insurance policies contain an elimination period of 10 or fewer days.
Ted borrowed $140,000 from ABC Bank to purchase a home and pledged the home as collateral for the loan. Shortly after purchasing the home, Ted lost his job. He could not find another job and could not pay the monthly mortgage. Ted set fire to the home. The claims adjuster suspected arson, and an investigation proved that Ted intentionally caused the loss. Under the mortgage clause of the Homeowners 3 policy, how will this loss be settled? A) The insurer has no liability because the loss was intentional. B) The insurer will pay Ted the actual cash value of the loss as intentional loss is not excluded. C) The insurer will pay ABC the value of its insurable interest and pay Ted the value of his insurable interest. D) The insurer will pay ABC the value of its insurable interest and then attempt to recoup the loss payment from Ted.
D) The insurer will pay ABC the value of its insurable interest and then attempt to recoup the loss payment from Ted.
Which of the following statements about mandatory provisions in individual health insurance policies is true? A) Insurers are not permitted to place time limits on filing claims or providing proof of loss. B) The time limit on certain defenses provision prohibits the insurance company from denying a claim based on a fraudulent misstatement by the applicant after the policy has been in force three months. C) The usual length of the grace period is 180 days. D) Under the reinstatement provision, a health insurance policy that has lapsed can be put back in force.
D) Under the reinstatement provision, a health insurance policy that has lapsed can be put back in force.
The effect of an annual out-of-pocket limit in an individual medical expense policy is to A) limit the lifetime benefits payable under the policy. B) put a cap on annual benefits the insurer will pay. C) prevent the insured from receiving duplicate benefits if medical expenses are also covered under workers compensation insurance. D) cover 100 percent of eligible medical expenses after an insured has incurred a specified amount of annual out-of-pocket expenses.
D) cover 100 percent of eligible medical expenses after an insured has incurred a specified amount of annual out-of-pocket expenses.
Which of the following types of water damage is covered under an unendorsed Homeowners 3 policy? A) damage from a flood caused by torrential rain B) damage from water backing up through a drain C) damage from water below the surface of the ground that seeps into a basement D) damage from water that overflows from a malfunctioning washing machine
D) damage from water that overflows from a malfunctioning washing machine
All of the following losses are subject to special limits of liability under the Homeowners 3 policy EXCEPT A) theft of firearms. B) destruction by fire of property used for business purposes. C) storm damage to a boat at a marina. D) furniture destroyed by a fire.
D) furniture destroyed by a fire.
Which of the following statements about the Homeowners 3 policy is (are) true? I.Losses to the dwelling are always settled on an actual cash value basis. II.Coverage on personal property is limited to $5,000. A) I only B) II only C) both I and II D) neither I nor II
D) neither I nor II
Which of the following statements about the Homeowners 8 policy is (are) true? I.Losses to the dwelling are settled on a replacement cost basis if the dwelling is insured for its full market value. II.It is designed primarily for expensive, newer, dwellings. A) I only B) II only C) both I and II D) neither I nor II
D) neither I nor II
Which of the following statements is (are) true regarding renters insurance? I.Renters insurance is needed if you rent a house, but is not needed if you rent an apartment. II.The ISO renter's policy provides open perils ("all-risks") coverage on the insured's personal property. A) I only B) II only C) both I and II D) neither I nor II
D) neither I nor II
The inability of the insured to perform some but not all of the important duties of his or her occupation is called A) residual disability. B) total disability. C) recurrent disability. D) partial disability.
D) partial disability
Barb was injured in an auto accident. She was totally disabled and collected disability income benefits for 8 months. She would like to return to work on a part-time basis to see if her recovery is complete. During this period, her insurer will pay reduced disability income benefits. This type of disability is called A) recurrent disability. B) presumptive disability. C) permanent disability. D) partial disability.
D) partial disability.
Under the Homeowners 3 policy, all of the following are options of the insurer for settling claims EXCEPT A) paying the claim in cash. B) replacing the property. C) repairing the property. D) paying the claim with insurance company stock.
D) paying the claim with insurance company stock.
Following catastrophic hurricane losses, South Coast Insurance Company changed its deductible provision. Rather than using a specified dollar value, $250 for example; the dollar value of the deductible increases with the size of the loss. The type of deductible that South Coast changed to is called a(n) A) calendar-year deductible. B) aggregate deductible. C) straight deductible. D) percentage deductible.
D) percentage deductible.
One long-term care insurance benefit trigger considers whether the insured needs supervision to protect against threats to health or safety due to memory loss or disorientation. This benefit trigger is referred to as a(n) A) activities of daily living trigger. B) medical necessity trigger. C) needs test trigger. D) severe cognitive impairment trigger.
D) severe cognitive impairment trigger.
All of the following statements about conditions under a Homeowners 3 policy are true EXCEPT A) If an insurer broadens coverage without an additional premium during the policy period, the broadened coverage applies immediately to the present policy. B) A waiver or change in any policy provision must be approved in writing by the insurer to be valid. C) The insurer must give written consent for an assignment of the policy to be valid. D) If the named insured dies, coverage automatically ceases with respect to any property of the deceased.
If the named insured dies, coverage automatically ceases with respect to any property of the deceased.
