Supplemental Insurance

The free-look period for long-term care policies sold in Minnesota is

10 days. Long-term care policies in Minnesota have a 30-day free-look period.

After an insurance company examination, the Commissioner or the examiner appointed by the Commissioner must file a written report of the examination within

30 days. The report relating to the examination must be filed no later than 60 days after the examination is completed.

Coverage for a hospital stay following a cesarean section shall not be limited to less than

48 hours. Coverage for a hospital stay following a cesarean section shall not be limited to less than 96 hours.

A licensed Minnesota insurance producer must notify the Commissioner of a change of address within

5 business days. A licensed Minnesota insurance producer must notify the Commissioner of a change of address within 10 days.

All of the following events will terminate a producer's certificate of appointment, EXCEPT

A producer's license expires and is not renewed. An appointment by an insurer is based upon the person maintaining a valid insurance license. Although the appointment is made by the head of the Insurance Department, that person leaving the office does not terminate existing appointments.

The required provisions of a health insurance policy

Accidental injury is covered immediately, but losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date.

Under which provision can a physician submit claim information prior to providing treatment?

Anticipatory Treatment Under the prospective review or precertification provision, the physician can submit claim information prior to providing treatment to know in advance if the procedure is covered under the insured's plan and at what rate it will be paid.

Which of the following statements regarding Business Overhead Expense policies is NOT true?

Any benefits received are taxable to the business. Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.

An insurance producer must disclose his or her name and the name of the agency or insurer they represent

At the delivery of a policy. When first meeting with a potential buyer, before a personal solicitation, producer must disclose their name, the name of the agency or insurer, and must disclose the fact that they are in the insurance business.

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

Blanket A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.

Evidence of Insurance

Certificate of insurance given to each member under the MASTER POLICY.

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Conditional A contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written.

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost

Counts toward coinsurance. An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.

What type of care is Respite care?

Daily medical care, given by medical personnel Respite Care is designed to provide relief to the family care giver, and can include a service such as someone coming to the home while the care giver takes a nap or goes out for a while. Adult day care centers also provide this type of relief for the caregiver.

In long-term care (LTC) policies, as the benefit period lengthens, the premium

Decreases. LTC policies define the benefit period for how long coverage applies, after the elimination period. The longer the benefit period, the higher the premium will be.

What type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled?

Disability Buy-Sell Key person disability is purchased by the employer on the life of a key employee to cover the expense of hiring and training a replacement for the key person.

Which is true regarding HMO coverage?

It is divided by the state.

Master Policy

One group policy ( no matter how many members).

Medicare PART B

Provides doctors and physician services

Insurers usually do not reimburse claimants for 100% of income lost due to disability. What is the reason for insurer limitations on coverage amounts?

To pay no more than 50% of the pre-disability income The reason that insurers don't pay benefits that are equal to the insured's prior earnings is to reduce the chance of malingering on the part of the insured. Limiting the amount of coverage provides an incentive for the insured to return to work after a disability, as opposed to collecting benefits when he or she is capable of returning to work.

What is the purpose of the Claims Made form?

To protect insureds from inaccurate or obsolete information The purpose of the claims made form is to allow insurers to determine adequate rates for unknown losses claimed in the future.

Which of the following hospice expenses would NOT be covered in a cost-containment setting?

Tylenol In a cost-containment setting, daily needs and pain relief are provided for hospice patients, but curative measures are not.

Producer licenses must be renewed every

Year for the first five years and then every 2 years thereafter. An insurance license must be renewed every 24 months.

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage?

$100 The employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individual's group premium rate (in this scenario, 102% of $100 total premium is $102). The 2% charge is to cover the employer's administrative costs.

What is the maximum noncash gift a producer can offer?

100 dollars Producers may offer noncash gifts or services in connection with the marketing and sale of insurance contracts so long as the cost is the lesser of 5% of the current or projected policyholder premium or $250 per policy year per term.

A licensed Minnesota insurance producer must notify the Commissioner of a change of name, address, or a change of any other information contained in the application for license, within

5 business days. A licensed Minnesota insurance producer must notify the Commissioner of a change of name, address, or a change of any other information contained in the application for license, within 10 days.

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?

50% General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

Under COBRA, how soon from termination of employment must an employee exercise extension of benefits?

7 days.

All individual or group accident and health policies that provide coverage to a Minnesota resident must cover the insured's adopted children on the same basis as other dependents. Coverage begins on the adopted child's date of

Adoption. Coverage for adopted children begins on the date of the placement prior to legal adoption.

All of the following would be considered rebating EXCEPT

An agent offers to share his commission with a policyholder. Rebating occurs when an insured is offered something of value in order to induce the sale of an insurance product. Both the offer and acceptance of a rebate are illegal.

What is the policy summary?

Document stating that a full time employee is qualified/ covered under the company's group insurance policy,

A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT

Eyesight. Accidental Death & Dismemberment policies cover loss of body parts or life only.

Medicare PART A

HOSPICE CARE

In group health policies, a probationary period applies to employees who

Have a pre-existing condition at the time they join the group. The probationary period is a waiting period that applies to new employees who must wait a certain period of time before they can enroll in the group plan.

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the

Incontestability clause. Entire contract is a mandatory provision that is required by law.

Which of the following licensees are not compensated directly related to the amount of insurance sold?

Insurance broker Insurance consultants advise others about their insurance needs and coverages. Consultants are compensated by the people they advise, not by producers or insurers. Their compensation is not directly related to the amount of insurance sold, but based upon their advice and recommendations.

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the

Insuring Clause. The consideration clause specifies that both parties to the contract must give some valuable consideration. The payment of the premium is the consideration given by the applicant. Because the applicant had not paid an initial premium, she is not covered by insurance.

A guaranteed renewable disability insurance policy

Is guaranteed to have a level premium for the life of the policy. Guaranteed renewable means that the insured has the right to keep the policy until a specific age; however, while the insurer cannot increase the rates on an individual basis, the insurer can increase the rates for all insureds by class.

Which of the following statements is NOT true concerning Medicaid?

It is a state program. Medicaid is a state program funded by state and federal taxes that provide medical care for the needy. Parts A-C are part of Medicare.

Which of the following statements concerning Medicare Part B is correct?

It is provided automatically to anyone who qualifies for Part A. For those who have purchased the coverage, Part B pays 80% of out-patient medical cost after a deductible has been met. Part B covers physician and outpatient hospital services, and other medical and health services, such as diagnostic tests, and physical therapy.

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

Legal, provided that the information can be verified When a company criticizes the financial situation of another company with the intention of injuring that company, it has committed an illegal trade practice called defamation.

Which of the following is available to employers of all sizes?

MSAs Health Reimbursement Accounts (HRAs) consist of funds set aside by employers to reimburse employees for qualified medical expenses; they are available to all sizes of employers.

An insured is covered under a Medicare policy that provides a list of network healthcare providers that the insured must use to receive coverage. In exchange for this limitation, the insured is offered a lower premium. Which type of Medicare policy does the insured own?

Medicare Supplement Medicare SELECT policies require insureds to use specific healthcare providers and hospitals, except in emergency situations. In return, the insured pays lower premium amounts.

What is another name for social security benefits?

Medicare benefits Social security benefits are also known as Old Age, Survivors, and Disability Insurance (OASDI).

What must an insurance producer disclose at the delivery of a policy?

Name/ and the agency/ insurer's name they represent

Which provision states that the legal right or interest in a policy may be transferred?

Notice of Claim The assignment provision states that the legal right or interest in a policy may be transferred. In property and casualty insurance, assignments of policies are valid only with the prior written consent of the insurer.

With respect to the Consideration Clause, which of the following would be considered consideration on the part of the applicant for insurance?

Notice of policy cancellation The two types of consideration on the part of an insurance applicant are payment of premiums and representations on the application.

If any producer or broker, after violating a provision in Minnesota's insurance laws, surrenders, withdraws, or otherwise causes his/her license to become ineffective, the Commissioner may

Notify the Motor Vehicle Department and have that person's driver's license suspended.

A guaranteed renewable health insurance policy allows the

Policy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term. Coverage is guaranteed, but rates can be adjusted for the entire class.

If an insurance company wishes to order an inspection report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report could contain all of the following information, EXCEPT the applicant's

Prior insurance. The Fair Credit Reporting Act regulates what information may be collected and how the information may be used. Consumer Reports include written and/or oral information regarding a consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources. Ancestry is not a relevant factor assessed in these reports.

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?

Refund of premiums Accidental Death and Dismemberment coverage only pays for accidental losses and is thus considered a pure form of accident insurance. The principal sum is paid for accidental death. In case of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as the capital sum.

All of the following long-term care coverages would allow an insured to receive care at home EXCEPT

Respite care. Custodial care, respite care, home health care, and adult day care are all coverages used to reduce the necessity of admission into a care facility. Skilled care is almost always provided in an institutional setting.

An insured purchased an insurance policy 5 years ago. Last year, the insured received a dividend check from the insurance company that was not taxable. This year, the insurer did not send a check. From what type of insurer did the insured purchase the policy?

Stock Funds not paid out after paying claims and other operating costs are returned to the policyowners in the form of a dividend. If all funds are paid out, no dividends are paid.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Taxable as ordinary income. With participating policies, policyowners are entitled to dividends, which, in the case of mutual companies, are nontaxable because they are considered a return of excess premiums.

Any regularly salaried employee of a licensed insurer, without license or other qualification, may act on behalf of that insurer in the negotiation of insurance for that insurer, provided

That employee has been previously licensed in that line of insurance. Insurer's employees are exempt from general licensing requirements. However, in the event of an insurance sale, a licensed producer must participate.

To what organization must all admitted insurers belong?

The National Association of Insurance Commissioners (NAIC) All admitted insurers must be a member of the guaranty association as a condition of their certificate of authority.

Which is NOT a characteristic of group health insurance?

The actual policy is called the "master contract". The actual policy, called the "master contract", is issued to the group sponsor only; the individuals covered under the policy are issued certificates of insurance as proof that they are covered under the master contract. Dependents are covered under group plans. If the group contract is terminated, insureds may convert to individual policies without having to provide proof of insurability.

When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision

The contract will be deemed void because of the misstatement of age. If an insured misstates his or her age upon policy application, the optional misstatement of age provision will change the payable benefit to that which would have been purchased at the insured's actual age.

Which of the following is NOT covered under Plan A in Medigap insurance?

The first three pints of blood each year Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.

Which of the following would provide an underwriter with information concerning an applicant's health history?

The inspection report An agent's report and inspection report provide personal information. Medical exams provide information on current health. Only the MIB will provide information about an applicant's medical history.

All of the following are true about group disability income insurance EXCEPT

The longer the waiting period, the lower the premium. Employees who are injured on the job are covered by Workers Compensation insurance. Group disability income insurance is designed to cover employees only while they are off the job, so the coverage is considered to be nonoccupational in nature.

Which of the following statements regarding the Change of Beneficiaries Provision is true?

The policyowner has the right to change beneficiaries unless he/she has chosen to have an irrevocable beneficiary. Otherwise, the policyowner can legally change beneficiaries, without the consent of the former beneficiary.

All of the following statements about Medicare supplement insurance policies are correct EXCEPT

They cover Medicare deductibles and copayments. Medicare supplement policies (Medigap) do not cover the cost of extended nursing home care. Medigap plans are designed to fill the gap in coverage attributable to Medicare's deductibles, copayment requirements, and benefit periods. These plans are issued by private insurance companies.

The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as

Time limit on certain defenses. This mandatory provision requires that no legal action to collect benefits may be started sooner than 60 days after the proof of loss is filed with the insurer. This gives the insurer time to evaluate the claim.

Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage?

Yes, but only if the group is over 35 people. In order to qualify for group coverage, the group must be formed for a purpose other than obtaining group insurance; the coverage must be incidental to the group.