What is the main function of a managing general agent or MGA?

What is the main function of a managing general agent or MGA?

In the state of Michigan a person applying for an insurance producer license must fulfill the following criterion EXCEPT:Submit a completed application indicating the type of license desiredBe at least 18 years of ageComplete a program of study registered with the CommissionerPay a nonrefundable application fee of $75An insurance producer is able to receive licensing in a variety of area, but not:CreditPersonal PropertyVariable LifeAccident and Health or SicknessFor individuals practicing law in Michigan, an insurance adjuster license is not needed to adjust loss or damage under a policy of insurance. In which one of the following scenarios is a license also NOT needed?Persons adjusting a loss or damage under a policy within his controlParalegals working for a licensed attorneyEmployees of savings and loan banksEmployees of an insurer
Question 4After obtaining a written agreement from his or her client a licensed insurance counselor is able to perform which of the following acts?Provide advice with respect to promised benefits, afforded coverage, terms, or advantages of a policyAdvertise himself as an insurance counselorAudit policies of insuranceAll of the aboveWhat is the main function of a managing general agent or MGA?Reissues binding insurance contractsNegotiates insurance contracts with an insurer on behalf of a clientNegotiates and binds ceding reinsurance contracts on behalf of an insurer
How does an agent receive a limited license?By indicating the desired line of insurance to the licensing board after passing all necessary examsSignifying on his application that he is applying for a limited license
An business entity wishing to act as an insurance producer must first obtain a license by doing all of the following EXCEPT:Completing the required three month review period
Which of the following is not true when the Commissioner contracts with nongovernmental entities to perform ministerial functions related to producer licensing?The Commissioner must issue an insurance agency license to an affiliate of a lenderThe Commissioner must issue an agent license to an individual who is an employee of the affiliateThe commissioner must provide notice to the Commissioner of the financial institutions bureau of any acquisition of an insurance agencyThe Commissioner may issue a temporary insurance producer license for a period not to exceed 180 days without requiring an examination if the Commissioner considers it necessary in order to provide insurance services in all of the following cases EXCEPT:Any other person in an extenuating circumstance where public interest will be best served by granting a temporary licenseTo the surviving spouse or adult child of an insurance producer who dies or becomes disabled in order to allow adequate time for the sale of the insurance business, to train another insurance producers, or to allow time for recovery
As long as education requirements for resident individual producers are met by the due date An insurance producer license must remain in effect unless which of the following takes place?The license is suspended
Licensees must inform the Commissioner by any means acceptable to the Commissioner of a change of legal name or address within how many days of the change?30 days
An insurer that terminates a contract with an insurance producer must notify the CommissionerProviding misleading information on license applicationMisappropriation of moneyFailing to pay taxesAll of the above
With regard to assumed names, which of the following statements is the correct rule?An insurance producer doing business under any name other than the producers legal name must notify the Commissioner prior to using the assumed name.
An applicant must have completed a program of study within what time frame of the receipt of the application?4 months2 years1 year6 months
The Commissioner may require a reinsurance intermediary-manager or a managing general agent to file a bond in an acceptable amount from an acceptable insurer for the protection of the reinsurer or insurer. What is the acceptable amount?$15,000$10,000
The Commissioner will serve a formal charge, including his findings and a cease and desist order to a person who has committed any of the following acts EXCEPT:Violated a regulationEngaged in methods of unfair competitionCommitted a felony
An insurer selling automobile insurance may terminate an insurance producers license for which of the following reasons:Failure to perform the provided contract termsMalfeasanceAll of the above
The Commissioner may impose any of the following penalties for violations of the rules EXCEPT:Payment of a civil fine not to exceed $500 for each unknowing violationSuspension or revocation of licenseA refund of any overchargesPayment of a civil fine up to 3,500 for willful violationsThe person whose duties include personally superintending the duties of his office, evaluating and approving applications for licenses and promulgating rules and regulations necessary to further the purposes of the established statutory rules is known by what formal title?Chief OfficerSecretary of InsuranceCommissionerAn authorized insurer must be issued by the Commissioner a certificate of authority in order to ____________ in Michigan.Practiceprovide insurancetransact insurance
An insurer must maintain unimpaired capital and surplus in an amount not less than ________.$1,000,000$5,000,000$750,000$7,000,000
Rates are subject to all of the following regulations EXCEPT:If the insurer has not received notice of disapproval within 10 days, the rates are considered approved.
Insurance policy forms may not be issued to any person unless a copy of the form is filed with the insurance bureau and is approved by the Commissioner as conforming to which of the following rules?Forms must obtain a readability score of 30 or moreIssuing a form without the approval of the Commissioner may result in a fine of $25 for each offense, not to exceed $500 total.
Failure to pay claims on a timely basis or to pay interest on late payments constitutes unfair claims settlement practices, unless what takes place?The Commissioner issues an exemption for extenuating circumstancesThe insured dies or no longer seeks payment of due claimsA court of law renders judgment and the person pays the insured all entitled benefits
If the insurer terminates the appointment, he must notify the Commissioner within __ days and mail a copy of the notification to the terminated producer within __ days.45, 1560, 3030, 15
A person is forbidden from conducting insurance business without a license, unless the person is:Acting only for a fraternal benefit society authorized to transact insurance in MichiganDevoting less than 50% of his time to selling insuranceAll of the above
All of the following acts fall under prohibited conduct EXCEPT:A person maintaining or operating an office transacting insurance business, if they fail to comply to the state regulationsA solicitor failing to, in a timely manner, turn over all money owedAn agent selling insurance not by means of intimidation or threats
No insurer may pay a commission to a person who ______________________________.is not licensedis not employed by the insureris also insured by the insureris not, but is required, to be licensed
An agent may not accept payment of a premium for a Medicare supplemental policy in the form of __________________.a check or money order made payable to the agent instead of the insurer
Which of the following is NOT a penalty the Commissioner may impose for unfair insurance trade practices?A refund of any overchargesCharge an insurance producer with criminal negligence
No insurance producer may make a statement which misrepresents the terms of a contract, including the _________ benefits and required premiums, or __________ intended to deceive.insurance, a claimrequired, a promisenecessary, a claimpromised, an estimate
To avoid deception what three criteria must advertisements meet?Complete, clear, and truthful
No insurance producer may make any misrepresentation for the purpose of inducing a policyholder to ___________________________.lapse on his current insuranceoverpay on his current policylapse on his current insurance and take out another policy.
If, after investigation by an independent public accountant, the insurer is found to have misstated his financial condition, the board of directors and the Commissioner must be notified within how many business days?107305
No insurance producer may make an oral or written statement which is false or maliciously critical of the financial condition of any person, and which is calculated to injure. Included in this are advertisements which may not perform which of the following?disparage competitorsdisparage competitors policiesdisparage competing methods of marketing businessall of the above
No insurance producer may unfairly discriminate between individuals of the same class, same hazard, and equal expectation of life with regards to what area?rate charged for the policythe amount of premium ratesunderwriting standardsall of the above
The Commissioner may refuse to grant or renew a license if he determines that it is ________ that the business of the applicant will give rise to indirect rebating of commissions, meaning paying people in order to induce them to buy insurance policies.possibledefiniteprobable
In order to assure compliance with insurance regulations the Commissioner may conduct examinations of:Directors of insurersStock brokersAll of the above
Fraudulent insurance acts includes acts committed by any person knowingly and with an intent to ______.injure, defraud, or deceive
Any person who commits a fraudulent insurance act is guilty of a felony and may be subject to what penalties?Imprisonment not to exceed 4 years or a fine not to exceed $100,000A fine not to exceed 25,000Imprisonment not to exceed 5 yearsImprisonment not to exceed 4 years or a fine not to exceed $50,000, or bothUnder what circumstance is an insurer NOT required to give a privacy notice to the insured?If the insurer does not disclose any nonpublic personal financial information to any nonaffiliated third party and the insurer does not have a customer relationship with the consumerIf a notice has already been provided by an affiliated insurerAll of the above
Consumer credit reports with fraud alerts may not be used for credit or insurance applications without what other component?Permission from the CommissionerConsent of the consumer
In order to monitor all financial transactions, prohibit correspondent account with foreign shell banks, and report all suspicious activity to the government insurance companies must now use what mechanism?Suspicious person reportAnti-money laundering programWhat is the main function of a managing general agent or MGA?Reissues binding insurance contractsNegotiates insurance contracts with an insurer on behalf of a clientNegotiates and binds ceding reinsurance contracts on behalf of an insurerHow does an agent receive a limited license?By indicating the desired line of insurance to the licensing board after passing all necessary examsSignifying on his application that he is applying for a limited licenseWith regard to assumed names, which of the following statements is the correct rule?An insurance producer doing business under any name other than the producers legal name must notify the Commissioner prior to using the assumed name.
An applicant must have completed a program of study within what time frame of the receipt of the application?4 months2 years1 year6 months
Failure to pay claims on a timely basis or to pay interest on late payments constitutes unfair claims settlement practices, unless what takes place?The Commissioner issues an exemption for extenuating circumstancesThe insured dies or no longer seeks payment of due claimsA court of law renders judgment and the person pays the insured all entitled benefits
Question 49If the insurer terminates the appointment, he must notify the Commissioner within __ days and mail a copy of the notification to the terminated producer within __ days.45, 1560, 3030, 15The person whose duties include personally superintending the duties of his office, evaluating and approving applications for licenses and promulgating rules and regulations necessary to further the purposes of the established statutory rules is known by what formal title?Chief OfficerSecretary of InsuranceCommissionerBlanket disability insurance covers all of the following categories EXCEPT:Students and teachersPassengers on any carrier
The term preexisting condition may not ___________________.be used in a way that implies coverage beyond the terms of the policybe used in a policy being advertisedbe used without an appropriate accompanying definition
If an outline of coverage is given to a prospective applicant for life insurance and that outline includes: a description of the benefits provided by the policy, a list of the exclusions and limitations, a statement that the outline is just a summary and the actual policy should also be read, and an explanation of the return policy then what necessary component is the outline missing?Nothing, all components are presentA timeline of the policyA credit reportA statement of the continuation terms
Insurers may not require an asymptomatic applicant to undergo genetic testing before issuing a policy, however what may the insurers require of an applicant regarding genetic information?That the applicant undergoes a physicalThat the applicant discloses whether genetic testing has already been conductedThat the applicant answers questions about family history
If a group disability coverage is replaced by a policy which contains a preexisting condition limitation and covers 10 or more employees then the new policy coverage ______________________may be less than the coverage of the replacement policy without the preexisting condition limitationmay not be less than the coverage of the replacement policy with the preexisting condition limitationmay or may not be less than the coverage of the replacement policy depending on the preexisting conditionmay not be less than the coverage of the replacement policy without the preexisting condition limitation
In the state of Michigan the preexisting condition exclusion does not apply to individuals who have had health insurance coverage for at least ___________ and have not had a break in coverage of more than ____ days.1 year, 3012 months, 63
In order to void a claim or deny coverage misstatements, with the exception of fraudulent misstatements, must be used within what time period after the policys date of issue?5 Years2 years1 year3 years
Other than weekly and monthly premium policies what is the grace period entitled to the insured to pay the first premium?31 days
What is the correct procedure for filing claims? a) Indemnities are paid; b) Insurer must provide the claimant proof of loss forms within 15 days; c) Written notice of claim is given to the insurer within 20 days of the occurrence of a loss covered by the policy; d) Written proof of loss is received by the insurer within 90 days of the end of the liability period.A, C, B, DC, B, D, A
How many times does the insurer have the right to examine the person of the insured?NoneOnly as many as a licensed medical doctor deems necessaryAs often as required within reasonNo action at law or in equity may be brought to recover on this policy prior to the expiration of 60 days after what has taken place?The insurer has received written proof of loss
If after changing to a more hazardous occupation the insured is injured what is the outcome?The insured is still required to pay the premiums of the current policyThe insured would be required to pay higher premiums as a result of changing to the more hazardous occupation
What is the insurer liable for if the insured has taken out a second policy with another insurer which covers the same loss on a provision of service basis or on an expense incurred basis, and the insured has not given written notice to the insurer of the first policy?NothingThe half of the dollar amount the first insurer would have been liable for had the insured not taken out a second policyThe proportion of the loss which would otherwise have been payable plus the total of the like amounts under all such other valid coverages
If a provision of an individual health insurance policy conflicts with the laws of Michigan what then is the status of the provision?The policy provision takes precedence over the Michigan statuteIt is void and has no legal standingIt is amended to conform with the minimum statutory requirements of Michigan lawInsurers providing expense-incurred medical policies typically must renew the policy at the option of the individual, however there is no guarantee for renewal if any of the following acts take place EXCEPT for:Lack of paymentFailure to qualify for the policy
With regards to Disability income and related insurance policies an insurer is not liable to pay the total monthly amount of loss of time benefits promised for the same loss if it is more than the monthly earnings of the insured. But the insurer may not reduce benefit amounts below what sum?$100$500$350$200
If an insurance policy which provides hospital care for the insured and his dependents contains a provision for termination of a dependent of a certain age from the policy then what, if any, is a possible option for the dependent on that policy?The dependent may not remain on the policy as a dependentIf the dependent is incapable of self-support then the policy holder can submit proof within 31 days after the child has reached the termination age in which case the dependent will remain on the policy
If a group disability coverage is replaced by a policy which contains a preexisting condition limitation and covers _____ or more employees, the new policy coverage may not be less than the coverage of the replacement policy without the preexisting condition limitation.10
To what percentage of those approved must the premium rates for individuals who purchase a comparable group conversion policy be limited to?200%150%120%What is the range of employees any person, firm, corporation, partnership, limited liability company, or association actively engaged in business must have on at least 50% of its working days during the preceding and current calendar years in order to fit the definition of a small business?5-10030-JanFeb-50
All insurers must have a policy containing all of the following benefits EXCEPT:Coverage under Medicare Parts A and B for the cost of the first 3 pints of bloodUpon exhaustion of Medicare hospital inpatient coverage, coverage of 50% of the Medicare Part A expensesIf an insurer providing Medicare supplement insurance wishes to use any written, radio, or television advertisement they must first file a copy with the Commissioner how many days prior to the advertisements desired publication date?60 days30 days50 days45 days
When recommending the purchase of a Medicare supplement policy, the insurer must ___________________________.make every effort to ensure the policy fits the needs of the consumermake reasonable efforts to determined whether or not it is appropriate for the consumer
Each Medicare supplement policy must contain an outline of coverage, a description of limitations on referrals to restricted network providers, a description of the Medicare select insurers quality assurance program and grievance procedure as well as which of the following?A list of local medical providersDescription of preexisting conditions not coveredDescription of restricted network provisions
Applications for Medicare supplement policies contain questions on received disability or Medicare benefits. What is the purpose of this practice?To ensure the consumer receives the most comprehensive policyTo understand the consumers complete medical historyTo discover if the consumer qualifies for an insurance policyTo ensure the policy does not duplicate benefits already offered to the person by Medicare
A unilateral contract is:A contract that makes a promise or promises in exchange for a performanceAn individual medical plan is usually a:A contract of adhesion
A one-sided agreement whereby you promise to do (or refrain from doing) something in return for a performance (not a promise) is what type of contract?A conditional contractA contract of adhesionA unilateral contract
A contract that heavily restricts one party while leaving the other free (as some standard form printed contracts), and implies inequality in bargaining power is:A unilateral contractA conditional contractAn aleatory contractA contract of adhesion
An insurance policy is a legal contract, based on contract law. It is a contract where _____________ is exchanged for valuable consideration (i.e. premiums).An expectationA promise of benefits
Kathy is filling out an insurance application. Her broker has explained to her that the statements made in the application are held to a principle of _______________, which means they are not guaranteed to be true.RescissionSubrogationWarrantiesRepresentation
What gives the insurance company the right to assume rights of the insured in order to sue a responsible third party when damages are inflicted on the insured?ConcealmentWarrantiesSubrogation
Simon has applied for insurance by completing an application and paying the initial premium. This is considered which of the following?A completed contractAn acceptanceA conditioned contractA consideration and an offer to buy
Ben is making application for a health insurance policy. He has been treated for heart problems in the past, but he answers no to” Have you ever had heart problems”. Ben is guilty of:Breach of contractFraudConcealment
In an insurance contract, which concept refers to the fact that the value given by the two parties is unequal?Aleatory contract
Which of the following concepts refers to the option that one party can set aside a contract:AleatoryUnilateralVoidableBoth Unilateral and Voidable
What essential element of the contract is violated by an agent who solicits to sell to an individual who has difficulty understanding what the agent is selling?Competent parties
Sometimes the values given by two parties are unequal. This is called which of the following?ReimbursementIndemnityAleatory
What happens when you combine the principles of waiver and estoppel?Nothing, waiver and estoppel are real estate termsAnother form of a waiver is createdA known right is voluntarily relinquishedInsurance policies are legal contracts. How do life and/or health insurance contracts differ from other insurance contracts?They are contestable for up to two yearsThe producer does not have the authority to bind the insurerBoth of the above
Because insurance policies are legal contracts, they are subject to the general law of contracts. Which of the following elements is not necessary for the formation of a valid contract under the law?AgreementConsiderationInsuring Clause
Certain rules of construction are used to interpret a contract. All of the following are among the five main areas commonly used by the court when reviewing contracts EXCEPT:Conditions
When looking at insurance contract characteristics, it is important to know that an exchange of a promise for a promise is called –UnilateralBilateral
Because she gets paid on the 15th, Julia routinely pays her insurance premium (due on the 5th) late. Her policy was cancelled for nonpayment of premium. Does Julia have a legal leg to stand on to contest the decision by the insurer to cancel her policy?No – the premiums should be paid on timeYes – if she has a good lawyerYes – because the insurer accepted late payments previously
Which of the following is not true about the Utmost Good Faith characteristic of an insurance contract?Both parties are entitled to rely on the representations of each other to conceal and deceive
Unlike other types of insurance contracts, life insurance is not –A transferable contractA conditionalA voidableA personal contract
Mark was afraid that he might fail the physical exam that was required for his insurance policy, so he had his brother Robert, a marathon runner, take the exam for him. This is an example of –False pretenses
If an insurance matter goes to court for interpretation, health insurance contracts are held to the principle of indemnity. This means –They pay fixed periodic income to policyholders that become disabled.They reimburse the insured for the amount of financial loss, but the insured cannot profit from the loss.
Which of the following could result in an insurance contract being voided?ConcealmentFraudRecissionAll of the above
All of the following statements are true regarding the Parol (oral) Evidence Rule EXCEPT:It limits the impact of waiver and estoppel by disallowing oral evidence made before the contract was created.Oral evidence is not admissible in court to change or contradict an existing contractOral evidence is never admitted
Sally sees her policy has no maximum benefit for life, but she will not receive more that $100,000 in benefits in any one calendar year. This is known as:Lifetime maximumAnnual maximum
An annual maximum benefit will provide the following:A lifetime benefit of $1,000,000No specified life time amount but a limited benefit for each yearHorace owns a health insurance policy that will not pay benefits unless he is confined to the hospital. This type of contract is known as a:Non-cancellable contractA unilateral contractA contract of adhesionA conditional contract
A participating policy (par) usually pays dividends. Most health insurance policies:Pays dividends until claims are paidDo not pay any dividends
A health policy has an outline of coverage. All of the following would be included in the outline of coverage EXCEPT:Contractual provisions
Cafeteria plans may offer which of the following?Flexible spending accountsTax shelter for premiums paid on chosen coverageOptions to choose coverage that meets the individual’s needsAll of the above
Ajax Manufacturing has a self-funded group health plan and believes it can lower administrative costs from those charged by an insurance company for processing claims. Which type of organization should Ajax use to process claims?Third Party Administrator (TPA)
An outline of coverage will include all of the following EXCEPT:Exclusions and limitationsRenewal and cancellation provisionsCalculation of premium
All of the following are correct concerning Blue Cross and Blue Shield plans EXCEPT:Blue Cross and Blue Shield Plans are exempt from state insurance regulations
Eddie has an accidental death and dismemberment policy for $100,000 principal amount. He is involved in a logging accident and his hand is severed. What benefit should he expect?$100,000 since this a complete loss of the handNothing since logging is an excluded industry$50,000 since this is the benefit for losing a hand
James is in an auto accident and breaks his arm and has blurred vision for a short period of time. He has a $100,000 Accidental Death and Dismemberment policy. What benefit can he expect from this accident?$50,000 for a broken arm$25,000 for temporary loss of vision$0 since he did not die or lose a limb, and his vision loss was temporary
The outline of coverage in a policy contains all of the following EXCEPT:Policy benefitsLimitations and exclusionsConditions of renewabilityFuture value of the policy
Jennifer’s employer offers her the opportunity to choose from a variety of group benefits. She can choose the plans that best meet her needs while declining to participate in components of the plan. The type of plan she is being offered is called which of the following?HMOPPOFree lunch programCafeteria Plan
Which of the following best describes a TPA?An organization that processes claims for a self-funded group plan
An accidental death and dismemberment policy will cover all of the following EXCEPT:Hospital expense
Final Rest Mutual is an insurance company that processes and pays claims for ABC Company’s self-funded health plan. This arrangement is know as:Third Party Administration (TPA)Cost plus benefits (CPB)Exclusive Provider Organization (EPO)Administrative Services Only (ASO)
Jack has an accidental death and dismemberment policy. He can expect benefits for all of the following EXCEPT:An emergency appendectomy
Health insurance will provide benefits for all the following EXCEPT:Living too long
Larry is in an accident and he loses one hand and one eye. He has an Accidental Death and Dismemberment policy for $200,000 principal sum. What should he expect for his benefit?$50,00 for each loss$100,000 total$400,000 since this is a double dismemberment$200,000 since this is the principal sum
Leon has decided to self-insure his medical plan through an insurance company. This will pay his claims and administer the other features of the plan for a set fee plus claims paid. This arrangement is known as which of the following?Third Party Administration (TPA)Administrative Services Only (ASO)
Health insurance may be sold on a participating or a non-participating basis. Which of the following is true about participating policies?Dividends amounts are guaranteedDividends will always be the same as the projected scheduleThe insured has a choice of whether his policy will be participating or notDividends are paid year to year and the amount of the payment is not guaranteed
Statistics indicate that women under age 55:Have a greater frequency of disability than men
All of the following are true about health insurance deductibles EXCEPT:Higher deductibles limit smaller claimsHigher deductibles tend to lower premiumsDeductibles continue to increase as the cost of healthcare services increaseDeductibles vary on a employer group plan depending on the risk of the individual employeeState University will offer what kind of plan to enrolled students?Blanket health planA representation isA guarantee that all statements are 100% factual.The company’s guarantee that benefits will be paid promptlyA guarantee that the insured can get a refund if he is dissatisfied with the service.A statement that all information is true to best of the applicant’s knowledge.
Carl has been in the hospital. When he is discharged, the accounting department agrees to file his claims as long as he executes an assignment. This means that Carl:Has directed the provider to bill the insurance company and the company will pay him directlyHas paid his bill in full and will be reimbursed by the insurance company laterHas authorized the provider to bill the insurance company on his behalf and the insurance company will pay the provider directly
The factor most often used in the calculation of health rates is:MortalityGender distributionMorbidity
A moral hazard can be any of the following EXCEPT:Poor credit historyDrug or alcohol abuseRiding motorcycles
In calculating premiums for health insurance, actuaries use which of the following information?InterestMortalityExpensesMorbidity
Simon has a special risk policy. The policy will only pay a benefit if Simon suffers:A dread diseaseAn industrial accident while while working a hazardous occupationAn unusual hazard not covered on other policies
Mary-Margaret has applied for a new health insurance policy. When must Mary-Margaret be given an outline of coverage?At the time of the first claimAt the time of the applicationAt the time of the first premiumAt the time the policy is delivered to the applicant
Which of the following is a preexisting condition?A condition the insured contracted before the policy was in effect for 90 daysA condition the insured contracted while the policy was in underwriting, even though premiums have been paidA condition the insured contracted prior to the application
Which of the following benefits are provided by a health service provider?Both hospitals and physician services directly to the provider
A health insurance company may refuse coverage or charge a higher premium for which of the following?Previous medical problemsEthnic backgroundMarital StatusPoor moral history
An individual health policy will normally exclude which of the following losses suffered?A broken leg sustained by falling off a ladderInjuries suffered on the Job
Blanket health insurance covers which of the following?Large fixed groups of employersEach person named in the policyA Limited number of insuredsAn ever-changing group of people, like students
What are participants called in a Blue Cross and Blue Shield plan?MemberEnrolleePolicyholderSubscriber
Bill receives a check directly from the insurance company for his recent hospital stay. He has a Hospital Expense Policy. This type of policy is referred to as which of the following?An indemnity contractA special payment contractA fee for service contractA Reimbursement contract
Happy Hills, a day camp, wants to offer a health insurance policy to its campers. The type of policy they will offer is:A Blanket policy
All of the following are examples of limited policies EXCEPT:Travel AccidentVision CareHospital indemnityLong Term Care
All of the following are considered health policies EXCEPT:Medical ExpenseMajor MedicalAccidental Death
Which contract is considered a reimbursement contract?Accidental Death and DismembermentTerm LifeMonthly disability incomeMedical ExpenseDavid applies for a health insurance policy. He is not aware that he has a heart condition at the time, and he answers NO to question concerning heart issues. His answer is considered:Fraud and the insurance company may cancel his policyConcealment, since he had the condition but did not know about it.A Representation, since he was telling the truth to the best of his knowledgeRandall sees reference to an organization called the NAIC. What does NAIC stand for?National Association for Insurance CounselorsNational Association for Insurance Commissioners
An applicant completed an application for health insurance, but he omitted answers to several questions. The application was signed, but he did not submit a premium with the application. Before the policy was issued he was admitted to the hospital for a condition that was covered under the policy. His claim would most likely be denied because:Exclusion clause would be effectiveNo consideration
All of the following Government benefit programs will provide benefits for medical benefits Except:OASDISocial Security disability
Julia has a basic medical expense plan through her employer. This can also be referred to as:Dread Disease PolicyExcess medical coverageContingent major medial insuranceFirst dollar insurance
How long is the “free look” period for a health insurance policy?30 days for high deductible plans7, 10 or 31 days depending on the premium mode10 days for all health policies
A representation is:A guarantee that all statements are 100% factual.The company’s guarantee that benefits will be paid promptlyA guarantee that the insured can get a refund of all premiums if he is dissatisfied with the service.A statement that all information is true to best of the applicant’s knowledge.Which of the following limits coverage under an insurance policy?WaiversExclusions
Is an insurance company required to return unearned premiums on a policy cancellation?Only if the insurance company initiates cancellationOnly if the policy has a provision allowing this actionIn all cases where the insured has paid for coverage beyond the cancellation date
Matilda goes motocross racing over the Memorial Day weekend and suffers a broken leg. She contacts her agent to purchase a major medical policy and files a claim when the policy is issued. The company declines the claim. The grounds for declination is which of the following?Insuring clause does not cover this eventThe premium was not paid until the policy was issuedThe transaction did not meet the consideration requirementThe broken leg was a preexisting condition
John has been in the hospital for five days. How long does he have to file a claim form and show proof of loss with his insurance company?45 days90 days
Which of the following may be an optional provision under the Uniform Provisions Law?Physical ExamChange in occupation
What provision of a health policy may cover preexisting conditions?Time limit for certain defensesEntire Contract
Joan asked her agent when she will have benefits if she reinstates a lapsed health policy. Her agent would be correct if he told her:10 days for accidents and 30 days for sicknessImmediately for accidents and 10 days for sickness
Michael purchased an individual disability policy when he was an executive at BXT, Inc. Due to downsizing at BXT, Inc., Michael was laid off and so he accepted a new position at a new employer with a substantial reduction in pay. Due to an accident, Michael was disabled according to the terms of his contract. The benefit paid was more than Michael’s current salary. What is the company that issued the policy obligated to do under a relation of earnings to insurance optional provisions?Pay the benefits that Michael bought at the time the policy was issuedPay a reduced benefit based on Michael’s current earnings
Co-insurance is designed to control which of the following situations?Make deductibles higherAllow the insurance company to charge higher premiumsRaise premiums more frequentlyMake the insured responsible for some of the charges to hold down claims payments
Which of the following is one of the ownership rights of an insurance contract?Pay a claimChange a beneficiary
Fred has purchased a cancellable policy. He should understand that:He can keep the policy as long as he makes required premiums.The policy may be cancelled by the insured only on the anniversary date.The insurance company may cancel the policy at any time with proper notice and refund all unearned premium.
A grace period allows a certain number of days by contract for the insured to submit a premium. Except for weekly and monthly premium contracts, what is the usual grace period?7 days15 days31 days
Old Reliable issues a policy that may not be cancelled by the insurance company, except for non-payment of premium. The company does have the right to adjust premiums for an entire class of business. This type of policy is called which of the following?Guaranteed level premiumNon-cancellable and renewableGuaranteed renewable
Fred has purchased a health policy with a Waiver of Premium rider. When can Fred expect to receive benefits from this rider?This is a promotion and the insurance company will waive the first three month’s premium as an inducement to buy now.If Fred does not file claims within the first five years of the policy, he will not have to pay premiums for six months.If Fred becomes totally and permanently disabled, the insurance will waive all premiums during the period of disability.
The incontestable clause will provide what protection?After two years, the claim may not be contested by the insurance company except for fraud.
Julia purchases a disability policy that will provide $500 per month if she becomes disabled. The policy requires her to notify the insurance company if she changes occupations. When the policy was issued, Julia was a bank employee. At the time of disability, she had changed occupations to become a welder. What kind of benefit should she expect?A refund of premium since she had not notified the company of the changeA lower benefit since she had changed to a more hazardous occupation
A company may use a rider or an endorsement to do any of the following EXCEPT:Add benefitsChange the insuring clause
Zack and his friends were celebrating his promotion to manager at a local pub after work. Zack was “over served” at the party and on the way home, Zack was involved in a serious accident that required him to be hospitalized. His blood alcohol level was well above the allowable limit. Zack’s insurance policy will most likely pay his benefit at what level?Standard benefits as for any other claimA limit of $5,000 total regardless of claim sizeNothing, as alcohol related accidents are usually policy exclusion.Mr. Jones wants a health policy that can never be cancelled by the insurance company. He also wants one that will guarantee the premiums for the life of the policy (no premium increases). He should look for a policy that is:Noncancelable
ormally, proof of loss for a medical claim must be submitted to the insurance company for consideration within 90 days UNLESS:The provider fails to submit the claimThe insured is not of legal capacity
Using the facility of payment clause in a policy, the insurance company may pay an amount up to the maximum limit to which of the following?The people who appear to be entitled to itThe insured’s estate
Martha decides she does not want the new policy she purchased. She is within her free look period, so she returns the policy. She should receive which of the following?Full refund of all premiums paidThe application and the premium is which part of the contract?Right of ownershipUnderwriting clauseConsiderationThe grace period for a health insurance policy may vary according to which of the following?Annual benefit periodFrequency of premium payment
Mary has been admitted to the hospital for testing. How long does she have to give notice of claim to the insurance company?15 days20 days
Seth has notified his insurance company that he has a claim. The insurance company must furnish a claim form within how many days to comply with the governing provisions?15 days
An application for reinstatement of a health insurance policy was submitted with all the proper requirements. The company makes no response. Will the policy automatically reinstate without further company action?No, the company has refused reinstatementYes, coverage is in effect after 90 daysNo, the company must take affirmative actionYes, the coverage will be effective in 45 days
The grace period on a health policy is based on:The amount of the benefit maximumThe amount of the deductibleThe mode of premiums
An insured has 20 days to notify the insurance company of a loss. This is called:Notice of claim provision
Marjorie has notified her insurance company that she has been in the hospital. The insurance company has furnished the form to file a claim. How long does Marjorie have to file proof of her loss?10 days30 days60 days90 days
Marjorie has notified the insurance company of a claim. How long does the insurance company have to furnish a claim form?10 days15 days
An insurance company may not modify the policy agreement (contract) without the insured’s written permission. The part of the policy that addresses this is called which of the following?Uncontested legal action provisionIncontestable provisionEntire contract provision
Rupert has filed a claim to be reimbursed for a recent hospital stay. He feels the company is either ignoring his claim or is attempting to deny coverage. How long must he wait to initiate legal action?He must use an arbitrator firstHe must contact the insurance department firstHe must wait 60 days
All of the following may be exclusions from coverage in a health policy EXCEPT:Injury while committing a felonySickness while traveling abroad
Jim applies for reinstatement after his policy lapses. He submits all requirements, including the premiums. He hears nothing further from the company. This policy is in effect:When 30 days have passed without notificationWhen his agent binds the contractAutomatically in 45 days if the company takes no action
What constitutes the “entire contract” for a health policy?The form the insurance company has on file with the insurance commissionerThe policy, all riders and amendments, the application and all other papers that are required constitute the entire contract between the company and the policyholder
The NAIC proposes laws for states to consider. They have proposed a law that requires mandatory standard provisions for health insurance contracts. How many mandatory standard provisions does the current law include?1112
Amanda noticed that the wrong date of birth was recorded on her application for insurance. Health policies have a provision that addresses this issue. If Amanda has a claim, she can expect which of the following?The policy will be cancelled for fraudClaims will be denied until her age is correctedThe amount of the claim will be adjusted to reflect the correct premium and benefit
All of the following are required provisions in a health policy EXCEPT:Grace periodNotice of claimEntire contractChange of occupation
Co-insurance may do any of the following EXCEPT:Provide insurance for multiple individuals
In which of the following will you find in the consideration clause of a heath insurance contract?Rules on filing claimsFrequency of premium payments
The term used for incontestable period for a health insurance contract is which of the following?Grace PeriodTime limit on filing claimsConsideration clauseTime limit on certain defenses
Nathan has advised his insurance company of a loss covered by his Major Medical policy. Nathan has not received a claim form. After 15 days, Nathan may:File a complaint with the insurance departmentHire a lawyer to settle the claim in courtSubmit a description with supporting documents in any form he chooses
A disability policy has lapsed due to non-payment of premium. The insured contacts his/her agent to pay back premium and reinstate the policy. What is the waiting period before coverage resumes?90 days for accidents and sickness10 days for sickness and immediate for accidents
Jason is comparing plans for medical insurance. His employer offers two plans. One has an 80/20 coinsurance provision and the alternate plan has a 75/25 coinsurance. Jason should expect which of the following?To pay less out of pocket for the 75/25 planTo have a lower premium for the 75/25 plan
A claim has been filed on a timely basis. The insurer has requested further proof of loss. How long does the insured have to furnish the proof?60 days, up to one year60 days, up to 5 years90 days, up to 1 year
The entire contract provision in a health policy prevents the Insurance company from:Cancelling the policy without written noticeIncreasing premiums for all in this policy typeEliminating the need for considerationChanging the terms of the contract by referring to documents not included in the policy
Bruce has a non-cancellable health policy. The company may do any of the following EXCEPT:Pay the benefits when they are dueCancel the policy or raise premium
A policy lapses when:Premiums have not been paid and the grace period expires
Cheryl has filed a claim for a hospital stay with her insurance company. She has complied with all time lines, but the insurance company has been unresponsive to date. Her health care providers are calling her for payment and threatening to turn her account over to a collection agency. How long does Cheryl have to wait until she can take legal action against the insurance company?20 days30 days60 days
All of the following provisions are mandatory in health policies EXCEPT:Coinsurance provision
Bill has a policy that will always be the same premium. He has which of the following?A guaranteed renewable policyA noncancellable policyA pre-existing condition clause protects the insurance company against:FraudMisrepresentationAdverse selection
A health insurance policy will generally exclude all of the following losses EXCEPT:Injuries sustained while falling off a ladderWinston applied for a health insurance policy stating that he had never had heart trouble, even though he had suffered a heart attack one year prior to making the application. Winston has a heart attack 2 months after the policy is issued. The insurance company cancelled the policy and refunded his premiums. Under what clause does the insurance have the right to take this action?Pre-existing condition exclusion
Warren has followed the procedure to initiate a claim for a hospital stay. His insurance company has requested information from him that documents his loss. How long does Warren have to produce this proof of loss?20 days30 days60 days90 days
The “time limit on certain defenses” provision allows the insurance company to defend against which of the following?The company to cancel the policy for misstatement of age or sexThe time limit for which the insurance company may cancel the policy and refund premiums for material misrepresentation in the applicationNick is reading his policy to determine any exclusions that he should know about. If he suffers a loss as a result of using intoxicants or narcotics, he should expect which of the following from most policies?Losses from the use of intoxicants or narcotics will only be covered if prescribed by a licensed physician
Samantha has not paid her premium on her health insurance policy. It has not lapsed, but the premium is due. On her pending claim, Samantha can expect which of the following?The claim will not be paid until premium is currentThe insurance company will pay the claim minus the premium due
Joan was robbing a bank when she was severely injured in a car accident as she tried to make her escape. Joan can expect her health insurance policy to:Pay normal benefitsPay 50% of normal benefits due to her occupationPay nothing since Joan was engaged in an illegal occupation
The legal action provision states that a policyholder must wait for how long after presenting proof of loss before bringing legal action against the insurer?60 days
The free look period for an insurance policy begins:When the company issues the policyWhen the underwriting company approves the riskWhen the agent delivers the policy to the insured
A guaranteed renewable policy will have all of the following features EXCEPT which of the following?The company will renew the policy but may increase rates for the entire class of businessThe company will renew the policy to a certain age and never increase premiums
The policy clause that states, “benefits are subject to all the provisions, conditions, and exclusions of the policy” is:Time limit on certain defenses clauseEntire contract clauseConsideration ClauseInsuring Clause
The insured and the insurance company are each responsible for a percentage of a medical claim. This feature is called a:DeductibleStop lossCopaymentCoinsurance
Which of the following types of policies might have a Guaranteed Insurability Clause attached?Major MedicalPPOHMODisability Income
A policyholder is injured while robbing a home. He has to be hospitalized as a result of his injury. When the insurance company discovers that a felony is involved with the claim, the insurance company may do which of the following?Cancel the policy for fraudDeny the claim based on no liability
Roland has been on a trip and has failed to pay the premium due on his health insurance policy. His agent explains to him that he still has coverage because his policy has which of the following?Waiver of premium benefitConsideration clauseGrace Period
Regina is insured under a guaranteed renewable health contract. The insurance company may increase rates as follows:When it has approval from the insurance commissionerWhen specific individuals have excessive claimsOn any anniversary date for any reasonOnly when an entire class of insured’s has a premium increaseWhat is the time limit for an insured to notify the insurance company of a loss?20 days
Kathy has a cancellable health policy. Her insurance company may do any of the following EXCEPT:Raise premiums for her class of insured’sCancel the policy with noticeChange the state required provisions of the policy
How many mandatory provisions for health insurance contracts are there?101112
There are two parties mentioned in the insuring clause. Who are they?The insurance company and the state regulatory agencyThe insurance company and the insuredJoe has named his wife, Sarah, primary beneficiary to his Accidental Death and Dismemberment Policy. Joe is not able to change the beneficiary without Sarah’s consent. This type of arrangement is called which of the following?ContingentIrreconcilablePrimaryIrrevocable
Michelle has reviewed her health policy after her agent delivered it to her. She noticed that the birth date recorded is not correct and she requested that her date of birth be changed to reflect her correct age. Michelle can expect all of the following EXCEPT:The company will rescind her policy due to incorrect information
An insured has reported the wrong age and the wrong occupation on his application. What is the insurance company allowed to do when the error is discovered?Cancel the policy and start overCancel the agent’s appointment for a grievous errorPay a benefit that the premium paid would have purchased at the correct age or occupation
An agent is aware that a prospective insured omitted information about an illness that the proposed insured had prior to the application. The agent should do which of the following?The agent has no responsibility to report the omission.Nothing, because the insurer will discover the illness in the Medical Inspection Bureau (MIB) reportsInform the proposed insured that he may have a claim rejected later on with possible other repercussions
Melanie tells her agent that she gave him the wrong date of birth on her application. The agent should:Notify the insurer to have the premium corrected to reflect the correct date of birth
Jim, an agent, notices when he returns to his office that he failed to obtain answers to a few questions on an application for John and Mary Smith. Before submitting the application, he should:Call the Smiths and ask the questions by phoneReturn in person to the Smiths to ask them the questions in person and have them initial the missed questions
An underwriter has reviewed an application and determines that the risk does not meet the criteria for standard issue. The company may choose to take any of the following actions EXCEPT:Decline to accept the riskIssue a probationary policy that can be cancelled by the insurer after a specified time
A conditional receipt issued by the agent at the time of application provides which of the following?A guarantee to issue the policy as applied forA promise to refund all premiums if the insured changes his/her mind before one year has transpiredWarrants that all statements on the application are true and completeIndicates that coverage will begin as of the application date if the policy is issued without modification
A complete and accurate application for insurance is important because:The application is used to fully identify the applicantThe information provided becomes the basis on which the company makes a decision to issue a policyThe application becomes a part of the policy issuedAll of the above
William is seeking the best way to minimize his total premium for the year. His best choice is:MonthlyQuarterlySemi-AnnualAnnual
All of the following are true about a conditional receipt EXCEPT:It will provide coverage from the policy date if all underwriting requirements have been met and the policy is issued as applied forIt will guarantee coverage is in effect at the time of the payment
As a new agent, you are completing an application for health insurance. You should take care of all of the following EXCEPT:Ask and complete all questions on the applicationWitness all signatures whether present or not
A health insurance underwriter is considering an application for John Smith. Which of the following is not a factor the underwriter may consider?Medical historyMoral hazardsRace
An underwriter considers physical conditions in addition to other factors in judging a risk. All of the following are physical conditions EXCEPT:Credit Score
Which of the following can be risk factors in judging a risk for insurance?Family Medical HistoryGender and AgeSmokingAll of the above
An agent takes an application. What information is in Part III?Medical HistoryCredit ReportingGeneral InformationAgent’s Report
Agent John notices that he has made an error in completing an application for Sally Smith. John should do which of the following?For a minor change, he should correct the error and have the Sally initial the changes in his presence
Which of the following information is not required on the first page of an application for insurance?Agent’s nameName of the insurance companyAgent’s license numberHealth information about the applicant
An application for insurance will contain all of the following EXCEPT:A written request for insurance by the applicantInformation about the applicant’s backgroundInformation about the applicant’s health historyAn oral request by the agent to the company to issue the requested coverage
When a policy is issued and forwarded to the agent, what constitutes personal delivery of the policy?All underwriting requirements have been completed and the company issues the policyThe final complete insurance policy is placed in the hands of the insured and any premium due is paid
Nathaniel completes an application for health insurance but he does not pay the first premium. What is the earliest date that coverage will begin?When the application is mailed to the companyWhen the insurance company issues the policyWhen the policy is delivered and the proper premium is paidJerry Wilson is an agent for Wonderful Mutual Insurance Company. He has just completed an application for insurance on Allen Jones and collected the first premium. He has issued Allen a conditional receipt for the insurance. He should also tell Allen all of the following EXCEPT:An insurance policy will not be issued until he completes the physical examHe will receive a report from an agency called MIB concerning any health information that is on record about him
William has submitted an application for health insurance to All Good Insurance Company through his agent, Tom Smith. Under which of the following set of circumstances will William’s insurance coverage become effective?The applicant has met all underwriting requirements, the insurance company approves the policy, and the initial premium has been paid and the policy is issued
Joe Jones has completed an application for Accident and Health Insurance at an applicant’s home. He collects the premium and returns to the office. Before sending the application to the home office, Joe should do which of the following?Correct any mistakes on the application and initial for the insuredDeposit the premium in his/her personal account and buy a money order to send in with the appOrder an MIB reportComplete an agent’s report
What is considered constructive delivery to the policyholder?The company sends the policy with amendments to be signedThe company sends the policy to the agent or other representative of the policyholder and all premiums due are paid
All of the following are true about approval conditional receipts EXCEPT:It is establishes when coverage under the policy beginsIt is part of the considerationIt is temporary insurance until the policy is issued
In some cases a credit-reporting agency is used in the underwriting process. According to the Fair Credit Reporting Act, when is the applicant to be notified that a report may be ordered?Prior to the initial interview by letterIf a report is actually orderedAs part of the policy deliveryAt the time of an application
The agent issues a conditional receipt at the time of the application. Which of the following statements is true?The coverage is effective immediately until he hears otherwise from the insurance companyThe agent should issue a receipt whether or not a payment has been collectedThe company will look on his application more favorably, even if he has some health problemsIf the insurer accepts the policy as applied for, the coverage will take effect from the date of the application or medical exam, whichever is later
A group health insurance plan may include all of the following benefits EXCEPT:Medical ExpenseDisability IncomeRetirement Pension
The Health Insurance Coverage Continuation Act regulates which of the following?Large companies with exclusions in their policyEstablishing requirements for insurers who market to small employers with 20 employees or less
An association is required to do all of the following to qualify as an association group plan EXCEPT:The employer must pay all premiums in full for his employees
Mark and Sarah have recently been blessed with a new son, James. James will be covered under Mark’s health policy:Immediately for group policies and 3 months for individual policiesAfter 24 hours on individual policiesAfter 72 hours on group policiesAt birth for both individual and group policies
George has enrolled in his company’s group insurance plan. As proof of his participation, George will receive which of the following?A certificate of coverageGroup policies typically contain a coordination of benefits (COB) provision. This provision is in the contract to:Prevent under payment of claimsEliminate arbitration on disputed claimsPrevent over payment of a claim when more than one insurance policy is involved
How long do COBRA benefits remain from the date employment is terminated?12 months18 months
What is the maximum length that COBRA benefits may be extended:12 months18 months36 months
How does the pre-existing condition vary from individual to group policies?There is no differenceIndividual pre-existing are less restrictiveGroup plans never have pre-existing clausesIndividual plans are usually more restrictive than group plans
To be eligible to participate in a group medical plan, an employee:Must be full timeMust have served any required probationary periodShould enroll during period of eligibilityAll of the above
For a benefit plan to be considered non-contributory:The employee must pay part of the costThe government subsidizes the premiumsThe employer pays 100% of the cost
Seth must work for 90 days before his insurance is effective. These 90 days are called the:The elimination periodThe deductible periodThe contestable periodProbationary period
The conversion period for an employee to convert his/her group policy to an individual policy is:7 days15 days31 days
Several small businesses join together to form a large group for the purpose of buying group health insurance. This type of arrangement is called which of the following?Health Maintenance Organization (HMO)FranchiseAssociationMultiple Employer Trust (MET)
Sam Johnson is looking at possible methods to classify his employees under his group insurance program. He may choose all of the following except:Method of compensationJob classificationLength of serviceAge bands
When comparing individual disability income policies with group disability income policies, group policies are generally:More costly and more restrictiveMore restrictive in terms of what constitutes a disabilityMade to have longer elimination periodsLess costly and have more liberal benefits
Wildlife Manufacturing Company has a non-contributory health plan. How many employees must participate to meet enrollment requirements?75%90%50%100%
A large group of 2,000 employees has renewed for another year. The premiums have increased by 12% over the previous year. The new rates were most likely a result of:Higher than expected claims for that particular group of people
The longest pre-existing period for conditions that occurred prior to employment under HIPAA is:6 months12 months
Guaranteed issue is a process by which eligible employees may enroll in the company’s group plan without restriction. Guaranteed issue is usually available on what basis?At any time the employee wishes to enrollAt the employer’s discretionAt the insurance company’s discretionAt the time of hire or other annual open enrollmentsUnder HIPAA an insurance company may look back how far on pre-existing conditions for a late enrollee?6 months12 months18 months
An employee changes employers and has diabetes. He has worked for his previous employer for 4 years and is covered by a HIPAA eligible group. He will have full coverage under the new employer when:At the end of any eligibility period under the new employer plans.
HIPAA recognizes time served under group plans to determine pre-existing condition restrictions. If a person is not covered, what is the maximum period they are allowed to go without coverage before the HIPAA requirements become void?6 months5 months90 days63 days
John is over 65 and has been enrolled in Medicare Part A. He remains enrolled on his employer’s group plan. If he has a claim, which plan pays first?Medicare will be primary and his employer’s plan will function as a supplement.The employer plan will be primary and Medicare will be secondary as long as he is actively at work.
Sally and James are married and they work for the same employer. Both have family coverage under the employer group plan, since the employer pays the full premium for all employees. What will the reimbursement be in the event that Sally or James has a claim?Both Sally and James will receive full reimbursement from the plan, even if that results in a higher payment than the claim.The spouse who has the sickness or accident will receive reimbursement up to the benefit maximum under the contract, and coverage for the well spouse will make up the difference up to 100% of the bill, but there will be no excess payment.To qualify as an association group benefit program, an organization must:Be formed for the purpose of setting up an insurance planHave no common business affinityExist for at least two years
A group plan will generally accept all employees without underwriting questions. What are the circumstances where the insurance company can accept or reject a member under a group plan?The group has had excessive claimsAn employee has declined coverage when eligible and later elects to join the group
An association seeking group insurance must meet all of the following requirements EXCEPT:Must be formed for the purpose of buying insurance
In a non-contributory plan:The employer may choose who they want to coverThe employer may exclude hazardous occupationsThe employee must pay part of the cost100% of the employees must be covered
Why do group policies include coordination of benefit (COB) provisions?To allow the insured to collect double when they have two insurance plansTo limit payment to 100% of the loss and no more
COBRA eligibility may be triggered as a result of any of the following events EXCEPT:An employee loses eligibility for group coverage as a result of reduction in hoursTermination of employmentAn employee diesAn employee is promoted
When group insurance is compared to individual insurance, all of the following are true EXCEPT:More people are covered by individual plans than by group plansMaternity coverage covers the expenses for child delivery. Which of the following statements is correct regarding maternity coverage?Individual policies may not offer this benefit or have limitationsGroup policies treat maternity like any other sickness or accident
When an employee has enrolled in a group health plan, he/she will receive what document?An abridged copy of the master contractA certificate of coverage
All of the following are true about group insurance EXCEPT:There are usually no health questions for groupThe rates for larger groups can be based on that group’s claims experienceThe rates may change on the anniversary of the contractEvery employee can tailor make his/her own plan within the group
Smaller employer group rates are usually determined by a preset table that deals with the demographic make up of that group of individuals. This process is known as:Industry ratingGroup ratingCommunity rating
An employee’s eligibility for group enrollment may be determined by all of the following EXCEPT:Number of hours worked weekly or monthlyJob classificationGender
The process by which an employee may enroll in an employer group without regard or restriction for any pre-existing condition is referred to as:Automatic enrollmentConditional enrollmentProspective enrollmentGuaranteed Issue
While the definition of a pre-existing condition may vary to some degree, a pre-existing condition is one that:The employee received treatment or was diagnosed prior to joining the group 12 months before employment.Matilda is starting a new job on Monday. She has been covered under her prior employer’s group plan for 6 months, but she has been treated for a stomach disorder just prior to joining her new employer. When will she have full coverage under the new plan if they do not offer guaranteed issue?Immediately: The new company may not look back on pre-existing conditions.After six months, since Matilda has 12 months of credible coverage
HIPAA rules on renewability apply to:Individual policies
Group insurance plans typically have a provision called coordination of benefits. This occurs when an insured is covered by more than one group plan. Why is this provision in the contract?It provides the contract with a formal method to deny claims.It allows the insured to choose which contract will pay the claim.It prevents over insurance
Both spouses are covered by their employer group plans for full family coverage. Based on usual guidelines, how is the order of coverage determined?The father’s coverage is always primaryThe first qualification is which parent has been covered longestPrimary coverage is usually determined by which parent’s birthday comes earliest in the year.
Valerie has a health insurance policy that states that the insurance company may not cancel the policy, but they may increase the rates on a specified class of insureds. Valerie has a:Non-cancellable policyOptionally renewable policyGuaranteed renewable policy
Karl has an individual health insurance policy with Wildlife Mutual. Wildlife also sells group contracts and his employer decides to purchase group coverage for his employees through that company. Karl enrolls in the group, but he also continues to pay premiums on his individual plan. When Karl has a claim, what can he expect?Karl will receive full benefits from both contracts, since there is no coordination of benefits on individual plans.
Sometimes small businesses are grouped together in order to obtain insurance as one large group. This practice is a characteristic of which of the following?A Blue Cross/Blue Shield planA Franchise PlanA HMO (health maintenance organization)A multiple employer trust or M.E.T.
HIPAA requirements deal with, on a federal level, groups of what size?100 or more50 or more
COBRA is intended to accomplish which of the following in regard to a group health policy:Terminate coverage at the time of resignation or other separation from employmentProtect employees and their dependents from immediately losing health insurance under the group plan in the event of a separation by a listed number of events
All of the factors below are factors in underwriting a Group Health Insurance Plan EXCEPT:Stability of the groupType of industryIndividuals with certain health conditions
COBRA is a provision that allows a terminating employee to continue health insurance under his employers plan for a specified period of time. If an employer fails to allow this benefit, his consequences may include which of the following?Private lawsuits under ERISAIRS excise TaxesLiability for past and future medical expenses during the qualified beneficiary’s continuation period.All of the AboveYou belong to a system that provides both health care services and health care insurance. You belong to:PPOHMO
An HMO found guilty of unfair trade practices can be subject to:ImprisonmentFines not exceeding $25,000Fines up to $50,000Both imprisonment and fines up to $50,000
If Sally belongs to an HMO, she can expect which of the following included in her benefits?Annual physicalImmunization shots as requiredAge related preventative treatmentAll of the above
Steve is considering the HMO option offered by his employer. Which of the following can Steve expect if chooses this option?Choice of any doctor he wishes to use.Treatment for diagnosed illness onlyAnnual physical and preventative care
Before an HMO may offer coverage and benefits to the public, the HMO must do which of the following:Obtain a certificate of authority from the state’s Department of Insurance.A Health Maintenance Organization (HMO) uses a method called capitation. Which of the following describes capitation?Sets a limit on the number of doctors that can be employed by the HMO.Pays a fixed monthly fee to the health provider for each member regardless of the services they may use.
HMOs (Health Maintenance Organizations) typically:Provide annual physicals and preventative services
Blue Sky HMO has an open panel plan. The plan is:A group of physicians, who contract with the HMO for services, but maintain a private practice.
Carl is considering the HMO option on his employer’s plan. Which of following benefits may not be provided by the HMO?Hospital carePrescription Drugs
All of the following are medical cost management techniques designed to minimize overall health costs EXCEPT:Preventative careRequiring a second opinion for surgeryDiffering the payment amounts for specified illnesses
An HMO is an IPA model HMO. The HMO members can expect any of the following EXCEPT:Annual physicals and other wellness benefitsChoice of any surgeon
An HMO allows it members to choose approved physicians who are in private practice. This is called:Staff Model HMOOpen panel HMO
Why do most insurance plans pay for benefits in an outpatient service facility?It is more convenient for the patientOut patient services do not require as much timeThe cost is usually much less for the same service as an inpatient admission.
Henry works for GHI Corp and they have announced an annual re-enrollment for the HMO plan. Under most HMOs, Henry has how long to make his decision to join the HMO?60 days10 days45 days30 days
An HMO (Health Maintenance Organization) is considered to be what type of organization:Regular licensed insurance companyA pre-paid service organizationA provider under an HMO arrangement could be:A physicianA hospitalA diagnostic laboratoryAll of the Above
Under HMO guidelines, rules are very specific about when a member should receive certificates and handbooks outlining their coverage. When must an HMO deliver this material to an enrolling member?7 days10 days
Sally is reading her HMO contract. She sees the term “Capitation” listed in the wording. The HMO uses Capitation to describe:The maximum number of doctors who may be listed in the panel.The per member fee paid to the state for licensingThe number of times a patient may have service each monthThe flat fee the HMO pays the doctor per subscriber each month regardless of services rendered.
An HMO has a limited number of health care providers that are owned or employed by the HMO. This type of HMO is:Gatekeeper systemOpen PanelCapitation SystemClosed PanelWhich of the following gives a subscriber the broadest choice in health care providers without paying a penalty?Closed-Panel PPOOpen-Panel PPO
Which of the following employ capitation as a plan for paying health care providers?HMO
All the following statements about PPO arrangements are correct EXCEPTNo difference in deductible is permitted between care received by preferred and non-preferred providers.
A point-of-service (POS) plan is MOST like a Health Maintenance Organization (HMO) in which of the following ways?Both are generally nonprofit organizations.Both all subscribers to use outside providers.Both use a primary care physician
A technique used to evaluate the clinical necessity, appropriateness, and/or efficiency of health care services, procedures, or settings is known asAdverse selectionRetrospective reviewExternal reviewUtilization review
The principal difference between a preferred provider organization (PPO) and a point-of-service plan (POS) is that aPPO allows the individual to use any service provider, whereas a POS requires the individual to use only pre-selected providers.The principal difference between a preferred provider organization (PPO) and a point-of-service plan (POS) is that aPPO allows the individual to use any service provider, whereas a POS requires the individual to use only pre-selected providers.
All the following are considered basic health care services offered by HMOs EXCEPT:Rehabilitative and home health servicesOf the following statements about HMOs, which is CORRECT?They place special emphasis on preventive health care.A Health Maintenance Organization (HMO) is known for stressing which type of medical care?Preventative and wellness care to keep its members well.
An HMO plan is characterized by all of the following EXCEPT:Community ratingPeriodic wellness testingAnnual open enrollmentsFree choices of any providerThe theory of providing preventative care under an HMO is:Diagnosing and treating a problem at the earliest possible date will reduce health care cost in the long run.
Harold is enrolled in an HMO program through his employer. He notes in his benefit booklet that he must select a primary care physician for his medical treatment and consultation. There are specialists listed in the panel of doctors, but none are listed as primary care physicians. How will Harold be able to access these specialists?He can choose to make an appointment with any physician on the listHe must consult his primary care physician and receive a referral to a specialist based on his primary doctor’s evaluation.
In an HMO a member may be required to have a primary physician to be the focal point for all treatment and service. All of the following are true about the primary care physician relationship EXECPT:The primary care physician will have records from all physicians and other providers in the HMO to coordinate the patient’s treatment.The primary care physician will provide referrals to specialists and other providers when required.The primary care physician can decide what is covered and what is not for the member.
An HMO member can usually qualify for benefits when there is an emergency in all of the following EXCEPT:While on vacation out of the HMO areaWhile on business out of the HMO areaUsing an urgent care facility when the situation is criticalUsing a non HMO emergency room when you are in the HMO area
Gilda is at home and she discovers that her child is running an extremely high fever. Gilda places a call to her primary care physician advising her that she is going to go to the emergency room. Which of the following is true?As long as Gilda takes her child to an HMO approved hospital she will have benefits
An HMO will generally cover all of the following services from a hospital EXCEPTIn patient care, including ancillary servicesOut patient surgeryX-ray and laboratoryOut patient prescription drugs
An HMO hospital benefit will usually provide all of the following services EXCEPT:Specified mental health conditionsHospital room and boardEyeglasses and hearing aids
In addition to the basic health services an HMO may also offer which of the following services?Health education programs (quit smoking, prepare for childbirth, etc.)
An HMO will offer basic services to all members. All of the following services are offered as a basic service EXCEPTDoctor servicesPreventive and routine care like annual physical and immunizationsRehabilitation therapyDurable equipment
Carl has enrolled in an HMO plan through his employer. The price is very low and attractive. Carl reads that he must use the doctor listed in his directory or lose benefits. This type of HMO is known as a (an):Open panel HMOStaff model HMOClosed panel HMO
Betty has enrolled in an HMO through her employer. The booklet she receives indicates that she may choose any doctor or specialist without a referral, but approved HMO doctors will provide service at lower or no out-of-pocket cost. Betty is enrolled in:Open panel HMO
Derrick has a plan with his employer that provides co-pays and a higher payment from the insurance company if he uses designated providers. He, may, however, use other providers if he chooses, but the reimbursement will be lower. Derrick’s employer most likely has what kind of plan?IPAHMOPPO
A PPO Plan will usually have all the following features EXCEPT:Higher reimbursement for in network providersOffice visit co-paysMandatory referrals to specialists
A PPO network may have a contract that involves any of the following EXCEPT:The Contracting networkPhysicians, hospitals and other providersThe participating employee
PPO networks contract with individual physicians and also with physician groups. What is the disadvantage of contracting with physician groups?Contracting with physician groups provides higher discounts to servicesContracting with groups allows the network and the physicians to have one individual act on their behalf.Physicians may leave the group from time to time to begin an individual practice and not be part of the network at the time of service
Max is enrolled through his employer’s group plan. While he has a generous reimbursement schedule for benefits, all of his medical care must be focused through a designated physician whom he may choose. The designated physician must make all referrals, but there is no restriction on the network. Max most likely has:A POS plan (Point of Service)
Both HMO and PPO plans may allow out of network access. If a member elects to use out of network providers, he/she may expect any of the following results EXCEPT:Lower benefits reimbursementLower quality of care
To be considered an out of network a provider must:Provide service at multiple locationsBe in a non-recognized specialtyNot have a contract with the network
George is a participant in his employer’s medical plan. The plan requires that he select a primary care physician for all medical treatment. George suffers from severe allergies. He wants to see a specialist about his problem. George should:Tell his primary care physician that he is going to see a specialist for allergiesRequest that his primary care physician refer him to an allergist
Ken has a medical plan through his employer that provides a schedule of benefits and payment allowances for those benefits in his employee group certificate booklet. Ken most likely in enrolled in a:PPO PlanHMO PlanPoint of Service PlanBasic Surgical Expense Plan
Joe is qualified for disability benefits as a result of an off the job accident. He returns to work after 9 months. Unfortunately, Joe has a heart attack and must go out on disability again. Which of the following is true?Joe will continue benefits without a new waiting period.Joe will have to satisfy a new elimination period since the new disability is not related to the first.
The factor that affects rates and benefits for a disability policy primarily is:Occupational classInterest on reservesMorbidity tables
Bill is a small business owner. He is considering the purchase of a Business Overhead Expense plan (BOE). He can expect the policy to pay which of the following in the event he is disabled?His salary up to the policy maximumHis home mortgageRent or mortgage on his business property
Frank has been out on disability and receives benefits under his current policy. His health has improved, but not enough for him to return to full time employment. He can work part time. He can continue to receive benefits at a reduced basis if his policy has which of the following provision?Rehabilitative Employment BenefitRecurrent Disability BenefitResidual Disability Benefit
Kenneth is injured on the job. He is disabled to the point that he is unable to resume the duties of his job at injury, but he is capable of performing the duties of another occupation. His disability will be classified as:Total lifetime disabilityTotal disability for two years and then partial disabilityPartial disability
Which of the following policies will not reimburse for specified medical expenses?Major medical policiesDaily hospital indemnityDisability IncomeA disability income plan is designed to pay benefits for which of the following?Unemployment benefitsOn the job injuriesMedical expenseWeekly or monthly income as a result of sickness or accident
All of the policies listed below will pay a death benefit EXCEPT:Ordinary life policyDisability income
Samantha has qualified for a disability benefit under her current plan. Samantha can expect to begin receiving benefits at the end of:The disability periodThe probationary periodThe benefit periodThe elimination period elected under the policy.A disability policy can be provided on a noncancellable and guaranteed renewable basis because:The benefits are fixed and will not increase at a later date
Arthur has been issued a health policy with a probationary period. He should understand which of the following?The waiting period for accidents may be different than for sickness.
Bernie is disabled and wants to apply for disability under Social Security. In order to qualify, he must meet all of the following requirements, EXCEPT:Total and permanent disability and he must not be able to workHe must have earned the necessary number of quarters of coverageThere is a 6 month waiting period
Rudy suffered an injury in an automobile accident. His policy covers disabilities as a result of an accident. In this case, he did not qualify for benefits. His injury most likely:Was an outpatient procedure that did not require hospitalizationDid not meet the threshold to qualify for disability payments
Robert has been notified that he does not qualify for full disability benefits, but his policy does contain a provision for partial disability that he does qualify for. His current policy pays $1,000 per month in the event of a full disability. What benefit should he expect for a partial disability?$750$600$300$500
To protect against a disabled person receiving more income by being disabled than they can earn by working, most group disability plans will offset policy benefits with any of the following benefits, EXCEPT:Wage continuation plansMedicaid
Edward has been treated for kidney stones in the past. He is applying for disability benefits. His agent should explain to him that he might have which of the following added to his policy:A longer elimination period for benefitsA waiting or probationary period before disabilities related to his pre-existing condition is covered.Carl is unable to work due to a medical condition. He has been confined to his home for four months and wants to begin the process for filing a disability claim with Social Security. All of the following are true EXCEPT:He should wait until he has completed 5 months of waiting.He should be eligible for Medicare before he applies.A business overhead expense policy will cover all of the following expenses EXCEPT:Copy machine lease50% of the owner’s salary
Larry, Moe and Curly are equal partners in a business that has been valued at $500,000 by their accountant. None of the three want to be in business with their partner’s families in the event one is disabled. The business entity should purchase which of the following?Three Disability Buy-Sell policies for $100,000 eachSix Disability Buy-Sell policies for $100,000 eachLife insurance will cover this needThree Disability Buy-Sell policies of $167,000 eachA disability plan that pays a benefit based on loss of earnings is considered which of the following?A non-cancellable planA residual disability plan
The owner of CEO, Inc. is concerned about his key employees becoming disabled. He should consider a(n):Key person disability plan
An insurance company must pay a disability benefit no less frequently than:WeeklyBi-weeklyQuarterlyMonthly
Hal has a disability income contract with Gigantic Mutual. If he qualifies for benefits, he should expect to receive:A monthly income for a specified period of time
All of the following are true concerning Worker’s Compensation laws EXCEPT:All states require employers to have Worker’s Compensation Insurance.he definition of accident is determined by which of the following theories?Accidental means and Accidental Bodily Injury
Rebecca is disabled and not able to work. When can she file a claim with the Social Security Administration for disability benefits?After one yearAs soon as she is diagnosed as total and permanently disabledAfter 3 months (90 days)After 5 months (150 days)
In order to qualify for Social Security disability, one must:Be confined to the house or other facilityHave a disability that is expected to last longer than 12 monthsAccidental Death and Dismemberment policy will usually pay benefits for which of the following?Elliott loses three fingers working on his lawnmowerManford loses the use of his left hand in an auto accidentSuzanne loses her eye as a result of a flying puck from a hockey game
A disability policy can be written as noncancellable, which means that premiums and benefits are guaranteed for the life of the contract because:The benefits are not affected by inflation
Ralph has qualified for benefits under his disability plan. The company is required to pay him at what minimum frequency?WeeklyBi-weeklyMonthly
Xavier has a noncancellable disability policy. He has an accidental injury, but he is not disabled. He does receive a one-time payment for his accident. He is most likely receiving a benefit from which of the following?A partial disability benefitA nondisabling injury benefit
Most disability policies will not cover more that 60-70% of pre-disability compensation. Why is this true?Disability income is a volatile product and the insurance company is hedging.To go any higher would require the insurance company to increase reserves beyond legal limits.To provide a higher level of income might create over insurance.
Hiram is looking at various disability contracts. He is concerned about the definition of disability as it varies on different contracts. The best definition from his standpoint is:Total and permanent and not being able to work at allInability to perform any occupationInability to perform the duties of his own occupation
Jerome has a policy with a waiver of premium provision. How long must Jerome be disabled before his premiums will be waived due to a qualifying disability?20 days for accidents4 weeks for accidents or sickness90 days for accidents, 6 months for sickness3 or 6 months for any disability
Ben has a COLA (Cost of living adjustment) rider on his disability policy. Any adjustment to his benefit will be tied to:Dow Jones AverageGross National Product (GNP)Consumer Price Index (CPI)
Harold has been issued a disability policy. In reading the policy, he finds that he must be insured for at least 15 or 30 days before he will be able to claim benefits for a disability due to a sickness. This time period is called the:Elimination periodProbationary period
Hector has a disability policy that will pay partial disability benefits this means that Hector’s benefit will be:Payable when he has had the policy for less than one yearPayable when he is not totally disabled
Reginald is trying to find a disability policy that will fit into his budget. In order to lower his premium, he should look at which of the following?Consider a longer elimination period
Zebadiah is injured and unable to go to work due to his injury. His definition of disability reads: “Disability means the insured’s inability to perform the duties of any occupation for which he is reasonably qualified by education, training or experience.” This definition is:Known as the “own occupation” definition and he can work at other jobs and still be considered disabled.Known as a limited occupation and he must be hospital confined to receive benefits.Known as rehabilitative disability and he must try to return to work as soon as possible to begin rehabilitative employment.Known as the “any occupation” definition. This is more restrictive than the own occupation definition for disability.
George has a disability policy that states he must be disabled for 180 days before he can collect benefits. This feature is known as which of the following?The deductible periodThe elimination period
An elimination period for a disability policy can be considered which of the following?A method of increasing the insurance company’s liabilityA method for the insured to accept a short-term risk to lower the premium cost
Disability insurance can be used in a business for which of the following needs?Funding a buy-sell agreementBusiness overhead Expense protectionKey person insurance protectionAll of the above
Sigmund’s disability policy has a “recurrent disability provision”. This means:The plan will only pay for a disability once.The insured will not have to serve a new elimination period if he goes out for the same disability within a set period of time.Sets a limit on how many times any one disability can be claimed.
Mike Donaldson is involved in a serious auto accident. As a result of the accident, Mike is disabled and his passenger is also seriously injured. Mike has a disability income plan. Which of the following losses will the disability plan reimburse?Medical expenses for his passengerThe other driver’s loss of incomeMike’s out-of-pocket medical expenseMike’s loss of income
Dr. Haley, an ophthalmologist, is severely injured in a skiing accident. He has a business overhead expense policy (BOE) and he qualifies for benefits on that policy. All of the following are true EXCEPT:He will be reimbursed for rent on his officeHe will be reimbursed for leased equipmentHe will be reimbursed for his home utilities
What is the elimination period for filing Social Security disability benefits?360 days180 days90 days150 dayCharles has been out on disability for a heart condition. He later has another episode of the same heart condition. Under a disability policy, this is referred to as which of the following?A new spell of illnessA recurrent disability
Amanda has an Accident policy. She reads the phrase “accidental bodily injury”. She asked her agent to explain this to her. His correct response would be:You will receive varying benefits depending on the type of accidentYou will have less restrictions on your claims than if the policy read accidental means
Dennis has provided a disability plan for his top employees in the event they become sick or injured. What is this called?Decreasing term disabilityKey person disability
Lazarus has been disabled for 6 months. What other requirements must he meet to qualify for waiver of premium?All premiums must be currentHe must be under a physician’s care
Your disability policy states that you will qualify for benefits as a result of your inability to perform the duties of any job that you are qualified by prior training, education, or experience. It further states that you must lose income as a result of this circumstance. You most likely haveAn income replacement policy
Your disability policy defines your eligibility for disability benefits as your inability, due to sickness or accident, to perform the essential duties of your occupation. That definition is known asAny occupation for disabilityOwn occupation for disability
Your disability policy states that you will qualify for benefits in the event you are not able to perform the essential duties of your occupation as a result of a sickness or an accident for 5 years and any occupation for which you have had prior experience, education or training thereafter. You are a surgeon who has a neurological problem in his arm. You are not able to perform surgery, but you can practice internal medicine. What benefits might your expect when your disability is approved?Full benefits until you recover or reach a specified ageFull benefits reduced by the income you earn as an internal medicine doctor.Full benefits for five years and no benefits thereafterYour disability policy states that to be considered disabled you must not be able to work as a result of an accident or sickness. That definition is known as:Any occupation definition
Sam is involved in a serious accident. He will not be able to return to his job as an instructor for an undetermined amount of time. He also has training as a welder. His disability policy states that Sam will be considered disabled in the event he is not able to perform the duties of any occupation for which he has been trained, has education or prior experience. Sam is also not able to perform the duties as a welder. Sam should expect the following:A full benefit until his health allows him to return to work.Full benefits until he can return to work or work in another suitable occupation.George is blinded in an accident. His disability policy begins benefits as soon as his disability is confirmed. This type of disability it known as:ImmediatePresumptive
An example of presumptive disability might be any of the following EXCEPT:Total BlindnessComplete loss of hearingAmputation of a leg at the hipSeverance of a hand
All of the following Government benefit programs will provide benefits for medical benefits Except:OASDISocial Security Disability
Samantha has suffered a heart attack and she expects to be unable to work for the foreseeable future due to unexpected complications. She is covered by a group disability policy, and she has qualified for benefits under that plan. Samantha has also qualified for Social Security disability benefits after the prescribed waiting period. Samantha’s disability benefit is 60% of her salary at the time of disability. How will Social Security disability affect her benefits?Samantha will receive 60% of her salary plus the benefits provided by Social Security.Samantha will receive 100% of the Social Security benefits; however, her employer’s benefits will be reduced so her total benefit will not exceed 60% of her salary at the time of disability, including what Social Security pays.
Judy is injured while she is on her job. Her company covers Judy with short-term disability, long-term disability and Workers Compensation. What plan will pay benefits to Judy in the event she is unable to work as a result of the on-the-job injury?Workers Compensation will pay up to specified limits with the employer’s long-term disability plan making up any short fall of total income benefits after an elimination period.
Richard purchases a disability policy while he is a bookkeeper in a family business. He leaves the family business to work on an offshore oil platform and he becomes disabled. His policy states that he has a $1,000 monthly benefit for a qualifying disability, but he receives $750.00 per month. His policy most likely has a:Residual disability clausePresumptive disability clauseOwn occupation definitionChange of occupation clause
A change of occupation provision will allow the insurance company to do any of the following at the time of claim EXCEPT:Pay the benefits stated in the policyIncrease the premiums for that individual
Walter is reading his disability policy and notices that there is a clause concerning “Rehabilitation”. He is trying to understand the difference between the rehabilitation benefit as opposed to partial disability. The rehabilitation benefit differs from partial disability in the following way:Rehabilitation requires a period of total disability and usually provides a benefit for a specified time to transition back to work
James has been out on disability for three years. He has recovered from his condition to the point where he can return to work on a part time basis, but he may never be able to return full time. In order for James to receive benefits on this basis, his disability plan should have which provision?Rehabilitative employmentResidual disabilityPartial disability
A short-term disability policy will provide short benefit periods of less than two years. In most cases the benefit period is shorter. One common exclusion for short-term disability policies is:Only accidents qualify for benefitsOn the job injuries are not covered
Hal is covered by a short-term disability through his employer. These plans may be designed with any of the following features EXCEPT:Benefits may be paid as a percent of incomeBenefits may be paid as a flat indemnity amountBenefits will coordinate with Worker’s CompensationLong-term disability has a benefit that will provide income payments for longer time periods. The maximum duration of a long-term disability payment is usually:10 years onlyTo age 65 in all casesAge 65 or a specified period of time if the insured is over a specified age when disabled
A person that is disabled under Social Security is eligible for Medicare benefits after how long?5 months (150 days)24 months (720 days)29 months (870 days)
Harry has been disabled for 2.5 years. He has been on his employer group through COBRA most of that time, but his coverage expired due to time limits. He is not eligible for Medicare Part A and Part B. What is the status of his employer plan?His employer plan has expired and it is not an issue in this case.
Which type of policy generally requires an elimination period to qualify for benefits?Dread disease policyA major medical planA dental planA disability plan
A disability plan states that there is a 14-day elimination period to qualify but this may be waived. The waiver will generally apply to what event?Pre-existing conditionsAccidental injury
Anderson Carpet Company has purchased business overhead expense insurance. All of the following are covered under this policy EXCEPT:The employer’s salary
The insurance company that Johnathan works for has classified Jonathan as totally disabled. Under the waiver of premium, how long is the waiting period?30 days60 days1-3 months3-6 monthsA group long-term disability plan provides benefits under an employer-sponsored plan. A group plan may contain all of the following features EXCEPT:Benefits will be coordinated with Social Security disability benefits.Benefits will not be paid for on-the-job lossesThe benefit is not usually stated as a percent of income
An individual disability will be characterized in all of the following ways EXCEPT:The benefit is a stated dollar amount based on a percentage of income per monthThe premium is established by the insured’s occupation and health statusThe benefit may be paid annually
What is the maximum number of days in a Skilled Nursing Facility is covered under Medicare Part A?20 days60 days80 days100 days
Medicare supplement plans must contain a provision that allows a free look period. What is the minimum time for a free look?10 days30 days
Medicare Part A provides which of the following benefits:Hospice Care
Medicaid is a program that:Is co-funded by states and the federal governmentProvides benefits for eligible low income individualsIs administered by individual statesAll of the above
Medicare will require the individual participant to pay a premium for which of the following parts?Part APart BPart DPart B and Part D
Mark is soon to reach age 65. At age 65 he will become eligible for which of the following:Medicare Part AMedicare Part BMedicare Part DAll of the above
The free look for Medicare Supplement Plans and Long Term Care policies is:10 days for Medicare Supplement, 45 days for Long term Care30 days for Medicare Supplement, 60 days for Long term Care30 days for both Medicare Supplement and Long Term Care
Medicare Part B provides benefits for all of the following benefits EXCEPT:Durable medical equipment at homeOutpatient Prescription drugs
Medicare Part A pays for hospital expenses. What is the maximum out-of-pocket for the patient in this plan?The per admission deductibleThe difference between a private and semi-private room chargeThere is not limit on out-of-pocket
The Smithermans are covered by Medicare Part A & B. There are concerned that this will not cover their entire medical bill in the event there is a sickness or an accident. The Smithermans should consider purchasing a:Determine if the are eligible for MedicaidPurchase a Medicare Supplement plan that will cover some of the cost not paid by Medicare.
Medicare was instituted for the primary reason of:Providing medical services for the indigentProviding medical services for individuals who are 65 or older
Medicare Part A will pay for the first 60 days of hospitalization in full after the required deductible. How long must a member be out of the hospital before a new benefit period begins?30 days90 days60 days
Part A Medicare will provide services for all of the following EXCEPT:Home health careSurgery
Long Term Care benefits may be available through all of the following, EXCEPT:Individual PolicyMedicare Part B
If an individual covered under Medicare Part A is in the hospital beyond 90 days, benefits may be subject to:DeductiblesCo-insuranceOut-of-pocket maximumLifetime reserve of equal to a maximum of 60 days of hospitalizationLong Term Care policy has which of the following renewability options:Non-CancellableGuaranteed renewableNone of the AboveAll of the Above
Medicare Part B includes benefits for:Doctor’s services
Medicare is primarily funded through:General fund of the federal governmentFICA payroll taxes
All of the follow are true about Medicare Part A EXCEPT:There is a deductible to enter the hospitalThere is a coinsurance beyond 60 days of confinementOutpatient prescription drugs are subject to the doughnut hole
A fully insured individual qualifies for Medicare at age___ .Age 62 if a widowAt any age with end stage renal failure
All of the following Government benefit programs will provide benefits for medical benefits EXCEPT:OASDISocial Security Disability
Which of the following is not a limited risk policy?Travel AccidentMedicare Supplement
All of the following statements regarding Medicare Part A are true, EXCEPT:Covers hospitalizationCoverage is mandatoryCovers hospice careCovers outpatient prescription drugsA long term care policy has an elimination period before benefits are payable. How long is the usual elimination period?365 days90 days only30 days or longerMedicare was enacted in 1965 and took effect in 1966. Medicare is part of what larger system?OASDIRailroad RetirementSocial Security
Health polices can be all of the following, EXCEPT:An indemnity ContractA valued Contract
Nathan incurs a $5,500 hospital bill. His major medical plan has a $500 deductible. Expenses beyond the deductible are payable at 80%, not to exceed $2,000 out-of-pocket expense. Nathan had $400 of charges that he paid before entering the hospital. How much will his insurance company pay towards his hospital bill?$4,320
Martin has gall bladder surgery that requires a 4 day hospital stay. His policy has a $500 deductible and pays 80% with a maximum out-of-pocket of $5,000. The hospital bill is $8,500. What is Martin’s part of the bill?$6,400$6,800$1,700$2,100Charles has a major medical policy that has a $1,000 deductible and a maximum out of pocket of $2,000. He has 80/20 coinsurance. He incurs a medical bill of $7,000. What will he have to pay?$4,800$2,200
Sarah wants to have her face lifted to look better. There is no medical necessity for this procedure. The insurance company will:Pay the benefit if Sarah has been covered for two yearsPay a reduced benefit since it is not medically necessaryExclude the benefit entirely
Harold has a policy that provides $5,000 basic hospital expense with a supplemental major medical that has a $500 deductible and 80/20 thereafter. He receives a surgeon’s bill for $3,000. How much will Howard pay out-of-pocket?$0$500$1,000Samantha has a basic plan with a supplemental major medical through her employer. The deductible that will be applied when she is eligible for major medical benefits is called which of the following?An integrated deductibleA corridor deductible
Marilyn has a major medical policy that has a $500 deductible and pays 80% of the benefit after the deductible. Marilyn has a hospital stay that results in a $21,000 bill. How much will Marilyn owe for her part of the bill?$2,100$4,100$500$4,600
Max has a policy that pays part of his medical bill without any deductible. He most likely has a(n):Disability IncomeBasic Medical Expense Plan
A hospital income plan pays benefits based on which of the following?Aggregate stop lossReimbursement scheduleCo-insuranceFlat payment per day in the hospital
Harry has a major medical plan that has a new deductible for each illness or accident he incurs. What is the name for this type of deductible?Annual deductibleCarryover deductiblePer cause deductible
Major Medical Plans usually allow benefits for all of the following EXCEPT:Non-occupational accidentsDiagnostic testingSurgical ProceduresExperimental drugs and treatmentGail has been in the hospital and has a total bill of $9,000. Her insurance policy contains a $200 deductible and a $5,000 maximum out-of-pocket provision. Benefits are paid at 80%/20%. How much will Gail have to pay on this bill?$2,000$1,960
Harland is confined to the hospital for 10 days for surgery. He has a hospital expense policy that provides $100 per day for a room, plus $1,000 for miscellaneous hospital charges and $500 for surgery. The hospital charges $200 per day for room, $1,500 for miscellaneous services and the doctor charges $1,500 for his fee. How much will Harland’s policy pay?$5,000$1,500$2,200$2,500
Barney has a surgical expense policy listed as a “$1,000 Basic Surgical Expense Policy”. This means which of the following?Any surgery will pay $1,000The plan will pay $1,000, only if the surgeon is board certifiedOnly the most complex surgery will be reimbursed at $1,000 and other procedures by the dollar value of procedure.
Caroline recently was admitted to the hospital. During this visit, she incurred a $7,000 charge. Her major medical plan has a $500 deductible and pays 80% after the deductible is satisfied. Her plan has a maximum out-of-pocket of $2,500. How much did Caroline owe for her part of the bill?$2,500$2,200$1,800
Medical expense plans are what type of contracts?Point valueSubstandard RiskReimbursement
A major medical expense plan:Provided only through a group planSupplements MedicareHas large lifetime benefit maximums
Major medical may have any of the following deductibles, EXCEPT:FlatStacked
Which of the following is not covered under a basic medical insurance plan?Private nursingIncome Replacement
Susan has paid the maximum out-of-pocket required on her major medical plan for the year. Any additional claims will be reimbursed at what level?80%90%100%
George has a hospital indemnity plan that pays $100 per day while he is an inpatient. He was admitted to the hospital for five days. What benefit should he expect?Nothing if he did not have surgery$500
Walter has a major medical policy with a $500 deductible, 80/20 coinsurance and a $1,500 maximum out-of-pocket. His hospital bill is $6,500. How much will the insurance company pay?$5,200$1,500$1,800$4,800
In a basic hospital expense policy, the ancillary hospital charges are usually paid as follows:Whatever is considered reasonable and customaryA multiple of the daily room and board rate
The death benefit for an Accidental Death and Dismemberment policy is referred to as which of the following?Maximum benefitPrincipal Sum
Jim participates in an employer paid disability income plan. He qualifies for and receives $6,500 in benefits. How much of these benefits must he include in his taxable income for that tax year?He may exclude the first $100 per week of benefitsHe has no tax due at allOnly the first 13 weeks is taxableAll is taxable, since the employer paid all of the premiumsDisability income benefits are paid tax-free to the insured on which of the following bases?The employer pays the entire premiumIt does not matter who pays the premiumThe insured pays 100% of the premiums with after tax dollarsKent is calculating his income tax. He is itemizing his deductions. Which of the following is not an allowable medical expense as a medical deduction?Dental ExpensesHearing AidsPremiums for health insuranceDisability Income premiums
Benefits for an employer sponsored disability income plan are taxable in the following situations:The employee pays 100% of the premium with after-tax dollarsThe employer shares the premium with the employeeThe benefits received from a non-contributory group disability program will be:Free of tax for the first $100 per weekFully taxable to the employee receiving benefits.
All benefits for individual health insurance policies are taxed as follows EXCEPT:Benefits received from a Hospital Indemnity plan are taxable to the extent the benefits exceed the premium paid.Which of the following statements it not true about the taxation of health insurance policy premiums?Premiums for individual health, accident, disability or long-term-care policies are never deductible
Monica works for the Global Map Company. Global Map provides accident, health, dental and vision coverage for it’s employees. Allow of the following are true statements about employer provided coverage EXCEPT:Global Map can deduct the premiums for the group coverage as a business expense.The employees are not taxed for the premiums.The benefits that the employees receive for health and accident coverage are tax-freeThe benefits that the employees receive for group long-term disability coverage are tax-free
Michelle’s company does not offer employer paid disability coverage under their group plan. Michelle opts to pick up the coverage and pay the premium herself. Which of the following is true?Michelle’s benefits would be tax deferred.The benefits would be subject to FICA for the first six calendar months following her disability.Both of the above.Neither of the above.Sally is the sole proprietor of the Sally Pie Company. She has purchased health insurance and long-term care insurance. How much of the premiums for her health insurance and long-term care insurance are deductible from her gross income?100%
When are individual Medicare supplement insurance premiums deductible as medical expense?From the first dollar paid for premiumsAfter the individual has met the policy deductibleWhen combined with other unreimbursed medical expense the amount exceeds 10% of the individual’s adjusted gross income.
Maggie is 35 years of age. She has purchased a long-term care policy. If her combined premiums and unreimbursed medical expense exceed 7.5% (10% in 2013), she can deduct ________ per year of her premiums for her long-term care policy.$310
Maggie’s grandmother is 72 years old. She has purchased a long-term care policy. If her combined premiums and unreimbursed medical expense exceed 10%), she can deduct ________ per year of her premiums for her long-term care policy.$1,000$2,600$3,850
All of the following statements are true regarding employer paid long-term care insurance premiums EXCEPT:The premiums are deductible as a business expenseThe coverage can be part of a flexible spending account
The Boxer Box Company has a long-term care policy that was originally issued in January 1995 and does not fulfill all of the criteria required of LTC policies issued after January 1997 to meet tax-qualified status. Which statement about this policy is true?The policy is invalid and they must provide a new policy that meets current requirements.The policy was automatically tax-qualified under a grandfather rule.
The federal standards established new eligibility requirements in January 1997. Which of the following is not part of the new standards that are required for tax-qualification?A licensed health care professional must certify that the individual is chronically ill.The certification must state that the condition is expected to last at least 120 days
In order to meet the federal standards for eligibility for tax-free benefits, the insured must –Be unable to perform at least two of the activities of daily living for at least 90 daysNeed supervision because of cognitive impairmentBe recertified as chronically ill annuallyAll of the above
Max is receiving Social Security Disability Insurance (SSDI) benefits. At what income level can these benefits be taxable if he files a tax return as an individual?$10,000$15,000$20,000$25,000
Erik is receiving Social Security Disability Insurance (SSDI) benefits. He files a joint return with his spouse showing income of $60,000. What portion of his benefits could be taxed?10%30%85%Wendy’s adjusted gross income for 2012 is $100,000. Her unreimbursed medical expenses for health, accident and long-term care premiums for 2012 amount to $8,200. She will be able to take a tax deduction of –$8,200$5,000$1,200$700
Janet is self-employed. Which of the following statements is not true about the limitations of her deductions for health insurance premiums?Her deduction is not limited to amounts over 7.5% of her adjusted gross income.She can deduct 100% of the cost of health insurance for herself, her spouse and dependents.The deduction can exceed the amount of her earned income
Health insurance reimbursements generally are not taxable income to individuals. All of the following statements about tax liability are true EXCEPT:If your reimbursements exceed your actual expenses the excess can be included in your income.Hospital, surgical or medical expenses reimbursed through your employer’s health plan are not taxable.There is dollar limit on the amount of tax-free medical reimbursements you can receive in a year.
The Color Candy Company provides both short-term and long-term disability to all eligible employees. They provide this benefit at no cost to the employees, and deduct the premiums from its income as a business expense. If an employee receives benefits under either of the plans –They are tax-freeThey are fully taxable
Jeff and Nancy Brown purchased individual disability policies from an insurance company. They paid their premiums with after-tax dollars. Any benefits received due to a disability are _______.Fully taxable

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