Florida Health Insurance 2-40 Practice Test bank-with 100% verified solutions 2024-2025, Exams of Advanced Education

Download Florida Health Insurance 2-40 Practice Test bank-with 100% verified solutions 2024-2025 and more Exams Advanced Education in PDF only on Docsity! Florida Health Insurance 2-40 Practice Test bank-with 100% verified solutions 2024-2025 Which of the following is NOT a form of medical insurance? -Business overhead expense -Surgical expense -Hospital expense -Long term care Business overhead expense (Explanation:Business Overhead Expense insurance is designed to reimburse a business for overhead expenses in the event a business owner becomes disabled. Expenses such as rent, utilities, telephone, equipment, employees' salaries, etc.) All of the following are state or federal government programs that provide health insurance, EXCEPT? -Medicare -OASDI disability -Medicaid -Medigap Medigap (Explanation:A Medigap policy is a Medicare supplement insurance policy sold by private insurance companies to fill "gaps" in Medicare Parts A and B.) What type of health insurance is available to assist low-income individuals? Medicaid Written by stu ybu ddy What types of reserves are set aside and held by health insurance companies? Premium and Claims reserves (Explanation:Reserves are set aside for the payment of future claims.) Group health insurance is generally written on a basis that provides for dividends or experience rating. What is the basis called? Participating (Explanation:Group plans written by mutual companies provide for dividends while stock companies frequently issue experience- rated plans.) Which of the following is NOT TRUE regarding eligibility for subsidies for families under the new health care act? -For those who make between 100-400% of the Federal Poverty -Level -Cannot be covered by an employer -Cannot be eligible for Medicare -Can be eligible for Medicaid Can be eligible for Medicaid Which of the following operates as a corporation, society, or association to provide life insurance primarily for the mutual benefit of its members, has a lodge or social system with rituals and representative form of government? A) Mutual companies B) Fraternal associations C) Stock companies -Fraternal benefit society B) Fraternal associations What does each member pay in a typical HMO plan? -Fixed premium based on a deductible and copay -Fixed premium whether or not plan is used What is the period of time for an HMO "open enrollment"? -45 days during every 18-month period -30 days during every 12-month period -30 days during every 18-month period -45 days during every 12-month period 30 days during every 18-month period If an HMO is found guilty of unfair trade practices, what is the maximum penalty that can be charged? -Up to $50,000 -Up to $150,000 -Up to $200,00 -Up to $100,000 Up to $200,00 Which of the following statements about Worker's Compensation laws is INCORRECT? -Employers can purchase coverage through the state program, private insurers or can self-insure -Worker's compensation provides benefits for work-related injuries, illness or death -Not all states have a workers compensation law -Basic principle is that work-related injuries are compensable by the employer without regard to fault Not all states have a workers compensation law What year was the Social Security Act amended to add health insurance protection for the aged and disabled? -1973 -1965 -1985 -1935 1965 All of the following are true statements about Workers Compensation, EXCEPT..? -Benefits are not paid unless there is employer negligence -Pays benefits for work related injuries and illnesses -Employee does not contribute to the plan -All states have Workers Compensation laws Benefits are not paid unless there is employer negligence Which of the following is a state administered disability plan? -Social Security -Workers Compensation -Medigap -Medicare Workers Compensation All of the following are nontraditional methods of providing health insurance, EXCEPT? -Multiple Employer Trusts -Multiple Employer Welfare Arrangements -Self-insurance -Commercial insurers Commercial insurers All of the following are true about a multiple employer welfare arrangement (MEWA), EXCEPT? -Required by law to have an employment-related common bond -Often provide insurance on a self-insured basis -Tax-exempt entities -Large employers who have joined together to provide health insurance benefits Large employers who have joined together to provide health insurance benefits (Explanation: MEWAs consist of small employers who join together to provide health insurance benefits for their employees) Grouping small businesses together to obtain health insurance as one large group is a characteristic of what type of group? -Multiple Employer Trust (MET) -Franchise Health plan -Health Maintenance Organization (HMO) -Blue Cross/Blue Shield Multiple Employer Trust (MET) Casey has a medical expense policy that provides a fixed rate of $150 per day for hospitalization. Casey is hospitalized for 10 days and incurred covered medical expenses of $20,000. What will her medical expense policy pay? -$1,500 -$20,000 -$15,000 How will the "miscellaneous expenses" benefit be expressed in a basic health insurance policy? -Reasonable, usual and customary rates -Multiple of daily room and board rate -Approved charge per day rate -Percentage of daily room and board rate Multiple of daily room and board rate Roberta has a basic hospital expense policy with a $10,000 limit for benefits, coordinated with a major medical policy with a $500 corridor deductible and 80/20 coinsurance provision. If she incurs a loss of $20,000, how much will the insurer pay? -$17,600 -$18,000 -$11,900 -$2,400 $17,600 (Explanation: Total expenses are $20,000. Basic medical will pay the first $10,000 which leaves $10,000 remaining. Roberta will pay the first $500 of this $10,000 with $9,500 remaining. Company will now pay 80% of $9,500 or $7,600. Total company pays will be $10,000 from the basic medical plus $7,600 from the major medical = $17,600) Which of the following statements is TRUE about basic hospital, medical and surgical expense policies? -The benefits provided are usually equal to the actual expenses incurred -They contain high deductibles -They usually have a stated limit for specific expenses -Benefits are provided for loss of income They usually have a stated limit for specific expenses Which of the following types of insurance policies combines several types of benefits and provides more coverage than any of the others? -Hospital expense -Comprehensive major medical -Hospital indemnity -Surgical expense Comprehensive major medical (Explanation: Comprehensive major medical plans cover virtually all medical expenses in a single policy. Such as hospital, physician and surgeon, nursing care, drugs, physical therapy, x-rays, medical supplies, etc.) Wanda has a Major Medical policy with a flat deductible of $250, coinsurance of 80%/20% and a stop-loss of $5,000. She has a covered claim for $5,500. What will Wanda pay? -$1,100 -$250 -$1,300 -$4,450 $1,300 (Wanda will pay the first $250 (her deductible) and then 20% of the remainder ($5,250, remainder amount, x .20 = $1,050. So Wanda will pay a total amount of $1,300 ($250 deductible, plus 20% of 5,250).) Travis has a Major Medical policy with a flat deductible of $500 and coinsurance of 80%/20% on the next $5,000 in covered expenses with 100% coverage for any remaining covered expenses. On an claim of $10,000, what amount will Travis pay? -$2,500 -$1,500 -$2,000 -$1,000 $1,500 (Explanation: Travis will pay the first $500 (deductible) and then 20% of the next $5,000 ($5,000 x .20 = $1,000. So Travis will pay a total of $1,500 (deductible plus 20% of $5,000).) When comparing a major medical policy having an 80%/20% coinsurance provision with one having a 75%/25% coinsurance provision, the insured will pay more or less premium for the 80%/20% provision? -Less premium -The same premium -Significantly less premium -More premium More premium (Explanation: Because the insured will be responsible for less of the cost for medical expenses (20% verses 25%), he will pay more in premium costs.) Jason has a Major Medical policy with a flat deductible of $500, coinsurance of 80%/20% and a stop-loss of $5,000. If he has a covered claim of $5,500, what will the insurance company pay? -$0 -$4,400 -$1,500 -$4,000 $4,000 (Explanation: Jason will pay the first $500 (his deductible amount) of the total medical bills. After this Jason will pay 20% of the remainder ($5,000) and the More advantageous to the insurer Which of the following terms relates to payments made for partial disabilities? -Residual amount -Gross amount -Net amount -Recurrent amount Residual amount (Explanation: The amount of benefit payable when a policy covers partial disabilities depends on whether the policy stipulates a flat amount or a residual amount) Daniel's disability income policy defines total disability as "the insured's inability to perform the duties of any occupation for which he or she is reasonably qualified by education, training or experience". This definition is known as? -Own occupation and is less restrictive than other definitions -Any occupation and is more restrictive than other definitions -Any occupation and is less restrictive than other definitions -Own occupation and is more restrictive than other definitions Any occupation and is more restrictive than other definitions Which of the following is NOT correct about partial disability? -Benefit period is usually 3 to 6 months -Flat amount benefit is usually 50% of the total disability benefit -Proof of disability is not required for partial disabilities -Follows period of total disability Proof of disability is not required for partial disabilities For individual disability income policies there are basically two types of benefit periods, which are? -Short-term and long-term -Short term and interim term -Basic term and broad term -Full term and partial term Short-term and long-term Tad earns $2,000 a month and currently has a disability income policy with Company X and is limited to a monthly benefit of $400. If Tad decides to purchase another disability income policy from Company Z and Company Z's limit on benefits is 70% of his monthly income, how much coverage can he purchase with this second disability policy? -$1,200 -$1,120 -$1,400 -$1,000 $1,000 (Explanation: Tad currently has a disability income policy that will pay him $400 per month. The second policy limits payments to 70% of his income, which would be ($2,000 x .70 = $1,400) $1,400. Because he is already covered for $400 by Company X, Company Z will only pay $1,000 per month. The total of the two policies will then equal 70% of Tad's monthly pre disability income of $2,000.) Peter is injured in an auto accident. He is only able to work on a part-time basis and at 60% of his predisability salary. If Peter's disability income policy provides for residual disability benefits of $2,000, what amount would he receive in monthly benefit payments? -$1,200 -$1,000 -$400 -$800 $800 (Explanation: Residual amount benefit is based on the proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income. The benefit is usually determined by multiplying the percentage of lost income by the stated monthly benefit for total disability. In this example Peter is would receive 40% of the total disability benefit of $2,000 which will equal $2,000 x .40 = $800.) Joseph has a disability income policy stating a flat amount of $2,000 monthly benefit. He has been totally disabled for 6 months but is now able to work part-time. What can he expect to receive from his disability income policy if the policy also covers partial disability? -$1,000 monthly benefit -$500 monthly benefit -$0 benefit -$2,000 monthly benefit $1,000 monthly benefit What form of insurance is the primary form of pure accident coverage? -Major Medical -Disability Income -Medical Expense -Accidental Death and Dismemberment Accidental Death and Dismemberment Margaret has a special risk policy. It will pay a benefit for... -Unusual hazards normally not covered by other policies -Death or dismemberment resulting from an aviation accident during a specified trip -Dreaded diseases -Special risks such as Lou Gehrig's disease or Parkinson's disease Unusual hazards normally not covered by other policies What is the free-look period for a Medicare Supplement policy? -7-days -10-days -14-days -30-days 30-days Which of the following statements is true about a Medicare Supplement policy? -These policies are designed to cover deductibles and co-insurance -Only insurance companies affiliated with Medicare can provide Medicare Supplement policies -These policies may be issued to anyone 59 1/2 or older without evidence of insurability -Anyone who qualifies for Medicaid benefits may be issued these policies These policies are designed to cover deductibles and co-insurance All of the following are correct regarding Medicare Supplement policies, EXCEPT -Must cover pre-existing conditions from the date the policy goes into effect -Must automatically adjust its benefits to reflect statutory changes in Medicare -Must cover all expenses not covered by Part A from the 61st to the 90th day -Must supplement both Part A and Part B of Medicare Must cover pre-existing conditions from the date the policy goes into effect Which of the following is NOT a requirement for an agent soliciting Medicare supplements? -Explain to prospect where there will be overlapping coverage -Send a signed form to the company explaining why coverage could not be placed -Inquire from each prospect if they already have coverage -Have prospect sign a form acknowledging information has been provided Send a signed form to the company explaining why coverage could not be placed Which of the following is NOT a category level of long-term care? -Custodial care -Intermediate nursing care -Hospitalization care -Skilled nursing care Hospitalization care Long-term care insurance also provides for a short rest period for a family caregiver. What is the known as? -Home care -Custodial care -Continuing care -Respite care Respite care What type of care, in a long-term care policy, is described as providing assistance in meeting daily living requirements, such as bathing, dressing, getting out of bed or toileting? -Custodial care -Respite care -Intermediate nursing care -Skilled nursing care Custodial care Which of the following conditions would NOT typically be covered by a Long Term Care policy? -Dementia -Drug dependency -Diabetes -Alzheimer's disease Drug dependency Florida requires a minimum participation of how many people for a group policy to be issued? -25 persons -15 persons Which of the following is CORRECT regarding group health insurance? -Insurer must ask health questions of each individual in the group -Labor unions are not eligible -A group may be eligible that is formed just for the purpose of purchasing insurance -Lodges are eligible Lodges are eligible Florida requires what percentage of participation by employees in a contributory group health plan? -100% -50% -No minimum percentage -75% No minimum percentage (Explanation: Most noncontributory group health plans require 100% participation by eligible members, whereas contributory group health plans often require participation by 75% of eligible members. Under Florida law there is no specific minimum percentage participation for employees covered by group health insurance.) Which of the following is CORRECT about a group health insurance plan? -Non-contributory plans are paid for by the employer and employee -Non-contributory plans require 100% participation -Contributory plans are paid for by the employer only -Contributory plans require 100% participation Non-contributory plans require 100% participation All of the following are characteristics of group health insurance, EXCEPT? -Group plans may be contributory or noncontributory -More Americans are covered by individual health plans than by group health plans -Benefits are predetermined by the employer -Cost for insuring an individual under a group plan is less than the cost under an individual plan More Americans are covered by individual health plans than by group health plans Generally when would an insurer engage in "individual underwriting" under a group health plan? -Never, this is prohibited by law -When the insurer is underwriting and evaluating the group -When an eligible employee tries to join the plan after initially electing not to participate -On an annual review When an eligible employee tries to join the plan after initially electing not to participate What is the plan called if the employer pays the whole premium on a group policy? -Qualified -Non-qualified -Contributory -Non-contributory Non-contributory Which of the following is NOT true about "coordination of benefits"? -Establishes which health plan is primary -Found in group and individual health plans -Limits total amount of claims paid from all involved insurers -Purpose is to avoid duplication of benefits and overinsurance Found in group and individual health plans What is the purpose of COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)? -Allow terminated employees to continue their group medical expense coverage for up to 18 months -Gives terminated employees 31 days to convert their medical expense coverage to another plan -Allows terminated employees to keep their group medical coverage at the same premium rates -Automatically convert terminated employee's group medical expense coverage into an individual policy Allow terminated employees to continue their group medical expense coverage for up to 18 months After COBRA continuation of benefits has expired, how long does the terminated employee have to convert their group certificate to an individual policy? -90 days -31 days -45 days -180 days 31 days -$100,000 Amount of outstanding debt For an individual to be able to take a tax deduction for individual contributions to a group medical plan, his medical expenses must exceed what percentage of his adjusted gross income? -7.0% -6.5% -7.5% -5.5% 7.5% Which of the following would NOT be considered important when choosing the proper health insurance program? -Will I be able to deduct the premium payments from my taxes? -Is coverage available from a group plan or social insurance program? -Is the coverage for a family, individual, or business? -What are the deductibles and coinsurance? Will I be able to deduct the premium payments from my taxes? Cafeteria plans are also known as? -Section 125 plans -Flexible plans -Menu plans -Section 1040 plans Section 125 plans Which of the following is a TRUE statement regarding premiums and benefits for business overhead insurance? -Both premiums and benefits are tax-deductible -Both premiums and benefits are taxable -Premiums-tax-deductible, Benefits-taxable -Premiums-taxable, Benefits-tax-deductible Premiums-tax-deductible, Benefits-taxable All of the following are examples of how disability insurance is used for business continuation, EXCEPT? -Business overhead expense -Key person disability -Employee disability -Disability buy-out Employee disability Why were Cafeteria Plans designed? -Provide insurer greater control over benefits selected for employees -Allow employees to pick and choose from a menu of benefits to tailor their own benefit package -Allow employers to pick and choose benefits from a menu that best suits their company needs -Provide diversity of insurance company and HMO Allow employees to pick and choose from a menu of benefits to tailor their own benefit package Which of the following will NOT be covered under Business Overhead Expense Insurance? -Leased equipment -Mortgage payments -Owner's salary -Employees' salaries Owner's salary (Explanation: Business Overhead Expense insurance is designed to reimburse a business for overhead expenses in the event a businessowner becomes disabled.) As compared to individual disability income policies, group disability income policies are generally? -More costly and have less liberal provisions -Tied more closely to Social Security disability benefits -Less costly and have more liberal provisions -More restrictive in terms of covered medical expenses Less costly and have more liberal provisions What is the typical maximum coverage provided to an individual by a group disability income insurance policy? -100% of pre-disability gross earnings -60% of pre-disability gross earnings -75% of pre-disability gross earnings -50% of pre-disability gross earnings 60% of pre-disability gross earnings Policy is delivered to the client by the agent and the premium is collected All of the following are additional risk factors used in underwriting a health insurance policy, EXCEPT? -Avocations -Policy premiums of other health insurance -Age -Family history Policy premiums of other health insurance Barry suffered a heart attack 26 months ago. What type of risk would he be considered? -Standard risk -Restricted risk -Special risk -Substandard risk Substandard risk (Explanation: A substandard risk applicant is one who poses a higher-than-average risk for one or more reasons. Substandard applicants may represent a very low risk on moral and occupational considerations and still pose a high risk because of their physical condition.) When must insurable interest exist in health insurance? -During the policy period -Both at the time of application and time of claim -At the time of a claim -At the time of application At the time of application (Explanation: Insurable interest for health insurance is the same as for life insurance. Insurable interest must exist at the time of application.) All of the following are used in underwriting an applicant's health application, EXCEPT? -Parents ages -Weight -Age -Sex Parents ages Who is the one that determines the classification of an applicant for health insurance? -Underwriter -Agent -Risk manager -Actuary Underwriter All of the following are techniques commonly used by insurers in issuing health insurance policies to substandard risks, EXCEPT? -Add a waiting period of 6 months -Charge extra premium -Attach exclusion or impairment rider or waiver -Limit the type of policy Add a waiting period of 6 months All of the following are classifications of applicants for health insurance, EXCEPT? -Standard risk -Preferred risk -Special risk -Substandard risk Special risk (Explanation: The classifications of applicants for health insurance are: preferred risk, standard risk, substandard risk and uninsurable risk.) When an insured holds more than one occupation, and occupation is used to classify the risk, what occupation will the insurer generally use to classify the insured? -Occupation that would produce the lowest premium -Occupation where insured spends the majority of hours -Occupation insured has been employed the longest -Occupation that is most hazardous Occupation that is most hazardous Which of the following is NOT a factor affecting health insurance premiums? -Marital status -Sex -Age -Hobbies Marital status An agent may have no more than ________ of his total business within a 12-month period be from controlled business. A) 25% B) 35% C) 50% D) 65% 50% (Controlled business is the practice of an agent selling policies or annuity contracts to himself or family members, officers, directors, stockholders, partners, or employees of a business in which he or a family member is engaged, or the debtors of a firm, association, or corporation of whom he or she is an officer, director, stockholder, partner, or employee.) If you are found guilty of any crime punishable by imprisonment one year or more, you must report it to the Insurance Department within how many days? A) 15 B) 20 C) 30 D) 60 30 (If you are declared guilty of any crime that is punishable by imprisonment for 1 year or more, you must report it to the Insurance Department within 30 days, even if you pleaded 'no contest' or it occurred outside of Florida or even the U.S.) An insurance license may NOT be suspended for which of the following? A) Cheating on the license exam B) Twisting C) Over-insuring a health insurance risk D) Violating the code of ethics Over-insuring a health insurance risk (An agent's license will not be suspended for over-insuring a health insurance risk unless the agent willfully over-insured it.) Which of the following is NOT true about a fiduciary? A) A fiduciary holds a position of special trust and confidence B) Giving an agent a premium payment is the same as giving it to the insurer C) If an agent is holding a premium payment for less than 3 days, it can be put in his personal account D) A fiduciary responsibility is to offer advice about financial security If an agent is holding a premium payment for less than 3 days, it can be put in his personal account (An agent or agency must keep funds belonging to each insurer in a separate account so it can be properly audited. An agent must never commingle the insurer's premium with personal funds, or otherwise use it for personal purposes.) An agent may write insurance under which of the following circumstances? A) Agent's company rejected the insurance so the agent submitted it to another company B) An agent may not broker rejected business to another company C) An agent may share commissions with another agent who is licensed, but not appointed with the insurer D) An agent may not be paid a fee for making a recommendation regarding group health insurance Agent's company rejected the insurance so the agent submitted it to another company (An agent may write excess or rejected business with another company after the agent's company rejected it or accepted it on a substandard basis, or a portion of a risk is above the limits of that which the agent's own insurer will accept.) Which of the following is INCORRECT about life insurance company appointments? A) Also applies to health applications B) An agent must be appointed for life and health insurance separately C) An agent may not use the same insurer appointment to sell life insurance and excess business D) An agent may present a proposal to a company without being appointed An agent must be appointed for life and health insurance separately (The department may issue a single appointment covering both life and health insurances to an individual licensed for both kinds of insurance and appointed as agent for both kinds by the same insurer.) Which of the following is NOT a qualification to apply for an insurance license in Florida? A) Must be at least 18 years old B) Must have a high school diploma or GED C) U.S. Citizen D) Legal alien with U.S. work authorization Must have a high school diploma or GED Fines and penalties for violating provisions of the agent's qualification laws include? -The denial, suspension, revocation and nonrenewal of License -A misdemeanor fine of not less than $500 nor more than $3500 -Imprisonment for not more than 6 months as well A misdemeanor fine of not less than $500 nor more than $3500 -All of the above All of the above Florida holds which of the following responsible for the content of any Medicare Supplement as using their name even if they did not approve the ad? -The insurer -The agent who ran the ad -The advertising association -The Agency of Ethical Conduct The insurer Must a mail-order insurance company be authorized to solicit insurance in the state of Florida? -Yes, and the applications must be taken by a Florida State Agent -No, since there is no personal contact any company can solicit by mail -Yes, but the applications do not have to be sent to a Florida address -No, Florida prohibits the sale of insurance without personal contact Yes, and the applications must be taken by a Florida State Agent Which of the following is NOT considered one of the renewability classifications? A) Optionally renewable B) Guaranteed renewable C) Conditionally cancellable D) Conditionally renewable Conditionally cancellable __________ are set aside by an insurance company and designated for the payment of future claims. A) Reserves B) Dividends C) Capital accounts D) Premiums Reserves Most individual health insurance is written on a ________ basis. A) Nonparticipating B) Participating C) Group D) Franchise Nonparticipating (Individual is commonly nonparticipating, group is commonly participating.) Health protection is offered in three different forms, which is NOT one of those forms? A) Accidental Death and Dismemberment B) Group Coverage C) Medical Expense D) Disability Income Group Coverage (Group is how those plans may be distributed) The two types of reserves set aside by insurers are? A) Premium and loss reserves B) Premium and liability reserves C) Claim and settlement reserves D) Earned and Unearned premium reserves Premium and liability reserves Reimbursement benefits may be paid directly to the medical providers under which condition? A) Scheduled benefits B) Assignment of benefits C) Loss of income benefits D) Injury benefits Assignment of benefits When a group is covered by a MET, who is issued the Master Policy? A) The sponsor B) The insurer C) The trust (The key words are acts as liaison between the insurer and employer.) Sylvia is a participant in a Preferred Provider Organization (PPO) and finds that if she opts to use a provider other than a preferred provider, that? A) Her PPO will not pay at all. B) Her PPO will pay only if the circumstances for care were precipitated by an emergency. C) Her PPO will pay a reduced amount with Sylvia paying the balance. D) Her PPO will cover any charges in full. Her PPO will pay a reduced amount with Sylvia paying the balance. Which of the following is TRUE of traditional commercial insurers? A) They offer only individual plans of insurance. B) They offer only group plans of insurance. C) They traditionally market reimbursement type contracts that pay directly to the insured. D) They traditionally market service type contracts that pay directly to the provider of the service. They traditionally market reimbursement type contracts that pay directly to the insured. 'Insurance Transaction' includes? A) Negotiations. B) Informal conversation among producers. C) Setting up an unattended brochure stand. D) Taking a random phone survey. Negotiations A policy that covers inpatient doctor visits and may be expanded to include payment for office visits, diagnostic x-ray, laboratory charges, ambulance and nurses expenses when not hospitalized, and maternity benefits for an additional premium, is considered which of the following? A) Medical Expense Policy B) Basic Physician's Expense Policy C) Major Medical Policy D) Supplementary Major Medical Policy Medical Expense Policy (Key word was in the question "expenses". The question is describing a Medical Expense Policy, sometimes referred to as a Regular (Basic) Medical Expense Policy.) Ed and Mavis own a Major Medical Policy for their entire family with a $250 per person/per accident deductible, 80/20 coinsurance and a stop- loss of $2,000. Their contract also contains the Carry-Over Provision, the Common Accident Provision and the Restoration of Benefits Provision. In June, Ed and 2 of his daughters were injured in an auto accident with a total medical bill of $2,000. In July, Ed and his son were also injured in a different incident for a total of $4,500 medical expenses. How much did the insurer have to pay for both accidents? A) $3,400 B) $1,700 C) $4,800 D) $4,500 $4,800 (Read Carefully: Since Ed and Mavis's Major Medical Policy contains a Common Accident Provision, only one deductible applies per claim even though more than one person was injured. Claim #1 ($2,000 - $250 deductible=$1750 X 80%=$1,400 the insurer's portion); Claim #2 ($4,500 - $250 deductible=$4,250 X 80%=$3,400 the insurer's portion). Insurer's total for the two claims=$4,800.) A Medical Expense Policy list of the amount the insurer will pay for each medical expense incurred is known as a _____ _____ _____. ? A) Conclusion of Benefits B) Schedule of Benefits C) Secluded Emergency Benefits D) Social Insurance Benefits Schedule of Benefits (Under a Schedule of Benefits, the amount payable is itemized for each medical expense covered by the plan.) The percentage of Scheduled Coverage in a Major Medical Plan is how much greater than in a Basic Medical Expense Plan? A) There are no schedules in a Major Medical Policy. B) 40% better coverage. C) 20% better coverage. D) Same coverage, major medical has more exclusions. There are no schedules in a Major Medical Policy. (Remember, a Major Medical Plan provides protection against health losses that may be catastrophic in nature with a lifetime maximum limit; usually there are no schedules included.) Hank was in the hospital last month for 3 days, today he received a check for $330. Is this a refund or a payment from a health policy? A) Supplementary Major Medical Policy B) Combination Major Medical Policy C) Comprehensive Major Medical Policy D) Blanket Major Medical Policy Comprehensive Major Medical Policy (Jasper owns a Comprehensive Major Medical policy. It combines the best features on the Basic Plans and Major Medical insurance into a single policy.) Sandra owns a Medical Expense Plan that contains a 60/40 Participation Provision (Coinsurance) after the deductible has been met. If a claim was filed and $7,200 in costs remained after Sandra met the $200 deductible? A) The insurer would pay $2,880, and Sandra would pay $4,320. B) The insurer would pay $4,440, and Sandra would pay $2,960. C) The insurer would pay $2,960, and Sandra would pay $4,440. D) The insurer would pay $4,320, and Sandra would pay $2,880. The insurer would pay $4,320, and Sandra would pay $2,880. A specified period before new coverage goes into effect for a specified condition is known as which of the following? A) Waiting period B) Exclusion C) Probationary period D) Morbidity table Probationary period (The question establishes a period before coverage goes into effect for specified conditions, not a period before an employee is even eligible to enroll for group benefits, which would be a waiting period.) Beth has a contract stating she must be disabled for 3 months before benefits will be paid. This is considered the? A) Probationary Period B) Elimination Period C) Grace Period D) Contingency Period Elimination Period (The Elimination Period is a period of time that must expire after onset of an illness or occurrence of an accident before benefits will be payable.) Which is NOT a reason insurers limit disability income benefits to 70% or less of the insured's past earnings? A) Insurers limit the benefits simply because it keeps their expenses down. B) The full income is not paid in order to reduce malingering. C) The insurer considers other sources of disability income in order to prevent overinsurance. D) Insurers limit the length of the benefit to encourage the return to work. Insurers limit the benefits simply because it keeps their expenses down. (Although insurers are always sensitive to controlling expenses, that is not a factor in this question.) A court reporter develops arthritis making it impossible to continue this employment. The reporter now has other employment at a reduced salary and receives a monthly benefit from an insurance contract due to which of the following policy provisions? A) Residual Disability B) Recurrent Disability C) Partial Disability D) Total Disability Residual Disability (Residual Disability recognizes one's ability to continue to work, but at a reduction of earnings.Arthritis is what forms as a result of an injury from an accident or otherwise, therefore it's considered a residual disability.) Steve Borden, a kindergarten teacher, was in a boating accident and lost both legs. Although he will continue to teach, his disability policy pays full benefits because of this provision? A) Presumptive Disability B) Total Disability C) Partial Disability D) Residual Disability Presumptive Disability (Presumptive Disability is where a loss is presumed to be total and permanent due to loss of sight, hearing, speech or loss of two limbs.) This provision states that if there is a second disability due to the same cause within a specified period, then the elimination period may not apply the second time. It is which provision? A) Rehabilitation Disability A) Increase the benefit period and shorten the elimination period. B) Shorten the elimination period and increase the amount of the benefit. C) Shorten the benefit period and increase the elimination period. D) Increase the benefit period and increase the amount of the benefit. Shorten the benefit period and increase the elimination period. (All other possible answers actually increase the risk.) Penelope received benefits from her disability policy and went back to work. After 30 days she found she was not able to work and began to immediately receive her disability payments. Which of following provisions made this possible? A) Recurrent Disability Provision B) Residual Disability Provision C) Presumptive Disability Provision D) Second Injury Provision Recurrent Disability Provision Accident and Health Insurance, insures for two major perils, they are? A) Driving under the influence and driving while intoxicated. B) On the job and off the job. C) Accidental injury and sickness. D) Automobile and home health care. Accidental injury and sickness. Which contract would a bus line passenger purchase to cover injuries sustained while traveling across the United States? A) Blanket B) Limited Accident C) Common Carrier Insurance D) Liability Insurance Limited Accident (A Limited Accident Policy provides specific benefits for specific injuries from specific causes such as travel.) Which statement is INCORRECT concerning an Accidental Death and Dismemberment Policy? A) It provides a specified payment for a specified injury. B) May be written separately or added to a Health/Disability or Life Policy as a rider. C) It usually provides that the death benefit (Principal) will also be paid if the insured loses sight in both eyes or loses any two limbs. D) A smaller amount (Capital) may be paid for the loss of sight in one eye or the loss of one limb. It provides a specified payment for a specified injury. (This is describing a Limited Accident Policy, not an Accidental Death and Dismemberment Policy.) Which is the best definition of a Limited Accident Policy? A) Provides specific benefits for specific injuries from specific causes. B) Only covers for a limited time after the accident. C) Limited in geographical scope (i.e. only in the state where written). D) All answers are correct. Provides specific benefits for specific injuries from specific causes. Raymond owns an Accidental Death and Dismemberment Policy with a Principal amount of $50,000, and a Capital amount of $25,000. After owning the policy several months, Raymond dies as the result of coronary artery disease. Lynn, his beneficiary, can expect to receive what amount of benefit from the policy? A) $0 B) $25,000 C) $50,000 D) $75,000 $0 (Lynn will receive no benefit from this policy since Raymond died of coronary artery disease, not an accident. Hopefully, Raymond owned additional life insurance.) Which statement regarding Medicare is NOT true? A) Medicare may be the primary payor to any employer group health plan coverage. B) It is a federal health program for people 65 and older and others of any age, who have received Social Security Disability Benefits for at least 2 years. C) The initial enrollment period lasts 7 months and begins on the 1st day of the 3rd month before one is eligible for Medicare. D) Hospitals and other providers of health care wanting to participate in the Medicare program must be licensed by the state. Medicare may be the primary payor to any employer group health plan coverage. (Group health plans with 20 or more employees are primary to Medicare and pay first.) Exclusions listed in the policy are NOT covered. Which of the following is not an exclusion? A) Intentionally self-inflicted injuries B) Elective cosmetic surgery C) Nonoccupational injuries D) Care in a government facility Nonoccupational injuries (Nonoccupational injuries are covered. Job related or occupational injuries are typically excluded as they are covered by Workers' Compensation.) Which Long-Term Care definition does not match the coverage? A) Residential Care - health care provided in one's home under a planned program established by his/her attending physician. B) Respite Care - provides relief to the caregiver not the long-term care patient. C) Custodial Care Facility - a licensed facility, operated according to the laws of the state, under the supervision of an R.N. D) Skilled Nursing Facility - a licensed facility, operated in accordance with the laws of the state, providing skilled nursing care under the supervision of a physician. Residential Care - health care provided in one's home under a planned program established by his/her attending physician. (This is the definition of Home Convalescent Care, not Residential Care, which occurs within a long-term care facility.) Every LTC Policy that provides benefits of homecare or community-based services shall provide all of the following except? A) Adult day care B) Hospice services C) Respite care D) Acute care Acute care An insurer offering Medicare Supplements to the senior clients of this state must? A) Offer Core Benefit Plan A if they sell any of the other plans. B) Offer the broader coverage plans only. C) Offer any plan from C to S. D) Offer Core Benefit Plans only. Offer Core Benefit Plan A if they sell any of the other plans (If an insurer is going to offer Medicare Supplement insurance, they must make Plan A available if they offer any of the 10 plans.) All of the following could be approved as Long-Term Care facilities, except? A) A skilled nursing facility B) A sanitarium for weight loss C) An intermediate care facility D) A custodial care facility A sanitarium for weight loss Which optional LTC coverage is designed to provide relief to the actual caregiver in an LTC situation? A) Respite Care B) Adult Day Care C) Hospice Care D) Home Health Care Respite Care (All responses are optional coverages to LTC insurance, but the question is specifically making reference to the caregiver, not the insured.) Which of the following is CORRECT concerning an LTC policy? A) Defining a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage. B) Providing coverage for only skilled nursing care instead of lower levels of care. C) Cancelling, nonrenewing, or terminating a policy on the grounds of age. D) Establishing a new waiting period when existing coverage is converted or replaced by a new form, except when the insured voluntarily selects an increase in benefits. Defining a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage. The policy, a copy of the application, any riders and policy endorsements constitute the _____ _____. A) Entire contract B) Legal actions C) Time limit B) Change to a more hazardous occupation, upon claim, benefits will be reduced to that which premiums paid would have purchased at the more hazardous occupation. C) Insured must notify the insurer of a change of occupation, or policy will be cancelled. D) If the insured works at two occupations, rates for the most hazardous occupation will be charged. Insured must notify the insurer of a change of occupation, or policy will be cancelled. (Failure to notify the insurer of a change of occupation will not result in cancellation of the policy.) Optional Uniform Provisions are included in the contract at the _____ option. A) Insured's B) Insurer's C) Commissioner's D) No one's option, they are regulated by statute. Insurer's (The Optional Uniform Provisions are included at the insurer's option; however, if used they must conform to that state's Insurance Code.) If liability is denied due to the insured being intoxicated or under the influence, it is because of which provision? A) Legal Actions B) Illegal Act C) Conformity with State Statutes D) Intoxicants and Narcotics Intoxicants and Narcotics (Intoxicants and Narcotics (an Optional Uniform Provision) allows the insurer the right to deny liability if the insured is under the influence or intoxicated at the time of loss.) Albert owns a printing business in which he, at times, prints counterfeit money. One day while processing funny money, his arm was severely damaged. His insurance will? A) Not pay since he was involved in an illegal act at the time of injury. B) Pay as he was injured on equipment normally used for legal purposes. C) This is classified as a Workers' Compensation claim. D) Will pay but will cancel his contract when he is convicted of the crime. Not pay since he was involved in an illegal act at the time of injury. (Illegal Occupation/Act (an Optional Uniform Provision) allows the insurer the right to deny liability if the insured is injured while performing an illegal occupation or committing an illegal act.) Three years ago, Charles purchased a health policy from the QRS Company; he has purchased two additional contracts from the same insurer since. Each contract contains the Other Insurance With This Insurer Provision. What happens if Charles has a claim? A) Only one policy will pay, the premiums for the other contracts will be returned. B) Each contract will pay in direct proportion to the loss. C) Benefits are paid in full by all contracts. D) The insurer will cancel all contracts because of intent to defraud. Only one policy will pay, the premiums for the other contracts will be returned. (Other Insurance With This Insurer (an Optional Uniform Provision) stipulates that if the insured has more than one policy of the same type with the same insurer, the insured may elect the policy to be used, and excess premiums for the excess coverage will be returned.) Louise purchased a disability policy when her salary was $4,000 a month. Later, she lost that job and her salary was reduced to $2,000 a month. Three years ago, she became self-employed and now receives $3,500 a month. The maximum disability benefit she might expect will be based on which salary amount? A) $2,000 B) $4,000, the contract amount C) The average of her income over the life of the contract D) $3,500 $3,500 (Relations of Earnings to Insurance (a Optional Uniform Provision) establishes that disability benefits shall not exceed the monthly earnings of an insured at the time the disability commenced, or his/her average earnings for the 2 years immediately preceding a disability, whichever is greater.) If an insurer cancels a contract, a written notice must be provided within 5 to 31 days. The contract must have which of the following provisions? A) Legal Actions B) Conformity with State Statutes C) Entire Contract D) Cancellation Cancellation A) 7 days weekly, 10 days monthly, 30 all others B) 7 days weekly, 10 days monthly, 31 all others C) 10 days weekly, 15 days monthly, 31 all others D) 30 for individual contracts, 31 for group 7 days weekly, 10 days monthly, 31 all others Which of the following terms and definitions do not match? A) Noncancellable - guaranteed renewable and guaranteed premium to age 65. B) Optionally Renewable - renewable only at the option of the insurer. C) Guaranteed Renewable - guaranteed renewable without proof of insurability. D) Cancellable - the life of the policy is expressed and cannot be renewed. Cancellable - the life of the policy is expressed and cannot be renewed. (The definition is defining Nonrenewable instead of Cancellable.) Which clause in a contract states that Jim is covered by XYZ insurer for a lifetime maximum of $1,000,000, with a schedule of benefits for various expenses? A) Consideration Clause B) Entire Contract C) Free Look Provision D) Insuring Clause Insuring Clause (The Insuring Clause states who is covered, by whom, for how much, and for what period, against what peril.) Abigail has a preexisting condition noted in her new A & H policy. If she submits a claim for this condition during the probationary period, what will the insurer do? A) Reduce the benefits paid. B) Pay a reduced amount or deny any claim payment. C) Pay benefits in full. D) Provide coverage only if this claim is nonoccupational. Pay a reduced amount or deny any claim payment. (Since Abigail's claim occurred during the Probationary Period, the insurer would likely deny any claim outright or at least pay a reduced amount.) Insurers include provisions in contracts to help reduce unnecessary claims and the overpayment of claims. Which of the following is NOT one of those provisions? A) Concurrent Review B) Mandatory Second Surgical Option C) Consideration Clause D) Ambulatory Service Consideration Clause (The other choices are Case Management Provisions designed to contain costs. The Consideration Clause stipulates that the payment of the first premium and statements in the application are the applicant's consideration, and the insurer's consideration is the promise to pay within the contract terms.) A health policy not conforming to the Uniform Individual Accident and Sickness Policy Provisions Law... A) Is invalid. B) May be voided. C) Will be construed as if it conformed to the Law. D) The insurer is fined and the policy corrected Will be construed as if it conformed to the Law. (According to the Conformity with State Statutes Provision (an Optional Uniform Provision), any provision on the policy effective date that is in conflict with statutes of the state is automatically amended to meet state requirements.) An application for disability insurance may be altered by? A) The insurer B) The Commissioner C) The agent D) No one without the applicant's written consent. No one without the applicant's written consent. (Only the applicant may alter statements on the application.) All states have adopted the Uniform Individual Accident and Sickness Policy Provision Law. If an insurer changes any of these provisions, they must make sure it does not? A) Weaken the application wording. B) Conform to NAIC requirements. C) Create a less favorable meaning than the original wording. D) Cancel the law of large numbers. Create a less favorable meaning than the original wording. An insured should receive necessary claim forms within _____ days after notice of claim. A) 5 B) 10 C) 15 D) 20 15 All are Optional Provisions, EXCEPT? A) Illegal Occupation. B) Legal Actions. C) Change of Occupation. D) Misstatement of Age. Legal Actions. (Legal Actions is a Mandatory Uniform Provision. All other responses are Optional Uniform Provisions.) Which provision is an Optional Uniform Provision? A) Claim Forms B) Other Insurance With This Insurer C) Physical Examination D) Payment of Claims Other Insurance With This Insurer (Other Insurance With This Insurer is an Optional Uniform Provision. All other answers are Mandatory Uniform Provisions.) The Guaranteed Renewable Provision states? A) Renewable with adjustable premiums determined by frequency of claim. B) Renewable with guaranteed premium. C) Renewable with adjustable premiums, by classification only. D) Renewable only at the option of the insurer. Renewable with adjustable premiums, by classification only. (The Guaranteed Renewable Provision does allow the insurer to adjust premiums upon renewal, but by classification only, not by individual.) You carry more accident and health insurance than you have the potential to lose. What is this called? A) Extra coverage B) Well covered C) Over insurance D) Excess insurance Over insurance (Over insurance occurs when more insurance is in force than the insured has the potential to lose.) What factors are NOT used in underwriting an individual health policy? A) Health history and foreign travel B) Age and gender C) Political affiliation and religious preference D) Smoking and hobbies Political affiliation and religious preference Which of the following terms and definitions DO NOT match? A) Field Underwriting - the agent's personal contact with the applicant. B) Reimbursement - pays benefits directly to the insured. C) Sickness - an illness or disease that first manifests itself, or that is first diagnosed and treated, while the policy is in force. D) Blanket payments - is a lump sum payment for a maximum number of days. Blanket payments - is a lump sum payment for a maximum number of days (Blanket pays a set maximum overall benefit limit with no itemizing; not a maximum number of days.) Which of the following would be considered a good result from an underwriter's action when an individual Accident and Health Policy is issued? A) Issued rated-up B) Issued standard C) Issued with exclusions or limitations D) Application is rejected Issued standard (To be issued standard is the most favorable action listed, as the coverage requested is issued at the rate that was quoted.) A) Preliminary Evaluation B) Pretreatment Examination C) Precertification D) Least Coverage Provision Precertification (Precertification or Predetermination of Benefits, although not normally mandatory, allows both the patient and the dentist to know what will be covered before treatment.) Amy owns her own individual Medical Expense Policy. Which of the following is TRUE about taxation circumstances? A) In most cases, the premiums for Medical Expense policies are not deductible. B) If she itemizes deductions and her medical expenses exceed 10% of her adjusted gross income, the portion exceeding that may be deducted. C) Benefits she received from her policy are taxable. D) When itemizing deductions, the deduction for reimbursed medical expenses normally applies to premiums that are paid for medical expenses. In most cases, the premiums for Medical Expense policies are not deductible. (The answer 'the premiums for Medical Expense policies are not deductible' is the only correct response. Expenses that exceed 7.5% may be deducted; benefits received are not taxable; and the deduction for non- reimbursed medical expenses normally applies.) Jay receives an annual disability benefit of $10,000. His employer contributed 75% of the premium. How much of Jay's benefit is subject to income tax? A) $10,000 B) $2,500 C) $7,500 D) None $7,500 (Jay is covered under a contributory plan in which the employer is contributing 75% of the premium, thus 75% of the $10,000 benefit ($7,500) is subject to income tax.) The benefits of an individual Disability Income Policy will be taxed in the following manner? A) Income tax B) FICA tax C) State income tax D) None of the benefits are taxed None of the benefits are taxed (Benefits received from an individual Disability Income Policy are not subject to taxation.) Pete is a valuable veteran of 21 years at Joe's Garage working with 24 people and filling in for Joe when he is not in. Joe wants to insure Pete to offset any losses and the costs of trying to find, recruit and train a replacement, should Pete become disabled. What type of policy should Joe purchase? A) Business Overhead Insurance B) Key Employee Insurance C) Special Insurance Supplement D) Employee Impairment Insurance Key Employee Insurance (Joe is after a policy that will pay a benefit to the business when a key employee (Pete) becomes disabled by helping pay for a replacement, training, loss of revenue, etc.) Two business partners wanting to be assured the business will not be lost should one of them become disabled, should purchase a Disability Policy to fund which of the following? A) A Buy-Sell Agreement B) A Business Continuation Plan C) A Business Overhead Expense Contract D) A Guaranteed Purchase Option A Buy-Sell Agreement (The partners should purchase a Disability Policy to fund a Buy-Sell Agreement that then would pay a lump sum enabling them to buy out the interests of the other partner should the other partner become totally disabled.) There are many business uses of Disability Income Insurance. All of the following are possible business uses, EXCEPT? A) Buy-Sell B) Key Employee Insurance C) Business Employer Expense D) Business Overhead Expense Business Employer Expense (Remember, Variable Annuities are paid in terms of units, rather than dollars. Upon annuitization, accumulation units are converted to annuity units, and the income is paid on the value of the annuity units.) Before VA benefits can be paid, they must be converted into? A) Accumulation units B) Annuity units C) Payout units D) Cash Annuity units (Annuity units remain the same, the value of each unit varies) On what basis may a variable annuity be purchased? A) Fixed or variable B) Flexible or fixed C) Deferred or immediate D) Delayed or detained Deferred or immediate (The annuitant may receive payments either immediately or in the future.) Which of the following definitions are INCORRECT? A) Annuity units are the basic measure and method by which annuity income is determined. B) The two factors that determine the annuitant's dollar income are the number of annuity units and the value of each unit. C) A variable annuity does not have a loan value because of its variable value. D) There is no capital gains tax to the individual during the accumulation period of a variable annuity. A variable annuity does not have a loan value because of its variable value. (There is a cash value so there is a loan value.) Can you add a waiver of premium to a variable annuity contract? A) Yes, only during the accumulation period. B) No, because of the fluctuation. C) Yes, throughout the lifetime of the entire contract, no limitations. D) No, because of the tax consequences. Yes, only during the accumulation period. (Once payouts begin, the contract pays according to how it was set up.) Which is NOT a rating factor for small employer carriers? A) All plans issued or renewed in the same calendar month shall have the same rating period. B) They use anticipated claim experience. C) They shall apply rating factors consistent among all small employers. D) Preexisting conditions may not be excluded any longer than 1 year. They use anticipated claim experience. (Small employer carriers utilize actual claim experience, not anticipated claim experience.) Which statement is INCORRECT regarding HMOs? A) HMOs must provide basic health care services to include hospitalization, laboratory services, optical services, physical therapy, dental care and preventive services. B) HMOs are sponsored by medical schools, hospitals, employers, labor unions, consumer groups, commercial insurers, governments, and hospital-medical service plans. C) Members are required to pay a small copayment for basic health care services. D) The copayment discourages unnecessary use of medical resources. HMOs must provide basic health care services to include hospitalization, laboratory services, optical services, physical therapy, dental care and preventive services. (Usually optical services, physical therapy, dental care are supplemental and offered as an option.) An agent is guilty of ______ when he / she makes a false or malicious statement about a competing insurer's financial condition. A) Twisting B) Intimidation C) Defamation D) Boycott Defamation (Defamation is defined as making false oral or written statements that are critical or derogatory of an insurer's financial condition and is intended to cause injury to someone in the insurance business.) B) Potential for criminal activity C) State insurance department has minimal oversight over unlicensed entities D) Federal funds will pay unpaid claims Potential for criminal activity (Unlicensed entities also have an adverse economic impact on authorized insurers, potential for unpaid claims due to dishonesty and lack of sound actuarial decisions, and the state and federal guaranty funds do not pay for those unpaid claims.) The administration of state insurance law is the responsibility of which of the following? A) Attorney General B) Director of Financial Regulation C) Governor D) Chief Financial Officer Chief Financial Officer (The administration of state insurance law is the responsibility of the Chief Financial Officer (CFO), Financial Services Commission, and Director of the Office of Insurance Regulation.) Which state entity decides conflicts between insurance companies and policyholders? A) State legislature B) State judicial system C) Office of Insurance Regulation D) Department of Financial Services Division State judicial system (The State judicial system also enforces the code by administering criminal penalties and decides if new laws are constitutional.) A false statement in the application that can render the contract void, if material to the acceptance of the risk, is known as a? A) Representation B) Concealment C) Fraud D) Misrepresentation Misrepresentation (A misrepresentation can render the contract void, if material to the acceptance of the risk.) The intentional misrepresentation, deceit, or withholding of a material fact known to a person with the intention of causing injury to another party is? A) Concealment B) Fraud C) Warranty D) Utmost good faith Fraud (key word here is deceit) To act as an agent for an insurer, the producer must be? A) Elected B) Endorsed C) Certified D) Appointed Appointed (Insurers must file an appointment for each agent who represents them.) Making false, oral or written statements that are critical or derogatory of an insurer's financial condition and is intended to cause injury to someone in the insurance business is called? A) False Advertising B) Twisting C) Intimidation D) Defamation Defamation If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a? A) Notice of Conservation B) Notice of Replacement C) Statement of Release D) Cancellation of Service Notice of Replacement Making a false statement about the benefits or nature of a policy is called? A) Twisting B) False Advertising C) Misrepresentation