Insurance Terminology and Concepts, Exams of Advanced Education

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Arkansas Health Insurance Exam

Questions With 100% Correct Answers

Accident - Correct Answer-An unplanned, unforeseen event which occurs suddenly and at an unspecified place. Accident Insurance - Correct Answer-A type of insurance that protects the insured against loss due to accidental bodily injury. Accidental Bodily Injury - Correct Answer-Unplanned, unforeseen traumatic injury to the body. Accidental Death and Dismemberment - Correct Answer-An insurance policy which pays a specified amount or a specified multiple of the insured's benefit if the insured dies, loses his or her sight, or loses two limbs due to an accident. Accidental Death Benefits - Correct Answer-A policy rider that states that the cause of death will be analyzed to determine if it complies with the policy description of accidental death. Acquired Immunodeficiency Syndrome (AIDS) - Correct Answer-An infectious and incurable disease caused by the human immunodeficiency virus (HIV). Activities of Daily Living - Correct Answer-Activities individuals must do every day such as moving about, getting dressed, eating, bathing, etc. Actual Charge - Correct Answer-The amount a physician or supplier actually bills for a particular service or supply. Adhesion - Correct Answer-A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is to accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured. Admitted (Authorized) Insurer - Correct Answer-An insurance company authorized and licensed to transact insurance in a particular state. Adult Day Care - Correct Answer-A program for impaired adults that attempts to meet their health, social, and functional needs in a setting away from their homes.

Adverse Selection - Correct Answer-The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability. Agent - Correct Answer-An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer. Aleatory - Correct Answer-A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss. Alien Insurer - Correct Answer-An insurance company that is incorporated outside the United States. Alzheimer's Disease - Correct Answer-A disease that causes the victim to become dysfunctional due to degeneration of brain cells and severe memory loss. Ancillary - Correct Answer-Additional, miscellaneous services provided by a hospital, such as x-rays, anesthesia, and lab work, but not hospital room and board. Apparent Authority - Correct Answer-The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. Approved Amount - Correct Answer-The amount Medicare determines to be reasonable for a service that is covered under Part B of Medicare. Assignment - Correct Answer-A claim to a provider or medical supplier to receive payments directly from Medicare. Attained Age - Correct Answer-The age of the insured at a determined date. Attending Physician's Statement (APS) - Correct Answer-A statement usually obtained from the applicant's doctor. Avoidance - Correct Answer-A method of dealing with risk (e.g. if a person wanted to avoid the risk of being killed in an airplane crash, he/she might choose never to fly in a plane). Basic Hospital Expense Insurance - Correct Answer-Coverage that provides benefits for room, board and miscellaneous hospital expenses for a certain number of days during a hospital stay.

Basic Medical Expense Insurance - Correct Answer-Coverage for doctor visits, x-rays, lab tests, and emergency room visits; benefits, however, are limited to specified dollar amounts. Beneficiary - Correct Answer-The person who receives the proceeds from the policy when the insured dies. Benefit period - Correct Answer-The length of time over which the insurance benefits will be paid for each illness, disability or hospital stay. Birthday rule - Correct Answer-The method of determining primary coverage for a dependent child, under which the plan of the parent whose birthday occurs first in the calendar year is designated as primary. Blanket Medical Insurance - Correct Answer-A policy that provides benefits for all medical costs, including doctor visits, hospitalization, and drugs. Boycott - Correct Answer-An unfair trade practice in which one person refuses to do business with another until he or she agrees to certain conditions. Buyer's Guide - Correct Answer-A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision. Cafeteria Plan - Correct Answer-A selection of health care benefits from which an employee may choose the ones that he/she needs. Capital Amount - Correct Answer-A percentage of the principal amount of a policy paid to the insured if he/she suffered the loss of an appendage. Carriers - Correct Answer-Organizations that process claims and pay benefits in an insurance policy. Cease and Desist Order - Correct Answer-A demand of a person to stop committing an action that is in violation of a provision. Certificate of Authority - Correct Answer-A document that authorizes a company to start conducting business and specifies the kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate. Certificate of Insurance - Correct Answer-A written document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided.

Claim - Correct Answer-A request for payment of the benefits provided by an insurance contract. Coercion - Correct Answer-An unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance. Coinsurance - Correct Answer-An agreement between an insurer and insured in which both parties are expected to pay a certain portion of the potential loss and other expenses. Coinsurance Clause - Correct Answer-A provision that states that the insurer and the insured will share the losses covered by the policy in proportion agreed upon in advance. A clause that requires the insured to carry insurance equal to at least a specified percentage of the insured property's value. Commissioner - Correct Answer-The chief executive and administrative officer of the Insurance Department. Comprehensive Policy - Correct Answer-A plan that provides a package of health care services, including preventive care, routine physicals, immunization, outpatient services and hospitalization. Comprehensive Major Medical - Correct Answer-A combination of basic coverage and major medical coverage that features low deductibles, high maximum benefits, and coinsurance. Concealment - Correct Answer-The withholding of known facts which, if material, can void a contract. Conditional Contract - Correct Answer-A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable. Consideration - Correct Answer-The binding force in a contract that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the insured is the representations made in the application and the payment of premium; the consideration on the part of the insurer is the promise to pay in the event of loss. Consideration Clause - Correct Answer-A part of the insurance contract that states that both parties must give something of value for the transfer of risk, and specifies the conditions of the exchange. Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 - Correct Answer- The law that provides for the continuation of group health care benefits for the insured for up to 18 months if he/she terminates employment or is no longer eligible, and for the

insured's dependents for up to 36 months in cases of loss of eligibility due to death of the insured, divorce, or attainment of the limiting age. Consumer Report - Correct Answer-A written and/or oral statement regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources. Contract - Correct Answer-An agreement between two or more parties enforceable by law. Contributory - Correct Answer-A group insurance plan that requires the employees to pay part of the premium. Coordination of Benefits - Correct Answer-A provision that helps determine the primary provider in situations where an insured is covered by more than one policy, thus avoiding claims overpayments. Copayment - Correct Answer-An arrangement in which an insured must pay a specified amount for services, "up front" and the provider pays the remainder of the cost. Custodial Care - Correct Answer-Care that is rendered to help an insured complete his/her activities of daily living. Death Benefit - Correct Answer-The amount payable upon the death of the person whose life is insured. Deductible - Correct Answer-The portion of the loss that is to be paid by the insured before any claim may be paid by the insurer. Defamation - Correct Answer-An unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation. Director - Correct Answer-The chief executive and administrative officer of the Insurance Department. Disability - Correct Answer-A physical or mental impairment, either congenital or resulting from an injury or sickness. Disability Income Insurance - Correct Answer-Health insurance that provides periodic payments to replace an insured's income when he/she is injured or ill.

Disclosure - Correct Answer-An act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation. Domestic Insurer - Correct Answer-An insurance company that is incorporated in the state. Domicile of Insurer - Correct Answer-Insurer's location of incorporation and the legal ability to write business in a state. Dread (Specified) Disease Policy - Correct Answer-A policy with a high maximum limit that covers certain diseases named in the contract (such as polio and meningitis). Dual choice - Correct Answer-A federal requirement that employers who have 25 or more employees, who are within the service area of a qualified HMO, who pay minimum wage, and offer a health plan, must offer HMO coverage as well as an indemnity Eligibility Period - Correct Answer-The period of time in which an employee may enroll in a group hearth care plan without having to provide evidence of insurability. Elimination Period - Correct Answer-A waiting period that is imposed on the insured from the onset of disability until benefit payments begin. Emergency - Correct Answer-An injury or disease which occurs suddenly and requires treatment within 24 hours. Endodontics - Correct Answer-An area of dentistry that deals with diagnosis, prrevention and treatment of the dental pulp within natural teeth at the root canal. Enrollment Period - Correct Answer-The amount of time an employee has to sign up for a contributory group health plan. Estoppel - Correct Answer-A legal impediment to denying a fact or restoring a right that has been previously waived. Excess Charge - Correct Answer-The difference between the Medicare approved amount for a service or supply and the actual charge. Expiration - Correct Answer-The date specified in the policy as the date of termination. Explanation of Benefits (EOB) - Correct Answer-A statement that outlines what services were rendered, how much the insurer paid, and how much the insured was billed.

Explanation of Medicare Benefits - Correct Answer-A statement sent to a Medicare patient indicating how the Medicare claim will be settled. Exposure - Correct Answer-A unit of measure used to determine rates charged for insurance coverage. Express Authority - Correct Answer-The authority granted to an agent by means of the agent's written contract. Extended Care Facility - Correct Answer-A facility which is licensed by the state to provide 24 hour nursing care. Extension of Benefits - Correct Answer-A provision that allows coverage to continue beyond the policy's expiration date for employees who are not actively at work due to disability or who have dependents hospitalized on that date. This coverage continues only until the employee returns to work or the dependent leaves the hospital. Fair Credit Reporting Act - Correct Answer-A federal law that established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used. Fiduciary - Correct Answer-An agent/broker who handles insurer's funds in a trust capacity. Flexible Spending Account (FSA) - Correct Answer-A pretax salary reduction cafeteria plan that uses employee funds to provide various types of health care benefits. Foreign Insurer - Correct Answer-An insurance company that is incorporated in another state. Fraternal Benefit Societies - Correct Answer-A life or health insurance company formed to provide insurance for members of an affiliated lodge, religious, or fraternal organization with a representative form of government. Fraud - Correct Answer-The intentional misrepresentation or deceit with the intent to induce a person to part with something of value. Free Look - Correct Answer-A period of time, usually required by law, during which a policyowner may inspect a newly issued individual life or health insurance policy for a stated number of days and surrender it in exchange for a full refund of premium if not satisfied for any reason. Gatekeeper Model - Correct Answer-A model of HMO and PPO organizations that uses the insured's primary care physician (the gatekeeper) as the initial contact for the patient for medical care and for referrals.

Grace Period - Correct Answer-Period of time after the premium due date in which premiums may still be paid, and the policy and its riders remain in force. Group Disability Insurance - Correct Answer-A type of insurance that covers a group of individuals against loss of pay due to accident or sickness. Group Health Insurance - Correct Answer-Health coverage provided to members of a group. Hazard - Correct Answer-A circumstance that increases the likelihood of a loss. Hazard, Moral - Correct Answer-The effect of a person's reputation, character, living habits, etc. on his/her insurability. Hazard, Morale - Correct Answer-The effect a person's indifference concerning loss has on the risk to be insured. Hazard, Physical - Correct Answer-A type of hazard that arises from the physical characteristics of an individual, such as a physical disability due to either current circumstance or a condition present at birth Health Insurance - Correct Answer-Protection against loss due to sickness or bodily injury. Health Maintenance Organization (HMO) - Correct Answer-A prepaid medical service plan in which specified medical service providers contract with the HMO to provide services. The focus of the HMO is preventive medicine. Health Reimbursement Accounts (HRAs) - Correct Answer-Plans that allow employers to set aside funds for reimbursing employees for qualified medical expenses. Health Savings Accounts (HSAs) - Correct Answer-Plans designed to help individuals save for qualified health expenses. Home Health Agency - Correct Answer-An entity certified by the insured's health plan that provides health care services under contract. Home Health Care - Correct Answer-Type of care in which part-time nursing or home health aide services, speech therapy, physical or occupational therapy services are given in the home of the insured. Home Health Services - Correct Answer-A covered expense under Part A of Medicare in which a licensed home health agency provides home health care to an insured.

Hospice - Correct Answer-A facility for the terminally ill that provides supportive care such as pain relief and symptom management to the patient and his/her family. Hospice care is covered under Part A of Medicare. Hospital Confinement Rider - Correct Answer-An optional disability income rider that waives the elimination period when an insured is hospitalized as an inpatient. Implied Authority - Correct Answer-Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal. Income Replacement Contracts - Correct Answer-Policies which replace a certain percentage of the insured's pure loss of income due to a covered accident or sickness. Indemnify - Correct Answer-To restore the insured to the same condition as prior to loss with no intent of loss or gain. Insolvent Organization - Correct Answer-A member organization which is unable to pay its contractual obligations and is placed under a final order of liquidation or rehabilitation by a court of competent jurisdiction. Insurability - Correct Answer-The acceptability of an applicant who meets an insurance company's underwriting requirements for insurance. Insurance - Correct Answer-A contract whereby one party (insurer) agrees to indemnify or guarantee another party (insured) against a loss by a specified future contingency or peril in return for payment of a premium. Insured - Correct Answer-The person or organization that is protected by insurance; the party to be indemnified. Insurer - Correct Answer-An entity that indemnifies against losses, provides benefits, or renders services (also known as "company" or "insurance company"). Insuring Clause - Correct Answer-A general statement that identifies the basic agreement between the insurance company and the insured, usually located on the first page of the policy. Integrated LTC Rider - Correct Answer-A rider that is added to a life insurance policy to pay Long-Term Care benefits. The amount of benefits available for LTC depends upon the life insurance benefits available; however, the benefits paid toward LTC will reduce the life insurance policy's benefits.

Intentional Injury - Correct Answer-An act that is intended to cause injury. Self-inflicted injuries are not covered under accident insurance; intentional injuries inflicted on the insured by another are covered. Intermediaries - Correct Answer-Organizations that process inpatient and outpatient claims on individuals by hospitals, skilled nursing tacilities, home health agencies, hospices and certain other providers of health services Intermediate Care - Correct Answer-A level of care that is one step down from skilled nursing care; provided under the supervision of physicians or registered nurses. Investigative Consumer Report - Correct Answer-A report similar to consumer report, but one that also provides information on the consumer's character reputation and habits. Lapse - Correct Answer-Termination of a policy because the premium has not been paid by the end of the grace period. Law of Large Numbers - Correct Answer-A principle stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss. Legal Reserve - Correct Answer-The accounting measurement of an insurer's future obligations to pay claims to policyowners. Limited Policies - Correct Answer-Health insurance policies that cover only specific accidents or diseases. Limiting Charge - Correct Answer-The maximum amount a physician may charge a Medicare beneficiary for a covered service if the physician does not accept assignment of the Medicare approved amount. Lloyd's Associations - Correct Answer-Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk. Long-Term Care (LTC) - Correct Answer-Health and social services provided under the supervision of physicians and medical health professionals for persons with chronic diseases or disabilities. Care is usually provided in a Long-Term Care Facility which is a state licensed facility that provides services. Long-Term Disability Insurance - Correct Answer-A type of individual or group insurance that provides coverage for illness until the insured reaches age 65 and for life in the case of an accident. Loss - Correct Answer-The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against.

Loss of Income Insurance - Correct Answer-Insurance that pays benefits for inability to work because of disability resulting from accidental bodily injury or sickness. Major Medical Insurance - Correct Answer-A type of health insurance that usually carries a large deductible and pays covered expenses up to a high limit whether the insured is in or out of the hospital. Medicaid - Correct Answer-A medical benefits program jointly administered by the individual states and the federal government. Medical Expense Insurance - Correct Answer-A type of insurance that pays benefits for medical, surgical, and hospital costs. Medical Information Bureau (MIB) - Correct Answer-An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to this database for underwriting purposes. Medical Savings Account - Correct Answer-An employer-funded account linked to a high deductible medical insurance plan. Medicare - Correct Answer-The United States federal government plan for paying certain hospital and medical expenses for persons who qualify. Medicare Supplement Insurance - Correct Answer-A type of individual or group insurance that fills the gaps in the protection provided by Medicare, but that cannot duplicate any Medicare benefits. Medigap - Correct Answer-Medicare supplement plans issued by private insurance companies that are designed to fill some of the gaps in Medicare. Misrepresentation - Correct Answer-A false statement or lie that can render the contract void. Morbidity Rate - Correct Answer-The ratio of the incidence of sickness to the number of well persons in a given group of people over a given period of time. Morbidity Table - Correct Answer-A table showing the incidence of sickness at specified ages. Multiple-Employer Trust (MET) - Correct Answer-A group of small employers who do not qualify for group insurance individually, formed to establish a group health plan or self-funded plan. Multiple Employer Welfare Association (MEWA) - Correct Answer-Any entity of at least two employers, other than a duly admitted insurer that establishes an employee benefit

plan for the purpose of offering or providing accident and sickness or death benefits to the employees. Mutual Companies - Correct Answer-Insurance organizations that have no capital stock, but are owned by the policyholders. Nonadmitted (Nonauthorized) - Correct Answer-An insurance company that has not applied for, or has applied and been denied a Certificate of Authority and may not transact insurance in a particular state. Nonauthorized (Nonadmitted) - Correct Answer-An insurance company that has not applied for, or has applied and been denied a Certificate of Authority and may not transact insurance in a particular state. Notice of Claim - Correct Answer-A provision that spells out an insured's duty to provide the insurer with reasonable notice in the event of a loss. Omnibus Budget Reconciliation Act - Correct Answer-A federal law which extends the minimum COBRA continuation of group health care coverage from 18 to 29 months for qualified beneficiaries who are disabled at the time of qualification. Oral Surgery - Correct Answer-Operative treatment of the mouth such as extractions of teeth and related surgical treatment. Orthodontics - Correct Answer-A special field in dentistry which involves treatment of natural teeth to prevent and/or correct dental anomalies with braces or appliances. Out-of-Pocket Costs - Correct Answer-Amounts an insured must pay for coinsurance and deductibles before the insurer will pay its portion. Over Insurance - Correct Answer-An excessive amount of insurance that would result in overpayment to the insured in the event of a loss. Parol - Correct Answer-Legal term that distinguishes oral statements from written statements. Parol Evidence Rule - Correct Answer-A rule that states a contract may not be altered without written consent of both parties; in other words, the contract may not be altered by an oral agreement. Partial Disability - Correct Answer-Ability to perform some, but not all, of the duties of the insured's occupation as a result of injury or sickness. Payment of Claims - Correct Answer-A provision that specifies to whom claims payments are to be made.

Peril - Correct Answer-The cause of a possible loss. Periodontics - Correct Answer-A specialty of dentistry that involves treatment of the surrounding and supporting tissue of the teeth such as treatment for gum disease. Permanent Disability - Correct Answer-Disability from which the insured does not recover. Persistency - Correct Answer-The tendency or likelihood of insurance policies not lapsing or being replaced with insurance from another insurer. Personal Contract - Correct Answer-An agreement between an insurance company and an individual that states that insurance policies cover the individual's insurable interest. Physical Exam and Autopsy - Correct Answer-A provision that allows an insurer at its own expense, to have an insured physically examined when a claim is pending or to have an autopsy performed where not prohibited by law. Policyholder - Correct Answer-The person who has possession of the policy, usually the insured. Policyowner - Correct Answer-The person who is entitled to exercise the rights and privileges in the policy. This person may or may not be the insured. Pre-Existing Condition - Correct Answer-A physical condition that existed before the effective date of the policy, usually excluded from coverage. Preferred Provider Organization (PPO) - Correct Answer-An organization of medical professionals and hospitals who provide services to an insurance company's clients for a set fee. Preferred Risk - Correct Answer-An insurance classification for applicants who have a lower expectation of incurring loss, and who, therefore, are covered at a reduced rate. Premium - Correct Answer-A periodic payment to the insurance company to keep the policy in force. Presumptive Disability - Correct Answer-A provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits. Primary Policy - Correct Answer-A basic, fundamental insurance policy which pays first with respect to other outstanding policies. Principal Amount - Correct Answer-The full face value of a policy.

Private Insurance - Correct Answer-Insurance furnished by nongovernmental insuring organizations. Pro Rata Cancellation - Correct Answer-Termination of an insurance policy, with an adjustment of the premium charge in proportion to the exact coverage that has been in force. Probationary Period - Correct Answer-The period of time between the effective date of a health insurance policy and the date coverage for all or certain conditions begins. Producer - Correct Answer-Insurance agent or broker. Proof of Loss - Correct Answer-A claim form that a claimant must submit after a loss occurs. Prosthodontics - Correct Answer-A special area of dentistry that involves the replacement of missing teeth with artificial devices like bridgework or dentures. Provider - Correct Answer-Any group or individual who provides health care services. Pure Risk - Correct Answer-The uncertainty or chance of a loss occurring in a situation that can only result in a loss or no change. Rate Service Organization - Correct Answer-An organization that is formed by, or on behalf of, a group of insurers to develop rates for those insurers, and to file the rates with the insurance department on behalf of its members. They may also act as a collection point for actuarial data. Rebating - Correct Answer-Any inducement offered in the sale of insurance products that is not specified in the policy. Reciprocal Exchange - Correct Answer-An unincorporated group of individuals who mutually insure one another each separately assuming a share of each risk. Reciprocity - Correct Answer-A situation in which two parties provide the same help or advantages to each other (for example, Producer A living in State A can transact business as a nonresident in State B if State B's resident producers can transact business in State A). Recurrent Disability - Correct Answer-A policy provision that specifies the period of time during which the recurrence of an injury or illness will be considered a continuation of a prior period of disability. Reduction - Correct Answer-Lessening the possibility or severity of a loss. Reinsurance - Correct Answer-Insurance sold to insurance companies.

A form of insurance whereby one insurance company (the reinsurer) in consideration of a premium paid to it, agrees to indemnify another insurance company (the ceding company) for part or all of its liabilities from insurance policies it has issued. Renewability Clause - Correct Answer-A clause that defines the insurance company's and the insured's right to cancel or renew coverage. Representations - Correct Answer-Statements made by the applicant on the insurance application that are believed to be true, but are not guaranteed to be true. Rescission - Correct Answer-The termination of an insurance contract due either to material misrepresentation by the insured or by fraud, misrepresentation. or duress on the part of the agent/insurer. Reserve - Correct Answer-An amount representing actual or potential liabilities kept by an insurer in a separate account to cover debts to policyholders. Residual Disability - Correct Answer-Type of disability income policy that provides benefits for loss of income when a person returns to work after a total disability, but is still not able to perform at the same level as before becoming disabled. Respite Care - Correct Answer-A type of temporary health or medical care provided either by paid workers who come to the home or by a nursing facility where a patient stays to give a caregiver a short rest. Restorative Care - Correct Answer-An area of dentistry that involves treatments that restore functional use to natural teeth such as fillings or crowns. Rider - Correct Answer-Any supplemental agreement attached to and made a part of the policy indicating the policy expansion by additional coverage, or a waiver of a coverage or condition. Risk - Correct Answer-Uncertainty as to the outcome of an event when two or more possibilities exist. Risk, Pure - Correct Answer-The uncertainty or chance of a loss occurring in a situation that can only result in a loss or no change. Risk Retention Group - Correct Answer-A liability insurance company owned by its members, which are exposed to similar liability risks by virtue of being in the same business or industry. Risk, Speculative - Correct Answer-The uncertainty or chance of a loss occurring in a situation that involves the opportunity for either loss or gain.

Risk, Standard - Correct Answer-An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle. Risk, Substandard - Correct Answer-An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium. Service Plans - Correct Answer-Insurance plans where the health care services rendered are the benefits instead of monetary benefits. Short-Rate Cancellation - Correct Answer-Canceling the policy with a less than proportionate return of premium. Short-Term Disability Insurance - Correct Answer-A group or individual policy that covers disabilities of 13 to 26 weeks, and in some cases for a period of up to two years. Sickness - Correct Answer-A physical illness, disease, or pregnancy, but not a mental illness. Skilled Nursing Care - Correct Answer-Daily nursing care or skilled care, such as administration of medication, diagnosis, or minor surgery that is performed by or under the supervision of a skilled professional. Standard Provisions - Correct Answer-Requirements approved by state law that must appear in all insurance policies. Standard Risk - Correct Answer-An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle. Stock Companies - Correct Answer-Companies owned by the stockholders whose investments provide the capital necessary to establish and operate the insurance company. Subrogation - Correct Answer-The legal process by which an insurance company seeks recovery of the amount paid to the insured from a third party who may have caused the loss. Substandard Risk - Correct Answer-An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium. Superintendent (Commissioner, Director) - Correct Answer-The head of the state department of insurance. Terminally Ill - Correct Answer-In most states, this is defined as a patient who is expected to die within 6 months of a specific illness or sickness.

Total Disability - Correct Answer-A condition which does not allow a person to perform the duties of any occupation for payment as a result of injury or sickness. Twisting - Correct Answer-A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage. Underwriter - Correct Answer-A person who evaluates and classifies risks to accept or reject them on behalf of the insurer. Underwriting - Correct Answer-The process of reviewing, accepting or rejecting applications for insurance. Unearned Premium - Correct Answer-Any premium that has not yet been "used up" during the policy period. The portion of premium for which policy protection has not yet been given. Unilateral Contract - Correct Answer-A contract that legally binds only one party to contractual obligations after the premium is paid. Utmost Good Faith - Correct Answer-The fair and equal bargaining by both parties in forming the contract, where the applicant must make full disclosure of risk to the company, and the insurance company must be fair in underwriting the risk. Waiting Period - Correct Answer-Time between the beginning of a disability and the start of disability insurance benefits. Waiver - Correct Answer-The voluntary abandonment of a known or legal right or advantage. Warranty - Correct Answer-A material stipulation in the policy that if breached may void coverage. Workers Compensation - Correct Answer-Benefits required by state law to be paid to an employee by an employer in the case of injury disability, or death as the result of an on- the-job hazard.