Insurance Terminology and Concepts, Exams of Insurance Economics

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Florida Health Insurance Exam/ 110+

Questions with Certified Solutions

An unplanned, unforeseen event which occurs suddenly and at an unspecified place - Answer: Accident A type of insurance that protects the insured against loss due to accidental bodily injury - Answer: Accident Insurance Unplanned, unforeseen traumatic injury to the body - Answer: Accidental Bodily Injury

An insurance policy which pays a specified amount or a specified multiple of the insured's benefit if the insured dies, loses his/her sight, or loses two limbs due to an accident - Answer: Accidental Death and Dismemberment 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 - Answer: Accidental Death Benefits Activities individuals must do every day such as moving about, getting dressed, eating, bathing, etc. - Answer: Activities of Daily Living The amount a physician or supplier actually bills for a particular service or supply - Answer: Actual Charge 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 - Answer: Adhesion An insurance company authorized and licensed to transact insurance in a particular state - Answer: Admitted (Authorized) Insurer A program for impaired adults that attempts to meet their health, social, and functional needs in a setting away from their homes - Answer: Adult Day Care

The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability - Answer: Adverse Selection An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of the insurer - Answer: Agent A contract in which participating parties exchange unequal amounts. Insurance contracts are this 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 - Answer: Aleatory An insurance company that is incorporated outside the USA - Answer: Alien Insurer The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created - Answer: Apparent Authority The amount Medicare determines to be reasonable for a service that is covered under Part B of Medicare - Answer: Approved Amount A claim to a provider or medical supplier to receive payments directly from Medicare - Answer: Assignment The age of the insured at a determined date - Answer: Attained Age

A statement usually obtained from the applicant's doctor - Answer: Attending Physician's Statement (APS) 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) - Answer: Avoidance Coverage that provides benefits for room, board and miscellaneous hospital expenses for a certain number of days during a hospital stay - Answer: Basic Hospital Expense Insurance Coverage for doctor visits, x-rays, lab tests, and emergency room visits; benefits, however, are limited to specified dollar amounts - Answer: Basic Medical Expense Insurance The person who receives the proceeds from the policy when the insured dies - Answer: Beneficiary The length of time over which the insurance benefits will be paid for each illness, disability or hospital stay - Answer: Benefit Period 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 - Answer: Birthday Rule

A policy that provides benefits for all medical costs, including doctor visits, hospitalization, and drugs - Answer: Blanket Medical Insurance An unfair trade practice in which one person refuses to do business with another until he/she agrees to certain conditions - Answer: Boycott A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision - Answer: Buyer's Guide A selection of health care benefits from which an employee may choose the ones that he/she needs - Answer: Cafeteria Plan A percentage of the principal amount of a policy paid to the insured if he/she suffered the loss of an appendage - Answer: Capital Amount Organizations that process claims and pay benefits in an insurance policy - Answer: Carriers A demand of a person to stop committing an action that is in violation of a provision - Answer: Cease and Desist Order 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 - Answer: Certificate of Authority A written document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided - Answer: Certificate of Insurance A request for payment of the benefits provided by an insurance contract - Answer: Claim An unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance - Answer: Coercion 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 - Answer: Coinsurance A provision that states that the insurer and the insured will share the losses covered by the policy in a proportion agreed upon in advance - Answer: Coinsurance Clause The chief executive and administrative officer of the Insurance Department - Answer: Commissioner

A plan that provides a package of health care services, including preventative care, routine physicals, immunization, outpatient services and hospitalization - Answer: Comprehensive Policy A combination of basic coverage and major medical coverage that features low deductibles, high maximum benefits, and coinsurance - Answer: Comprehensive Major Medical The withholding of known facts which, if material, can void a contract - Answer: Concealment A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable - Answer: Conditional Contract The binding force in a contract that requires something of value to be exchanged for the transfer of risk. On the part of the insured is the representations made in the application and the payment of premium; on the part of the insurer is the promise to pay in the event of loss - Answer: Consideration 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 - Answer: Consideration Clause

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 incases of loss of eligibility due to death of the insured, divorce, or attainment of the limiting age - Answer: Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 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 - Answer: Consumer Report An agreement between two or more parties enforceable by law - Answer: Contract A group insurance plan that requires the employees to pay part of the premium - Answer: Contributory A provision that helps determine the primary provider in situations where an insured is covered by more than one policy, thus avoiding claims overpayments - Answer: Coordination of Benefits An arrangement in which an insured must pay a specified amount for services "up front" and the provider pays the remainder of the cost - Answer: Copayment Care that is rendered to help an insured complete his/her activities of daily living - Answer: Custodial Care

The amount payable upon the death of the person whose life is insured - Answer: Death Benefit The portion of the loss that is to be paid by the insured before any claim may be paid by the insurer - Answer: Deductible 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 - Answer: Defamation The chief executive and administrative officer of the Insurance Department - Answer: Director A physical or mental impairment, either congenital or resulting from an injury or sickness - Answer: Disability Health insurance that provides periodic payments to replace an insured's income when he/she is injured or ill - Answer: Disability Income Insurance Am act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation - Answer: Disclosure

An insurance company that is incorporated in the state - Answer: Domestic Insurer Insurer's location of incorporation and the legal ability to write business in a state

• Answer: Domicile of Insurer A policy with a high maximum limit that covers certain diseases named in the contract (such as polio and meningitis) - Answer: Dread (Specified) Disease Policy 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 plan - Answer: Dual Choice The period of time in which an employee may enroll in a group health care plan without having to provide evidence of insurability - Answer: Eligibility Period A waiting period that is imposed on the insured from the onset of disability until benefit payments begin - Answer: Elimination Period An injury or disease which occurs suddenly and requires treatment within 24 hours - Answer: Emergency An area of dentistry that deals with diagnosis, prevention and treatment of the dental pulp within natural teeth at the root canal - Answer: Endodontics

The amount of time an employee has to sign up for a contributory group health plan - Answer: Enrollment Period A legal impediment to denying a fact or restoring a right that has been previously waived - Answer: Estoppel The difference between the Medicare approved amount for a service or supply and the actual charge - Answer: Excess Charge The date specified in the policy as the date of termination - Answer: Expiration A statement that outlines what services were rendered, how much the insurer paid, and how much the insured was billed - Answer: Explanation of Benefits (EOB) A statement sent to a Medicare patient indicating how the Medicare claim will be settled - Answer: Explanation of Medicare Benefits A unit of measure used to determine rates charged for insurance coverage - Answer: Exposure The authority granted to an agent by means of the agent's written contract - Answer: Express Authority

A facility which is licensed by the state to provide 24 hour nursing care - Answer: Extended Care Facility 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 - Answer: Extension of Benefits A federal law that establishes procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used - Answer: Fair Credit Reporting Act An agent/broker who handles insurer's funds in a trust capacity - Answer: Fiduciary A salary reduction cafeteria plan that uses employees funds to provide various types of health care benefits - Answer: Flexible Spending Account (FSA) An insurance company that is incorporated in another state - Answer: Foreign Insurer Life or health insurance companies formed to provide insurance for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government - Answer: Fraternal Benefit Societies

The intentional misrepresentation or deceit with the intent to induce a person to part with something of value - Answer: Fraud 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 - Answer: Free Look 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 - Answer: Gatekeeper Model Period of time after the premium due date in which the premiums may still be paid, and the policy and its riders remain in force - Answer: Grace Period A type of insurance that covers a group of individuals against loss of pay due to accident or sickness - Answer: Group Disability Insurance Health coverage provided to members of a group - Answer: Group Health Insurance A circumstance that increases the likelihood of a loss - Answer: Hazard

The effect of a person's indifference concerning loss has on the risk to be insured - Answer: Moral Hazard A type of hazard that arises from the physical characteristics of an individual, such as a physical disability due to either circumstances or a condition present at birth - Answer: Physical Hazard Protection against loss due to sickness or bodily injury - Answer: Health Insurance A prepaid medical service plan in which specified medical service providers contract with the HMO to provide services. The focus is preventative medicine - Answer: Health Maintenance Organization (HMO) Plans that allow employers to set aside funds for reimbursing employees for qualified medical expenses - Answer: Health Reimbursement Accounts (HRAs) Plans designed to help individuals save for qualified health expenses - Answer: Health Savings Accounts (HSAs) An entity certified by the insured's health plan that provides health care services under contract - Answer: Home Health Agency 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 - Answer: Home Health Care

A covered expense under Part A of Medicare in which a licensed home health agency provides home health care to an insured - Answer: Home Health Services A facility for the terminally ill that provides supportive care such a pain relief and symptom management to the patient and his/her family. Covered under Part A of Medicare - Answer: Hospice An optional income rider that waives the elimination period when an insured is hospitalized as an inpatient - Answer: Hospital Confinement Rider 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 - Answer: Implied Authority Policies which replace a certain percentage of the insured's pure loss of income due to a covered accident or sickness - Answer: Income Replacement Contracts To restore the insured to the same condition as prior to loss with no intent of loss or gain - Answer: Indemnify 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 - Answer: Insolvent Organization

The acceptability of an applicant who meets an insurance company's underwriting requirements for insurance - Answer: Insurability 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 - Answer: Insurance The person or organization that is protected by insurance; the party to be indemnified - Answer: Insured An entity that indemnifies against losses, provides benefits, or renders services (also known as "company" or "insurance company") - Answer: Insurer A general statement that identifies the basic arrangement between the insurance company and the insured, usually located on the 1st page of the policy - Answer: Insuring Clause 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 - Answer: Intentional Injury