Insurance Terminology and Concepts, Exams of Nursing

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FLORIDA 240 LICENSE NEWEST

ACTUAL EXAM 2025 QUESTIONS AND

DETAILED CORRECT ANSWERS WITH

RATIONALES (VERIFIED ANSWERS) |

2024 - 2025

After a person's employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true? a) The employee can convert from group to individual insurance within 31 days of termination. b) The premium of the individual health insurance policy can be higher than the original policy. c) By law, the new, individual policy must provide the same benefits as the group insurance policy. d) Continuation of group coverage need not include dental, vision, or prescription drug benefits. Correct Answer c) By law, the new, individual policy must provide the same benefits as the group insurance policy. If an insurance company offers Medicare supplement policies, it must offer which of the following plans? a) В-N b) A-D c) A

d) A & B Correct Answer c) A An insurance company must make available to each applicant a policy form offering the basic core benefits (Plan A) if it will offer any Medicare Supplement policies. An insurance company does not have to issue all or any of the plans B through N. The Florida Health Insurance Coverage Continuation Act requires insurers that sell health plans to small employers to offer in those plans a right to elect to continue coverage, without providing evidence of insurability, to employees who lose their coverage and are unable to replace it. The premium rate for this coverage may NOT exceed: Correct Answer 115% of the regular group rate. The coverage may be extended for a period of up to 18 months at a rate not to exceed 115% of the regular group rate. An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? Correct Answer False advertising False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading.

Which of the following does NOT have to be disclosed in a long-term care (LTC) policy? a) Any riders or endorsements b) The aggregate amount of premiums due c) The meaning of the terms "reasonable" and "customary" 'd) Any limitations or conditions of eligibility for LTC benefits Correct Answer b) The aggregate amount of premiums due. Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability? Correct Answer Residual disability A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss. An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? Correct Answer Full benefits Presumptive Disability plans offer full benefits for specified conditions.

Which of the following is NOT provided by an HMO? a) Reimbursement b) Services c) Financing d) Patient care Correct Answer a) Reimbursement The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physician or hospital. In Florida, which of the following practitioners normally do NOT receive payment from health insurance policies? *Optometrists *Pediatricians *Dentists *Naturopaths Correct Answer *Naturopaths A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will Correct Answer continue coverage but exclude the heart condition A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of

the following health care services are typically covered, EXCEPT for: Correct Answer experimental and investigative services An individual has a Major Medical policy with a $5, deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay if a total of $15,000 in covered medical expenses are incurred? Correct Answer $7, A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013? Correct Answer $1, The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called: Correct Answer Reserves An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the: Correct Answer Fair Credit Reporting Act

A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as: Correct Answer A fraternal benefit society What I the name of the law that requires insurers to disclose information gathering practices and where the information was obtained? Correct Answer Fair Credit Reporting Act Who elects the governing body of a mutual insurance company? Correct Answer Policyholders A group-owned insurance company that is formed to assume and spread the liability ricks of its members is known as a: Correct Answer Risk retention group What type of reinsurance contract involves two companies automatically sharing their risk exposure? Correct Answer treaty On an Accidental Death and Dismemberment (AD&D) insurance policy, who is qualified to change the beneficiary designation? Correct Answer Policyowner The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to: Correct Answer continue group health benefits K is the insured and P is the sole beneficiary on an Accidental Death and Dismemberment (AD&D) insurance

policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true? Correct Answer Proceeds will be paid to P's estate How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? Correct Answer If the primary beneficiary dies before the insured Which mode of payment is NOT used by health insurance policies? Correct Answer Single Premium Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy? Correct Answer Discourages overutilization of the insurance coverage Which of the following statements BEST describes dental care indemnity coverage? Correct Answer Services are reimbursed after insurer receives the invoice C was injured while deep sea diving and requires a hospital stay. C has a Major Medical policy with a 80/ coinsurance clause and a $400 deductible. What is the MAXIMUM C will pay if the covered medical expenses are $2000? Correct Answer $ Which of the following policy features allows an insured to defer current health charges to the following year's

deductible instead of he current year's deductible? Correct Answer Carryover provision M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for? Correct Answer Determined by the terms of the policy N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as Correct Answer coinsurance With a Basic Medical Expense policy, what does the hospitalization expense cover? Correct Answer hospital room and board Which of the following medical expenses does Cancer insurance NOT cover? Correct Answer arthritis The difference between group insurance and blanket health policies is: Correct Answer Blanket health policies do not issue certificates Which type of policy would pay an employee's salary if the employer was injured in a bicycle accident and out of work for six weeks? Correct Answer Business Overhead Expense T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy

insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? Correct Answer $ G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is Correct Answer Business Overhead Expense Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party? Correct Answer Subrogation S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations? Correct Answer 36 When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans? Correct Answer contributory Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business? Correct Answer Business owner becoming disabled

An accident policy will most likely pay a benefit for a(n) Correct Answer off-the-job accident An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses? Correct Answer Loss of eyesight due to an accidental injury Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for: Correct Answer health information Under which of the following circumstances will the benefits under COBRA continuation coverage end? Correct Answer All group health plans are terminated by the employer The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the Correct Answer waiting period Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition? Correct Answer Less restrictive Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy? Correct Answer reimbursement

The federal income tax treatment of employer-provided group Medical Expense insurance can be accurately described as: Correct Answer Employee's premiums paid by the employer is tax-deductible to the employer as a business expenditure P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to Correct Answer P only J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy? Correct Answer $25, Which of the following characteristics is associated with a large group disability income policy? Correct Answer No medical underwriting K has an Accidental Death and Dismemberment (AD&D) insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed? Correct Answer daughter

Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance? Correct Answer Disability income policy premiums are tax-deductible coordination of benefits provision Correct Answer prevents an insured covered by two health plans from making a profit on a covered loss Accidental Death coverage is provided to commercial airline passengers in which of he following types of policies? Correct Answer Blanket Accident policy If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? Correct Answer Insured's contingent beneficiary Which of the following statements is correct regarding an employer/employee group health plan? Correct Answer the employer receives a master policy and the employees receive certificates Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party? Correct Answer Subrogation A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a

specific procedure by a doctor of similar training and experience in that geographic area is known as Correct Answer Usual, customary and reasonable What provision would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? Correct Answer Payment of Claims All of the following are true about group disability Income insurance EXCEPT a) The longer the waiting period, the lower the premium. b) Coverage applies both on and off the job. c) Benefits are usually short term. d) The waiting period starts at the onset of the injury or sickness. Correct Answer Coverage applies both on and off the job. Which of the following statements regarding Business Overhead Expense policies is NOT true? a) Premiums paid for BOE are tax-deductible. b) Any benefits received are taxable to the business. c) Leased equipment expenses are covered by the plan. d) Benefits are usually limited to six months, Correct Answer d) Benefits are usually limited to six months In long-term care insurance, what type of care is provided with intermediate care? Correct Answer Occasional nursing or rehabilitative care An insured has endured multiple surgeries and hospitalizations for an illness during the last few months.

Her insurer no longer bills her for medical expenses. Which of the following allows for that? a) Waiver of premium b) Maximum loss c) Stop-loss limit d) Grace period Correct Answer c) Stop-loss limit L has a major medical policy with a $500 deductible and 80/20 coinsurance. Lis hospitalized and sustains a $2. loss. What is the maximum amount that L will have to pay? Correct Answer $900 L would first pay the $ deductible; out of the remaining $2,000, the insurer will pay 80% ($1,600) and the insured will pay 20% ($400). Which of the following entities has the authority to make changes to an insurance policy? a) Department of Insurance b) Broker c) Producer d) Insurer's executive officer Correct Answer d) Insurer's executive officer Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change.

All of the following statements about Medicare supplement insurance policies are correct EXCEPT a) They cover the cost of extended nursing home care. b) They cover Medicare deductibles and copayments. c) They supplement Medicare benefits. d) They are issued by private insurers. Correct Answer a) They cover the cost of extended nursing home care. Long-term care coverage may be available as any of the following options EXCEPT: a) Endorsement to a life policy. b) Endorsement to a health policy. c) Group long-term care d) Individual long-term care. Correct Answer b) Endorsement to a health policy. LTC policies may be purchased on an individual or group basis, or as an endorsement to a life insurance policy. An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? Correct Answer 10 days. The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes. Aninsurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? Correct Answer Conditional

A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies which put the burden of condition on either the insurer or the policyowner. How are HMO territories typically divided? Correct Answer Geographic areas A participating insurance policy may do which of the following? a) Provide group coverage b) Pay dividends to the stockholder c) Require 80% participation d) Pay dividends to the policyowner Correct Answer d) Pay dividends to the policyowner. When may an insurer require an insured to provide genetic information? Correct Answer Never. Insurers are prohibited from requesting a person or relative of a person to supply genetic information. In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits? Correct Answer 60 days

Under COBRA, terminated employees must exercise extension of benefits within 60 days of separation from employment. When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. how would this claim be handled? Correct Answer The insurer is considered to be notified since the notification to agent equals notification to the insurer. Notice to the agent equals notice to the insurer. The agent is the insurer's representative. Which of the following is NOT a feature of a guaranteed renewable provision? a) The insured has a unilateral right to renew the policy for the life of the contract. b) Coverage is not renewable beyond the insured's age

c) The insured's benefits cannot be reduced d) The insurer can increase the policy premium on an individual basis. Correct Answer d) The insurer can increase the policy premium on an individual basis. Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the

policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy. Which of the following is NOT required to be stated in the outline of coverage provided with a long-term care policy? a) The right to return the policy for a refund b) Basic information about the insurance company c) Basic information about supplementary policies d) The policy number Correct Answer c) Basic information about supplementary policies outline of coverage must follow standard format included in insurance regulations. Must include information about the insurance company, the policy number, important features of the policy, and explain the right to return the policy for a refund. All of the following are required provisions in all individual health insurance policies delivered in this state EXCEPT a) Grace period. b) Reinstatement. c) Misstatement of age. d) Entire contract. Correct Answer c) Misstatement of age. Misstatement of age is an optional health insurance policy provision, meaning that it may be included in a policy at the option of the insurer.

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen? Correct Answer The policy will not be affected. In insurance, fraud is the intentional misrepresentation of material information that is crucial when deciding whether or not to write a contract for an applicant. If an insurer finds that an applicant has committed fraud, it can void the contract, provided that the discovery occurs within the first two years of the effective policy date. In this particular instance the applicant did not commit intentional fraud. A long-term care shopper's guide must be presented at what point? Correct Answer Prior to the time of application A long-term care insurance shopper's guide must be provided in the format developed by the National Association of Insurance Commissioners (NAIC). The shopper's guide must be presented to the applicant prior to completing the application. In individual health insurance coverage, the insurer must cover a newborn from the moment of birth, and if additional premium payment is required, how many days

should be allowed for payment? Correct Answer Within 30 days of birth The insured must notify the insurer of a newly born dependent, and if additional payment is required, pay within 30 days. In order to maintain an insurance license, an agent will need to satisfy Florida's continuing education requirement of : Correct Answer 24 hours of continuing education in every 2-year period. An insured submits a proof of loss form within 10 days of a loss. The insurer, however, does not acknowledge the form for 3 months. Which of the following violations has the insurer committed? Correct Answer Unfair claims settlement Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements are completed and submitted by insureds is an example of unfair claims settlement. If a person accumulates more continuing education hours than is necessary to fulfill the requirements for a 2-year period, what will occur? Correct Answer The extra hours may be continued into the next period, Excess classroom hours accumulated during any 2-year period may be carried forward to the next 2-year period.

All small employer group health plans, in order to comply with the requirements of the Florida Employee Health Care Access Act, must be issued on what basis? Correct Answer Guaranteed issue A small group plan must be issued on a guaranteed-issue basis, which means an insurance policy must be offered to an employer, employee, or dependent of the employee, regardless of health status, pre-existing conditions or claims history. If an agent is in the military, which of the following is true? a) The agent cannot sell a policy to someone outside of the military base. b) The agent cannot sell any policies during times of war or conflict. c) The agent cannot sell policies while on active duty. d) The agent cannot sell a policy to another active military person who is of a lower rank. Correct Answer d) The agent cannot sell a policy to another active military person who is of a lower rank. Which of the following will NOT be considered unfair discrimination by insurers? a) Cancelling individual coverage based on the insured's marital status b) Assigning different risk classifications to applicants based on gender identity

c) Discriminating in benefits and coverages based on the insured's habits and lifestyle d) Charging applicants with similar health histories different premiums based on their ethnicity Correct Answer c) Discriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable. Which of the following would be required to be licensed as an insurance producer? a) A salaried full-time employee who furnishes information for group insurance b) An insurance company director who performs executive, administrative and managerial duties c) A salaried employee who advertises and solicits insurance d) A person whose activities are limited to producing insurance advertisements Correct Answer c) A salaried employee who advertises and solicits insurance

A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required. Which of the following is NOT among the goals of a Medicare supplement application? a) Determining whether or not the policy will replace another accident and health policy b) Advising applicants regarding the availability of counseling services c) Presuming the applicant is eligible for Medicaid, based on the nature of the policy d) Determining whether or not an applicant has an existing Medicare supplement policy Correct Answer c) Presuming the applicant is eligible for Medicaid, based on the nature of the policy Medicare supplement policies must ask the applicant if they are eligible for Medicaid. While a claim is pending, an insurance company may require: A. An independent examination only once every 45 days. B An independent examination as often as reasonably required. C. The insured to be examined only within the first 30 days.

D. The insured to be examined only once annually. Correct Answer B An independent examination as often as reasonably required. All students attending a large university could be covered by Correct Answer a blanket policy Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is Correct Answer Business Overhead Expense How does group insurance differ from individual insurance? Correct Answer Premiums are lower P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE? Correct Answer She does NOT need to provide evidence of insurability An insured covered by AD&D insurance has just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary? Correct Answer Proceeds will go to the contingent beneficiary All of the following statements regarding group health insurance is true, EXCEPT: Correct Answer An individual policy is given to each member

What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary requires his/her consent when a change of beneficiary is made? Correct Answer Irrevocable beneficiary Which statement is TRUE regarding a group accident & health policy issued to an employer? Correct Answer The employer receives the policy and each employee is issued a certificate P is a new employee and will be obtaining non- contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period? Correct Answer Sign an enrollment card M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? Correct Answer Revocable T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary? Correct Answer Request of the change will be refused