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

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November 20, 2020
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November 20, 2020

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

In the state of Michigan a person applying for an insurance producer license must fulfill the following criterion EXCEPT:
Submit a completed application indicating the type of license desired
Be at least 18 years of age
Complete a program of study registered with the Commissioner
Pay a nonrefundable application fee of $75
An insurance producer is able to receive licensing in a variety of area, but not:
Credit
Personal Property
Variable Life
Accident and Health or Sickness
For individuals practicing law in Michigan, an insurance adjuster license is not needed to adjust loss or damage under a policy of insurance. In which one of the following scenarios is a license also NOT needed?
Persons adjusting a loss or damage under a policy within his control
Paralegals working for a licensed attorney
Employees of savings and loan banks
Employees of an insurer

Question 4
After obtaining a written agreement from his or her client a licensed insurance counselor is able to perform which of the following acts?
Provide advice with respect to promised benefits, afforded coverage, terms, or advantages of a policy
Advertise himself as an insurance counselor
Audit policies of insurance
All of the above
What is the main function of a managing general agent or MGA?
Reissues binding insurance contracts
Negotiates insurance contracts with an insurer on behalf of a client
Negotiates and binds ceding reinsurance contracts on behalf of an insurer

How does an agent receive a limited license?
By indicating the desired line of insurance to the licensing board after passing all necessary exams
Signifying on his application that he is applying for a limited license

An business entity wishing to act as an insurance producer must first obtain a license by doing all of the following EXCEPT:
Completing the required three month review period

Which of the following is not true when the Commissioner contracts with nongovernmental entities to perform ministerial functions related to producer licensing?
The Commissioner must issue an insurance agency license to an affiliate of a lender
The Commissioner must issue an agent license to an individual who is an employee of the affiliate
The commissioner must provide notice to the Commissioner of the financial institutions bureau of any acquisition of an insurance agency
The Commissioner may issue a temporary insurance producer license for a period not to exceed 180 days without requiring an examination if the Commissioner considers it necessary in order to provide insurance services in all of the following cases EXCEPT:
Any other person in an extenuating circumstance where public interest will be best served by granting a temporary license
To the surviving spouse or adult child of an insurance producer who dies or becomes disabled in order to allow adequate time for the sale of the insurance business, to train another insurance producers, or to allow time for recovery

As long as education requirements for resident individual producers are met by the due date An insurance producer license must remain in effect unless which of the following takes place?
The license is suspended

Licensees must inform the Commissioner by any means acceptable to the Commissioner of a change of legal name or address within how many days of the change?
30 days

An insurer that terminates a contract with an insurance producer must notify the Commissioner
Providing misleading information on license application
Misappropriation of money
Failing to pay taxes
All of the above

With regard to assumed names, which of the following statements is the correct rule?
An insurance producer doing business under any name other than the producers legal name must notify the Commissioner prior to using the assumed name.

An applicant must have completed a program of study within what time frame of the receipt of the application?
4 months
2 years
1 year
6 months

The Commissioner may require a reinsurance intermediary-manager or a managing general agent to file a bond in an acceptable amount from an acceptable insurer for the protection of the reinsurer or insurer. What is the acceptable amount?
$15,000
$10,000

The Commissioner will serve a formal charge, including his findings and a cease and desist order to a person who has committed any of the following acts EXCEPT:
Violated a regulation
Engaged in methods of unfair competition
Committed a felony

An insurer selling automobile insurance may terminate an insurance producers license for which of the following reasons:
Failure to perform the provided contract terms
Malfeasance
All of the above

The Commissioner may impose any of the following penalties for violations of the rules EXCEPT:
Payment of a civil fine not to exceed $500 for each unknowing violation
Suspension or revocation of license
A refund of any overcharges
Payment of a civil fine up to 3,500 for willful violations
The person whose duties include personally superintending the duties of his office, evaluating and approving applications for licenses and promulgating rules and regulations necessary to further the purposes of the established statutory rules is known by what formal title?
Chief Officer
Secretary of Insurance
Commissioner
An authorized insurer must be issued by the Commissioner a certificate of authority in order to ____________ in Michigan.
Practice
provide insurance
transact insurance

An insurer must maintain unimpaired capital and surplus in an amount not less than ________.
$1,000,000
$5,000,000
$750,000
$7,000,000

Rates are subject to all of the following regulations EXCEPT:
If the insurer has not received notice of disapproval within 10 days, the rates are considered approved.

Insurance policy forms may not be issued to any person unless a copy of the form is filed with the insurance bureau and is approved by the Commissioner as conforming to which of the following rules?
Forms must obtain a readability score of 30 or more
Issuing a form without the approval of the Commissioner may result in a fine of $25 for each offense, not to exceed $500 total.

Failure to pay claims on a timely basis or to pay interest on late payments constitutes unfair claims settlement practices, unless what takes place?
The Commissioner issues an exemption for extenuating circumstances
The insured dies or no longer seeks payment of due claims
A court of law renders judgment and the person pays the insured all entitled benefits

If the insurer terminates the appointment, he must notify the Commissioner within __ days and mail a copy of the notification to the terminated producer within __ days.
45, 15
60, 30
30, 15

A person is forbidden from conducting insurance business without a license, unless the person is:
Acting only for a fraternal benefit society authorized to transact insurance in Michigan
Devoting less than 50% of his time to selling insurance
All of the above

All of the following acts fall under prohibited conduct EXCEPT:
A person maintaining or operating an office transacting insurance business, if they fail to comply to the state regulations
A solicitor failing to, in a timely manner, turn over all money owed
An agent selling insurance not by means of intimidation or threats

No insurer may pay a commission to a person who ______________________________.
is not licensed
is not employed by the insurer
is also insured by the insurer
is not, but is required, to be licensed

An agent may not accept payment of a premium for a Medicare supplemental policy in the form of __________________.
a check or money order made payable to the agent instead of the insurer

Which of the following is NOT a penalty the Commissioner may impose for unfair insurance trade practices?
A refund of any overcharges
Charge an insurance producer with criminal negligence

No insurance producer may make a statement which misrepresents the terms of a contract, including the _________ benefits and required premiums, or __________ intended to deceive.
insurance, a claim
required, a promise
necessary, a claim
promised, an estimate

To avoid deception what three criteria must advertisements meet?
Complete, clear, and truthful

No insurance producer may make any misrepresentation for the purpose of inducing a policyholder to ___________________________.
lapse on his current insurance
overpay on his current policy
lapse on his current insurance and take out another policy.

If, after investigation by an independent public accountant, the insurer is found to have misstated his financial condition, the board of directors and the Commissioner must be notified within how many business days?
10
7
30
5

No insurance producer may make an oral or written statement which is false or maliciously critical of the financial condition of any person, and which is calculated to injure. Included in this are advertisements which may not perform which of the following?
disparage competitors
disparage competitors policies
disparage competing methods of marketing business
all of the above

No insurance producer may unfairly discriminate between individuals of the same class, same hazard, and equal expectation of life with regards to what area?
rate charged for the policy
the amount of premium rates
underwriting standards
all of the above

The Commissioner may refuse to grant or renew a license if he determines that it is ________ that the business of the applicant will give rise to indirect rebating of commissions, meaning paying people in order to induce them to buy insurance policies.
possible
definite
probable

In order to assure compliance with insurance regulations the Commissioner may conduct examinations of:
Directors of insurers
Stock brokers
All of the above

Fraudulent insurance acts includes acts committed by any person knowingly and with an intent to ______.
injure, defraud, or deceive

Any person who commits a fraudulent insurance act is guilty of a felony and may be subject to what penalties?
Imprisonment not to exceed 4 years or a fine not to exceed $100,000
A fine not to exceed 25,000
Imprisonment not to exceed 5 years
Imprisonment not to exceed 4 years or a fine not to exceed $50,000, or both
Under what circumstance is an insurer NOT required to give a privacy notice to the insured?
If the insurer does not disclose any nonpublic personal financial information to any nonaffiliated third party and the insurer does not have a customer relationship with the consumer
If a notice has already been provided by an affiliated insurer
All of the above

Consumer credit reports with fraud alerts may not be used for credit or insurance applications without what other component?
Permission from the Commissioner
Consent of the consumer

In order to monitor all financial transactions, prohibit correspondent account with foreign shell banks, and report all suspicious activity to the government insurance companies must now use what mechanism?
Suspicious person report
Anti-money laundering program
What is the main function of a managing general agent or MGA?
Reissues binding insurance contracts
Negotiates insurance contracts with an insurer on behalf of a client
Negotiates and binds ceding reinsurance contracts on behalf of an insurer
How does an agent receive a limited license?
By indicating the desired line of insurance to the licensing board after passing all necessary exams
Signifying on his application that he is applying for a limited license
With regard to assumed names, which of the following statements is the correct rule?
An insurance producer doing business under any name other than the producers legal name must notify the Commissioner prior to using the assumed name.

An applicant must have completed a program of study within what time frame of the receipt of the application?
4 months
2 years
1 year
6 months

Failure to pay claims on a timely basis or to pay interest on late payments constitutes unfair claims settlement practices, unless what takes place?
The Commissioner issues an exemption for extenuating circumstances
The insured dies or no longer seeks payment of due claims
A court of law renders judgment and the person pays the insured all entitled benefits

Question 49
If the insurer terminates the appointment, he must notify the Commissioner within __ days and mail a copy of the notification to the terminated producer within __ days.
45, 15
60, 30
30, 15
The person whose duties include personally superintending the duties of his office, evaluating and approving applications for licenses and promulgating rules and regulations necessary to further the purposes of the established statutory rules is known by what formal title?
Chief Officer
Secretary of Insurance
Commissioner
Blanket disability insurance covers all of the following categories EXCEPT:
Students and teachers
Passengers on any carrier

The term preexisting condition may not ___________________.
be used in a way that implies coverage beyond the terms of the policy
be used in a policy being advertised
be used without an appropriate accompanying definition

If an outline of coverage is given to a prospective applicant for life insurance and that outline includes: a description of the benefits provided by the policy, a list of the exclusions and limitations, a statement that the outline is just a summary and the actual policy should also be read, and an explanation of the return policy then what necessary component is the outline missing?
Nothing, all components are present
A timeline of the policy
A credit report
A statement of the continuation terms

Insurers may not require an asymptomatic applicant to undergo genetic testing before issuing a policy, however what may the insurers require of an applicant regarding genetic information?
That the applicant undergoes a physical
That the applicant discloses whether genetic testing has already been conducted
That the applicant answers questions about family history

If a group disability coverage is replaced by a policy which contains a preexisting condition limitation and covers 10 or more employees then the new policy coverage ______________________
may be less than the coverage of the replacement policy without the preexisting condition limitation
may not be less than the coverage of the replacement policy with the preexisting condition limitation
may or may not be less than the coverage of the replacement policy depending on the preexisting condition
may not be less than the coverage of the replacement policy without the preexisting condition limitation

In the state of Michigan the preexisting condition exclusion does not apply to individuals who have had health insurance coverage for at least ___________ and have not had a break in coverage of more than ____ days.
1 year, 30
12 months, 63

In order to void a claim or deny coverage misstatements, with the exception of fraudulent misstatements, must be used within what time period after the policys date of issue?
5 Years
2 years
1 year
3 years

Other than weekly and monthly premium policies what is the grace period entitled to the insured to pay the first premium?
31 days

What is the correct procedure for filing claims? a) Indemnities are paid; b) Insurer must provide the claimant proof of loss forms within 15 days; c) Written notice of claim is given to the insurer within 20 days of the occurrence of a loss covered by the policy; d) Written proof of loss is received by the insurer within 90 days of the end of the liability period.
A, C, B, D
C, B, D, A

How many times does the insurer have the right to examine the person of the insured?
None
Only as many as a licensed medical doctor deems necessary
As often as required within reason
No action at law or in equity may be brought to recover on this policy prior to the expiration of 60 days after what has taken place?
The insurer has received written proof of loss

If after changing to a more hazardous occupation the insured is injured what is the outcome?
The insured is still required to pay the premiums of the current policy
The insured would be required to pay higher premiums as a result of changing to the more hazardous occupation

What is the insurer liable for if the insured has taken out a second policy with another insurer which covers the same loss on a provision of service basis or on an expense incurred basis, and the insured has not given written notice to the insurer of the first policy?
Nothing
The half of the dollar amount the first insurer would have been liable for had the insured not taken out a second policy
The proportion of the loss which would otherwise have been payable plus the total of the like amounts under all such other valid coverages

If a provision of an individual health insurance policy conflicts with the laws of Michigan what then is the status of the provision?
The policy provision takes precedence over the Michigan statute
It is void and has no legal standing
It is amended to conform with the minimum statutory requirements of Michigan law
Insurers providing expense-incurred medical policies typically must renew the policy at the option of the individual, however there is no guarantee for renewal if any of the following acts take place EXCEPT for:
Lack of payment
Failure to qualify for the policy

With regards to Disability income and related insurance policies an insurer is not liable to pay the total monthly amount of loss of time benefits promised for the same loss if it is more than the monthly earnings of the insured. But the insurer may not reduce benefit amounts below what sum?
$100
$500
$350
$200

If an insurance policy which provides hospital care for the insured and his dependents contains a provision for termination of a dependent of a certain age from the policy then what, if any, is a possible option for the dependent on that policy?
The dependent may not remain on the policy as a dependent
If the dependent is incapable of self-support then the policy holder can submit proof within 31 days after the child has reached the termination age in which case the dependent will remain on the policy

If a group disability coverage is replaced by a policy which contains a preexisting condition limitation and covers _____ or more employees, the new policy coverage may not be less than the coverage of the replacement policy without the preexisting condition limitation.
10

To what percentage of those approved must the premium rates for individuals who purchase a comparable group conversion policy be limited to?
200%
150%
120%
What is the range of employees any person, firm, corporation, partnership, limited liability company, or association actively engaged in business must have on at least 50% of its working days during the preceding and current calendar years in order to fit the definition of a small business?
5-100
30-Jan
Feb-50

All insurers must have a policy containing all of the following benefits EXCEPT:
Coverage under Medicare Parts A and B for the cost of the first 3 pints of blood
Upon exhaustion of Medicare hospital inpatient coverage, coverage of 50% of the Medicare Part A expenses
If an insurer providing Medicare supplement insurance wishes to use any written, radio, or television advertisement they must first file a copy with the Commissioner how many days prior to the advertisements desired publication date?
60 days
30 days
50 days
45 days

When recommending the purchase of a Medicare supplement policy, the insurer must ___________________________.
make every effort to ensure the policy fits the needs of the consumer
make reasonable efforts to determined whether or not it is appropriate for the consumer

Each Medicare supplement policy must contain an outline of coverage, a description of limitations on referrals to restricted network providers, a description of the Medicare select insurers quality assurance program and grievance procedure as well as which of the following?
A list of local medical providers
Description of preexisting conditions not covered
Description of restricted network provisions

Applications for Medicare supplement policies contain questions on received disability or Medicare benefits. What is the purpose of this practice?
To ensure the consumer receives the most comprehensive policy
To understand the consumers complete medical history
To discover if the consumer qualifies for an insurance policy
To ensure the policy does not duplicate benefits already offered to the person by Medicare

A unilateral contract is:
A contract that makes a promise or promises in exchange for a performance
An individual medical plan is usually a:
A contract of adhesion

A one-sided agreement whereby you promise to do (or refrain from doing) something in return for a performance (not a promise) is what type of contract?
A conditional contract
A contract of adhesion
A unilateral contract

A contract that heavily restricts one party while leaving the other free (as some standard form printed contracts), and implies inequality in bargaining power is:
A unilateral contract
A conditional contract
An aleatory contract
A contract of adhesion

An insurance policy is a legal contract, based on contract law. It is a contract where _____________ is exchanged for valuable consideration (i.e. premiums).
An expectation
A promise of benefits

Kathy is filling out an insurance application. Her broker has explained to her that the statements made in the application are held to a principle of _______________, which means they are not guaranteed to be true.
Rescission
Subrogation
Warranties
Representation

What gives the insurance company the right to assume rights of the insured in order to sue a responsible third party when damages are inflicted on the insured?
Concealment
Warranties
Subrogation

Simon has applied for insurance by completing an application and paying the initial premium. This is considered which of the following?
A completed contract
An acceptance
A conditioned contract
A consideration and an offer to buy

Ben is making application for a health insurance policy. He has been treated for heart problems in the past, but he answers no to” Have you ever had heart problems”. Ben is guilty of:
Breach of contract
Fraud
Concealment

In an insurance contract, which concept refers to the fact that the value given by the two parties is unequal?
Aleatory contract

Which of the following concepts refers to the option that one party can set aside a contract:
Aleatory
Unilateral
Voidable
Both Unilateral and Voidable

What essential element of the contract is violated by an agent who solicits to sell to an individual who has difficulty understanding what the agent is selling?
Competent parties

Sometimes the values given by two parties are unequal. This is called which of the following?
Reimbursement
Indemnity
Aleatory

What happens when you combine the principles of waiver and estoppel?
Nothing, waiver and estoppel are real estate terms
Another form of a waiver is created
A known right is voluntarily relinquished
Insurance policies are legal contracts. How do life and/or health insurance contracts differ from other insurance contracts?
They are contestable for up to two years
The producer does not have the authority to bind the insurer
Both of the above

Because insurance policies are legal contracts, they are subject to the general law of contracts. Which of the following elements is not necessary for the formation of a valid contract under the law?
Agreement
Consideration
Insuring Clause

Certain rules of construction are used to interpret a contract. All of the following are among the five main areas commonly used by the court when reviewing contracts EXCEPT:
Conditions

When looking at insurance contract characteristics, it is important to know that an exchange of a promise for a promise is called –
Unilateral
Bilateral

Because she gets paid on the 15th, Julia routinely pays her insurance premium (due on the 5th) late. Her policy was cancelled for nonpayment of premium. Does Julia have a legal leg to stand on to contest the decision by the insurer to cancel her policy?
No – the premiums should be paid on time
Yes – if she has a good lawyer
Yes – because the insurer accepted late payments previously

Which of the following is not true about the Utmost Good Faith characteristic of an insurance contract?
Both parties are entitled to rely on the representations of each other to conceal and deceive

Unlike other types of insurance contracts, life insurance is not –
A transferable contract
A conditional
A voidable
A personal contract

Mark was afraid that he might fail the physical exam that was required for his insurance policy, so he had his brother Robert, a marathon runner, take the exam for him. This is an example of –
False pretenses

If an insurance matter goes to court for interpretation, health insurance contracts are held to the principle of indemnity. This means –
They pay fixed periodic income to policyholders that become disabled.
They reimburse the insured for the amount of financial loss, but the insured cannot profit from the loss.

Which of the following could result in an insurance contract being voided?
Concealment
Fraud
Recission
All of the above

All of the following statements are true regarding the Parol (oral) Evidence Rule EXCEPT:
It limits the impact of waiver and estoppel by disallowing oral evidence made before the contract was created.
Oral evidence is not admissible in court to change or contradict an existing contract
Oral evidence is never admitted

Sally sees her policy has no maximum benefit for life, but she will not receive more that $100,000 in benefits in any one calendar year. This is known as:
Lifetime maximum
Annual maximum

An annual maximum benefit will provide the following:
A lifetime benefit of $1,000,000
No specified life time amount but a limited benefit for each year
Horace owns a health insurance policy that will not pay benefits unless he is confined to the hospital. This type of contract is known as a:
Non-cancellable contract
A unilateral contract
A contract of adhesion
A conditional contract

A participating policy (par) usually pays dividends. Most health insurance policies:
Pays dividends until claims are paid
Do not pay any dividends

A health policy has an outline of coverage. All of the following would be included in the outline of coverage EXCEPT:
Contractual provisions

Cafeteria plans may offer which of the following?
Flexible spending accounts
Tax shelter for premiums paid on chosen coverage
Options to choose coverage that meets the individual’s needs
All of the above

Ajax Manufacturing has a self-funded group health plan and believes it can lower administrative costs from those charged by an insurance company for processing claims. Which type of organization should Ajax use to process claims?
Third Party Administrator (TPA)

An outline of coverage will include all of the following EXCEPT:
Exclusions and limitations
Renewal and cancellation provisions
Calculation of premium

All of the following are correct concerning Blue Cross and Blue Shield plans EXCEPT:
Blue Cross and Blue Shield Plans are exempt from state insurance regulations

Eddie has an accidental death and dismemberment policy for $100,000 principal amount. He is involved in a logging accident and his hand is severed. What benefit should he expect?
$100,000 since this a complete loss of the hand
Nothing since logging is an excluded industry
$50,000 since this is the benefit for losing a hand

James is in an auto accident and breaks his arm and has blurred vision for a short period of time. He has a $100,000 Accidental Death and Dismemberment policy. What benefit can he expect from this accident?
$50,000 for a broken arm
$25,000 for temporary loss of vision
$0 since he did not die or lose a limb, and his vision loss was temporary

The outline of coverage in a policy contains all of the following EXCEPT:
Policy benefits
Limitations and exclusions
Conditions of renewability
Future value of the policy

Jennifer’s employer offers her the opportunity to choose from a variety of group benefits. She can choose the plans that best meet her needs while declining to participate in components of the plan. The type of plan she is being offered is called which of the following?
HMO
PPO
Free lunch program
Cafeteria Plan

Which of the following best describes a TPA?
An organization that processes claims for a self-funded group plan

An accidental death and dismemberment policy will cover all of the following EXCEPT:
Hospital expense

Final Rest Mutual is an insurance company that processes and pays claims for ABC Company’s self-funded health plan. This arrangement is know as:
Third Party Administration (TPA)
Cost plus benefits (CPB)
Exclusive Provider Organization (EPO)
Administrative Services Only (ASO)

Jack has an accidental death and dismemberment policy. He can expect benefits for all of the following EXCEPT:
An emergency appendectomy

Health insurance will provide benefits for all the following EXCEPT:
Living too long

Larry is in an accident and he loses one hand and one eye. He has an Accidental Death and Dismemberment policy for $200,000 principal sum. What should he expect for his benefit?
$50,00 for each loss
$100,000 total
$400,000 since this is a double dismemberment
$200,000 since this is the principal sum

Leon has decided to self-insure his medical plan through an insurance company. This will pay his claims and administer the other features of the plan for a set fee plus claims paid. This arrangement is known as which of the following?
Third Party Administration (TPA)
Administrative Services Only (ASO)

Health insurance may be sold on a participating or a non-participating basis. Which of the following is true about participating policies?
Dividends amounts are guaranteed
Dividends will always be the same as the projected schedule
The insured has a choice of whether his policy will be participating or not
Dividends are paid year to year and the amount of the payment is not guaranteed

Statistics indicate that women under age 55:
Have a greater frequency of disability than men

All of the following are true about health insurance deductibles EXCEPT:
Higher deductibles limit smaller claims
Higher deductibles tend to lower premiums
Deductibles continue to increase as the cost of healthcare services increase
Deductibles vary on a employer group plan depending on the risk of the individual employee
State University will offer what kind of plan to enrolled students?
Blanket health plan
A representation is
A guarantee that all statements are 100% factual.
The company’s guarantee that benefits will be paid promptly
A guarantee that the insured can get a refund if he is dissatisfied with the service.
A statement that all information is true to best of the applicant’s knowledge.

Carl has been in the hospital. When he is discharged, the accounting department agrees to file his claims as long as he executes an assignment. This means that Carl:
Has directed the provider to bill the insurance company and the company will pay him directly
Has paid his bill in full and will be reimbursed by the insurance company later
Has authorized the provider to bill the insurance company on his behalf and the insurance company will pay the provider directly

The factor most often used in the calculation of health rates is:
Mortality
Gender distribution
Morbidity

A moral hazard can be any of the following EXCEPT:
Poor credit history
Drug or alcohol abuse
Riding motorcycles

In calculating premiums for health insurance, actuaries use which of the following information?
Interest
Mortality
Expenses
Morbidity

Simon has a special risk policy. The policy will only pay a benefit if Simon suffers:
A dread disease
An industrial accident while while working a hazardous occupation
An unusual hazard not covered on other policies

Mary-Margaret has applied for a new health insurance policy. When must Mary-Margaret be given an outline of coverage?
At the time of the first claim
At the time of the application
At the time of the first premium
At the time the policy is delivered to the applicant

Which of the following is a preexisting condition?
A condition the insured contracted before the policy was in effect for 90 days
A condition the insured contracted while the policy was in underwriting, even though premiums have been paid
A condition the insured contracted prior to the application

Which of the following benefits are provided by a health service provider?
Both hospitals and physician services directly to the provider

A health insurance company may refuse coverage or charge a higher premium for which of the following?
Previous medical problems
Ethnic background
Marital Status
Poor moral history

An individual health policy will normally exclude which of the following losses suffered?
A broken leg sustained by falling off a ladder
Injuries suffered on the Job

Blanket health insurance covers which of the following?
Large fixed groups of employers
Each person named in the policy
A Limited number of insureds
An ever-changing group of people, like students

What are participants called in a Blue Cross and Blue Shield plan?
Member
Enrollee
Policyholder
Subscriber

Bill receives a check directly from the insurance company for his recent hospital stay. He has a Hospital Expense Policy. This type of policy is referred to as which of the following?
An indemnity contract
A special payment contract
A fee for service contract
A Reimbursement contract

Happy Hills, a day camp, wants to offer a health insurance policy to its campers. The type of policy they will offer is:
A Blanket policy

All of the following are examples of limited policies EXCEPT:
Travel Accident
Vision Care
Hospital indemnity
Long Term Care

All of the following are considered health policies EXCEPT:
Medical Expense
Major Medical
Accidental Death

Which contract is considered a reimbursement contract?
Accidental Death and Dismemberment
Term Life
Monthly disability income
Medical Expense
David applies for a health insurance policy. He is not aware that he has a heart condition at the time, and he answers NO to question concerning heart issues. His answer is considered:
Fraud and the insurance company may cancel his policy
Concealment, since he had the condition but did not know about it.
A Representation, since he was telling the truth to the best of his knowledge
Randall sees reference to an organization called the NAIC. What does NAIC stand for?
National Association for Insurance Counselors
National Association for Insurance Commissioners

An applicant completed an application for health insurance, but he omitted answers to several questions. The application was signed, but he did not submit a premium with the application. Before the policy was issued he was admitted to the hospital for a condition that was covered under the policy. His claim would most likely be denied because:
Exclusion clause would be effective
No consideration

All of the following Government benefit programs will provide benefits for medical benefits Except:
OASDI
Social Security disability

Julia has a basic medical expense plan through her employer. This can also be referred to as:
Dread Disease Policy
Excess medical coverage
Contingent major medial insurance
First dollar insurance

How long is the “free look” period for a health insurance policy?
30 days for high deductible plans
7, 10 or 31 days depending on the premium mode
10 days for all health policies

A representation is:
A guarantee that all statements are 100% factual.
The company’s guarantee that benefits will be paid promptly
A guarantee that the insured can get a refund of all premiums if he is dissatisfied with the service.
A statement that all information is true to best of the applicant’s knowledge.
Which of the following limits coverage under an insurance policy?
Waivers
Exclusions

Is an insurance company required to return unearned premiums on a policy cancellation?
Only if the insurance company initiates cancellation
Only if the policy has a provision allowing this action
In all cases where the insured has paid for coverage beyond the cancellation date

Matilda goes motocross racing over the Memorial Day weekend and suffers a broken leg. She contacts her agent to purchase a major medical policy and files a claim when the policy is issued. The company declines the claim. The grounds for declination is which of the following?
Insuring clause does not cover this event
The premium was not paid until the policy was issued
The transaction did not meet the consideration requirement
The broken leg was a preexisting condition

John has been in the hospital for five days. How long does he have to file a claim form and show proof of loss with his insurance company?
45 days
90 days

Which of the following may be an optional provision under the Uniform Provisions Law?
Physical Exam
Change in occupation

What provision of a health policy may cover preexisting conditions?
Time limit for certain defenses
Entire Contract

Joan asked her agent when she will have benefits if she reinstates a lapsed health policy. Her agent would be correct if he told her:
10 days for accidents and 30 days for sickness
Immediately for accidents and 10 days for sickness

Michael purchased an individual disability policy when he was an executive at BXT, Inc. Due to downsizing at BXT, Inc., Michael was laid off and so he accepted a new position at a new employer with a substantial reduction in pay. Due to an accident, Michael was disabled according to the terms of his contract. The benefit paid was more than Michael’s current salary. What is the company that issued the policy obligated to do under a relation of earnings to insurance optional provisions?
Pay the benefits that Michael bought at the time the policy was issued
Pay a reduced benefit based on Michael’s current earnings

Co-insurance is designed to control which of the following situations?
Make deductibles higher
Allow the insurance company to charge higher premiums
Raise premiums more frequently
Make the insured responsible for some of the charges to hold down claims payments

Which of the following is one of the ownership rights of an insurance contract?
Pay a claim
Change a beneficiary

Fred has purchased a cancellable policy. He should understand that:
He can keep the policy as long as he makes required premiums.
The policy may be cancelled by the insured only on the anniversary date.
The insurance company may cancel the policy at any time with proper notice and refund all unearned premium.

A grace period allows a certain number of days by contract for the insured to submit a premium. Except for weekly and monthly premium contracts, what is the usual grace period?
7 days
15 days
31 days

Old Reliable issues a policy that may not be cancelled by the insurance company, except for non-payment of premium. The company does have the right to adjust premiums for an entire class of business. This type of policy is called which of the following?
Guaranteed level premium
Non-cancellable and renewable
Guaranteed renewable

Fred has purchased a health policy with a Waiver of Premium rider. When can Fred expect to receive benefits from this rider?
This is a promotion and the insurance company will waive the first three month’s premium as an inducement to buy now.
If Fred does not file claims within the first five years of the policy, he will not have to pay premiums for six months.
If Fred becomes totally and permanently disabled, the insurance will waive all premiums during the period of disability.

The incontestable clause will provide what protection?
After two years, the claim may not be contested by the insurance company except for fraud.

Julia purchases a disability policy that will provide $500 per month if she becomes disabled. The policy requires her to notify the insurance company if she changes occupations. When the policy was issued, Julia was a bank employee. At the time of disability, she had changed occupations to become a welder. What kind of benefit should she expect?
A refund of premium since she had not notified the company of the change
A lower benefit since she had changed to a more hazardous occupation

A company may use a rider or an endorsement to do any of the following EXCEPT:
Add benefits
Change the insuring clause

Zack and his friends were celebrating his promotion to manager at a local pub after work. Zack was “over served” at the party and on the way home, Zack was involved in a serious accident that required him to be hospitalized. His blood alcohol level was well above the allowable limit. Zack’s insurance policy will most likely pay his benefit at what level?
Standard benefits as for any other claim
A limit of $5,000 total regardless of claim size
Nothing, as alcohol related accidents are usually policy exclusion.
Mr. Jones wants a health policy that can never be cancelled by the insurance company. He also wants one that will guarantee the premiums for the life of the policy (no premium increases). He should look for a policy that is:
Noncancelable

ormally, proof of loss for a medical claim must be submitted to the insurance company for consideration within 90 days UNLESS:
The provider fails to submit the claim
The insured is not of legal capacity

Using the facility of payment clause in a policy, the insurance company may pay an amount up to the maximum limit to which of the following?
The people who appear to be entitled to it
The insured’s estate

Martha decides she does not want the new policy she purchased. She is within her free look period, so she returns the policy. She should receive which of the following?
Full refund of all premiums paid
The application and the premium is which part of the contract?
Right of ownership
Underwriting clause
Consideration
The grace period for a health insurance policy may vary according to which of the following?
Annual benefit period
Frequency of premium payment

Mary has been admitted to the hospital for testing. How long does she have to give notice of claim to the insurance company?
15 days
20 days

Seth has notified his insurance company that he has a claim. The insurance company must furnish a claim form within how many days to comply with the governing provisions?
15 days

An application for reinstatement of a health insurance policy was submitted with all the proper requirements. The company makes no response. Will the policy automatically reinstate without further company action?
No, the company has refused reinstatement
Yes, coverage is in effect after 90 days
No, the company must take affirmative action
Yes, the coverage will be effective in 45 days

The grace period on a health policy is based on:
The amount of the benefit maximum
The amount of the deductible
The mode of premiums

An insured has 20 days to notify the insurance company of a loss. This is called:
Notice of claim provision

Marjorie has notified her insurance company that she has been in the hospital. The insurance company has furnished the form to file a claim. How long does Marjorie have to file proof of her loss?
10 days
30 days
60 days
90 days

Marjorie has notified the insurance company of a claim. How long does the insurance company have to furnish a claim form?
10 days
15 days

An insurance company may not modify the policy agreement (contract) without the insured’s written permission. The part of the policy that addresses this is called which of the following?
Uncontested legal action provision
Incontestable provision
Entire contract provision

Rupert has filed a claim to be reimbursed for a recent hospital stay. He feels the company is either ignoring his claim or is attempting to deny coverage. How long must he wait to initiate legal action?
He must use an arbitrator first
He must contact the insurance department first
He must wait 60 days

All of the following may be exclusions from coverage in a health policy EXCEPT:
Injury while committing a felony
Sickness while traveling abroad

Jim applies for reinstatement after his policy lapses. He submits all requirements, including the premiums. He hears nothing further from the company. This policy is in effect:
When 30 days have passed without notification
When his agent binds the contract
Automatically in 45 days if the company takes no action

What constitutes the “entire contract” for a health policy?
The form the insurance company has on file with the insurance commissioner
The policy, all riders and amendments, the application and all other papers that are required constitute the entire contract between the company and the policyholder

The NAIC proposes laws for states to consider. They have proposed a law that requires mandatory standard provisions for health insurance contracts. How many mandatory standard provisions does the current law include?
11
12

Amanda noticed that the wrong date of birth was recorded on her application for insurance. Health policies have a provision that addresses this issue. If Amanda has a claim, she can expect which of the following?
The policy will be cancelled for fraud
Claims will be denied until her age is corrected
The amount of the claim will be adjusted to reflect the correct premium and benefit

All of the following are required provisions in a health policy EXCEPT:
Grace period
Notice of claim
Entire contract
Change of occupation

Co-insurance may do any of the following EXCEPT:
Provide insurance for multiple individuals

In which of the following will you find in the consideration clause of a heath insurance contract?
Rules on filing claims
Frequency of premium payments

The term used for incontestable period for a health insurance contract is which of the following?
Grace Period
Time limit on filing claims
Consideration clause
Time limit on certain defenses

Nathan has advised his insurance company of a loss covered by his Major Medical policy. Nathan has not received a claim form. After 15 days, Nathan may:
File a complaint with the insurance department
Hire a lawyer to settle the claim in court
Submit a description with supporting documents in any form he chooses

A disability policy has lapsed due to non-payment of premium. The insured contacts his/her agent to pay back premium and reinstate the policy. What is the waiting period before coverage resumes?
90 days for accidents and sickness
10 days for sickness and immediate for accidents

Jason is comparing plans for medical insurance. His employer offers two plans. One has an 80/20 coinsurance provision and the alternate plan has a 75/25 coinsurance. Jason should expect which of the following?
To pay less out of pocket for the 75/25 plan
To have a lower premium for the 75/25 plan

A claim has been filed on a timely basis. The insurer has requested further proof of loss. How long does the insured have to furnish the proof?
60 days, up to one year
60 days, up to 5 years
90 days, up to 1 year

The entire contract provision in a health policy prevents the Insurance company from:
Cancelling the policy without written notice
Increasing premiums for all in this policy type
Eliminating the need for consideration
Changing the terms of the contract by referring to documents not included in the policy

Bruce has a non-cancellable health policy. The company may do any of the following EXCEPT:
Pay the benefits when they are due
Cancel the policy or raise premium

A policy lapses when:
Premiums have not been paid and the grace period expires

Cheryl has filed a claim for a hospital stay with her insurance company. She has complied with all time lines, but the insurance company has been unresponsive to date. Her health care providers are calling her for payment and threatening to turn her account over to a collection agency. How long does Cheryl have to wait until she can take legal action against the insurance company?
20 days
30 days
60 days

All of the following provisions are mandatory in health policies EXCEPT:
Coinsurance provision

Bill has a policy that will always be the same premium. He has which of the following?
A guaranteed renewable policy
A noncancellable policy
A pre-existing condition clause protects the insurance company against:
Fraud
Misrepresentation
Adverse selection

A health insurance policy will generally exclude all of the following losses EXCEPT:
Injuries sustained while falling off a ladder
Winston applied for a health insurance policy stating that he had never had heart trouble, even though he had suffered a heart attack one year prior to making the application. Winston has a heart attack 2 months after the policy is issued. The insurance company cancelled the policy and refunded his premiums. Under what clause does the insurance have the right to take this action?
Pre-existing condition exclusion

Warren has followed the procedure to initiate a claim for a hospital stay. His insurance company has requested information from him that documents his loss. How long does Warren have to produce this proof of loss?
20 days
30 days
60 days
90 days

The “time limit on certain defenses” provision allows the insurance company to defend against which of the following?
The company to cancel the policy for misstatement of age or sex
The time limit for which the insurance company may cancel the policy and refund premiums for material misrepresentation in the application
Nick is reading his policy to determine any exclusions that he should know about. If he suffers a loss as a result of using intoxicants or narcotics, he should expect which of the following from most policies?
Losses from the use of intoxicants or narcotics will only be covered if prescribed by a licensed physician

Samantha has not paid her premium on her health insurance policy. It has not lapsed, but the premium is due. On her pending claim, Samantha can expect which of the following?
The claim will not be paid until premium is current
The insurance company will pay the claim minus the premium due

Joan was robbing a bank when she was severely injured in a car accident as she tried to make her escape. Joan can expect her health insurance policy to:
Pay normal benefits
Pay 50% of normal benefits due to her occupation
Pay nothing since Joan was engaged in an illegal occupation

The legal action provision states that a policyholder must wait for how long after presenting proof of loss before bringing legal action against the insurer?
60 days

The free look period for an insurance policy begins:
When the company issues the policy
When the underwriting company approves the risk
When the agent delivers the policy to the insured

A guaranteed renewable policy will have all of the following features EXCEPT which of the following?
The company will renew the policy but may increase rates for the entire class of business
The company will renew the policy to a certain age and never increase premiums

The policy clause that states, “benefits are subject to all the provisions, conditions, and exclusions of the policy” is:
Time limit on certain defenses clause
Entire contract clause
Consideration Clause
Insuring Clause

The insured and the insurance company are each responsible for a percentage of a medical claim. This feature is called a:
Deductible
Stop loss
Copayment
Coinsurance

Which of the following types of policies might have a Guaranteed Insurability Clause attached?
Major Medical
PPO
HMO
Disability Income

A policyholder is injured while robbing a home. He has to be hospitalized as a result of his injury. When the insurance company discovers that a felony is involved with the claim, the insurance company may do which of the following?
Cancel the policy for fraud
Deny the claim based on no liability

Roland has been on a trip and has failed to pay the premium due on his health insurance policy. His agent explains to him that he still has coverage because his policy has which of the following?
Waiver of premium benefit
Consideration clause
Grace Period

Regina is insured under a guaranteed renewable health contract. The insurance company may increase rates as follows:
When it has approval from the insurance commissioner
When specific individuals have excessive claims
On any anniversary date for any reason
Only when an entire class of insured’s has a premium increase
What is the time limit for an insured to notify the insurance company of a loss?
20 days

Kathy has a cancellable health policy. Her insurance company may do any of the following EXCEPT:
Raise premiums for her class of insured’s
Cancel the policy with notice
Change the state required provisions of the policy

How many mandatory provisions for health insurance contracts are there?
10
11
12

There are two parties mentioned in the insuring clause. Who are they?
The insurance company and the state regulatory agency
The insurance company and the insured
Joe has named his wife, Sarah, primary beneficiary to his Accidental Death and Dismemberment Policy. Joe is not able to change the beneficiary without Sarah’s consent. This type of arrangement is called which of the following?
Contingent
Irreconcilable
Primary
Irrevocable

Michelle has reviewed her health policy after her agent delivered it to her. She noticed that the birth date recorded is not correct and she requested that her date of birth be changed to reflect her correct age. Michelle can expect all of the following EXCEPT:
The company will rescind her policy due to incorrect information

An insured has reported the wrong age and the wrong occupation on his application. What is the insurance company allowed to do when the error is discovered?
Cancel the policy and start over
Cancel the agent’s appointment for a grievous error
Pay a benefit that the premium paid would have purchased at the correct age or occupation

An agent is aware that a prospective insured omitted information about an illness that the proposed insured had prior to the application. The agent should do which of the following?
The agent has no responsibility to report the omission.
Nothing, because the insurer will discover the illness in the Medical Inspection Bureau (MIB) reports
Inform the proposed insured that he may have a claim rejected later on with possible other repercussions

Melanie tells her agent that she gave him the wrong date of birth on her application. The agent should:
Notify the insurer to have the premium corrected to reflect the correct date of birth

Jim, an agent, notices when he returns to his office that he failed to obtain answers to a few questions on an application for John and Mary Smith. Before submitting the application, he should:
Call the Smiths and ask the questions by phone
Return in person to the Smiths to ask them the questions in person and have them initial the missed questions

An underwriter has reviewed an application and determines that the risk does not meet the criteria for standard issue. The company may choose to take any of the following actions EXCEPT:
Decline to accept the risk
Issue a probationary policy that can be cancelled by the insurer after a specified time

A conditional receipt issued by the agent at the time of application provides which of the following?
A guarantee to issue the policy as applied for
A promise to refund all premiums if the insured changes his/her mind before one year has transpired
Warrants that all statements on the application are true and complete
Indicates that coverage will begin as of the application date if the policy is issued without modification

A complete and accurate application for insurance is important because:
The application is used to fully identify the applicant
The information provided becomes the basis on which the company makes a decision to issue a policy
The application becomes a part of the policy issued
All of the above

William is seeking the best way to minimize his total premium for the year. His best choice is:
Monthly
Quarterly
Semi-Annual
Annual

All of the following are true about a conditional receipt EXCEPT:
It will provide coverage from the policy date if all underwriting requirements have been met and the policy is issued as applied for
It will guarantee coverage is in effect at the time of the payment

As a new agent, you are completing an application for health insurance. You should take care of all of the following EXCEPT:
Ask and complete all questions on the application
Witness all signatures whether present or not

A health insurance underwriter is considering an application for John Smith. Which of the following is not a factor the underwriter may consider?
Medical history
Moral hazards
Race

An underwriter considers physical conditions in addition to other factors in judging a risk. All of the following are physical conditions EXCEPT:
Credit Score

Which of the following can be risk factors in judging a risk for insurance?
Family Medical History
Gender and Age
Smoking
All of the above

An agent takes an application. What information is in Part III?
Medical History
Credit Reporting
General Information
Agent’s Report

Agent John notices that he has made an error in completing an application for Sally Smith. John should do which of the following?
For a minor change, he should correct the error and have the Sally initial the changes in his presence

Which of the following information is not required on the first page of an application for insurance?
Agent’s name
Name of the insurance company
Agent’s license number
Health information about the applicant

An application for insurance will contain all of the following EXCEPT:
A written request for insurance by the applicant
Information about the applicant’s background
Information about the applicant’s health history
An oral request by the agent to the company to issue the requested coverage

When a policy is issued and forwarded to the agent, what constitutes personal delivery of the policy?
All underwriting requirements have been completed and the company issues the policy
The final complete insurance policy is placed in the hands of the insured and any premium due is paid

Nathaniel completes an application for health insurance but he does not pay the first premium. What is the earliest date that coverage will begin?
When the application is mailed to the company
When the insurance company issues the policy
When the policy is delivered and the proper premium is paid
Jerry Wilson is an agent for Wonderful Mutual Insurance Company. He has just completed an application for insurance on Allen Jones and collected the first premium. He has issued Allen a conditional receipt for the insurance. He should also tell Allen all of the following EXCEPT:
An insurance policy will not be issued until he completes the physical exam
He will receive a report from an agency called MIB concerning any health information that is on record about him

William has submitted an application for health insurance to All Good Insurance Company through his agent, Tom Smith. Under which of the following set of circumstances will William’s insurance coverage become effective?
The applicant has met all underwriting requirements, the insurance company approves the policy, and the initial premium has been paid and the policy is issued

Joe Jones has completed an application for Accident and Health Insurance at an applicant’s home. He collects the premium and returns to the office. Before sending the application to the home office, Joe should do which of the following?
Correct any mistakes on the application and initial for the insured
Deposit the premium in his/her personal account and buy a money order to send in with the app
Order an MIB report
Complete an agent’s report

What is considered constructive delivery to the policyholder?
The company sends the policy with amendments to be signed
The company sends the policy to the agent or other representative of the policyholder and all premiums due are paid

All of the following are true about approval conditional receipts EXCEPT:
It is establishes when coverage under the policy begins
It is part of the consideration
It is temporary insurance until the policy is issued

In some cases a credit-reporting agency is used in the underwriting process. According to the Fair Credit Reporting Act, when is the applicant to be notified that a report may be ordered?
Prior to the initial interview by letter
If a report is actually ordered
As part of the policy delivery
At the time of an application

The agent issues a conditional receipt at the time of the application. Which of the following statements is true?
The coverage is effective immediately until he hears otherwise from the insurance company
The agent should issue a receipt whether or not a payment has been collected
The company will look on his application more favorably, even if he has some health problems
If the insurer accepts the policy as applied for, the coverage will take effect from the date of the application or medical exam, whichever is later

A group health insurance plan may include all of the following benefits EXCEPT:
Medical Expense
Disability Income
Retirement Pension

The Health Insurance Coverage Continuation Act regulates which of the following?
Large companies with exclusions in their policy
Establishing requirements for insurers who market to small employers with 20 employees or less

An association is required to do all of the following to qualify as an association group plan EXCEPT:
The employer must pay all premiums in full for his employees

Mark and Sarah have recently been blessed with a new son, James. James will be covered under Mark’s health policy:
Immediately for group policies and 3 months for individual policies
After 24 hours on individual policies
After 72 hours on group policies
At birth for both individual and group policies

George has enrolled in his company’s group insurance plan. As proof of his participation, George will receive which of the following?
A certificate of coverage
Group policies typically contain a coordination of benefits (COB) provision. This provision is in the contract to:
Prevent under payment of claims
Eliminate arbitration on disputed claims
Prevent over payment of a claim when more than one insurance policy is involved

How long do COBRA benefits remain from the date employment is terminated?
12 months
18 months

What is the maximum length that COBRA benefits may be extended:
12 months
18 months
36 months

How does the pre-existing condition vary from individual to group policies?
There is no difference
Individual pre-existing are less restrictive
Group plans never have pre-existing clauses
Individual plans are usually more restrictive than group plans

To be eligible to participate in a group medical plan, an employee:
Must be full time
Must have served any required probationary period
Should enroll during period of eligibility
All of the above

For a benefit plan to be considered non-contributory:
The employee must pay part of the cost
The government subsidizes the premiums
The employer pays 100% of the cost

Seth must work for 90 days before his insurance is effective. These 90 days are called the:
The elimination period
The deductible period
The contestable period
Probationary period

The conversion period for an employee to convert his/her group policy to an individual policy is:
7 days
15 days
31 days

Several small businesses join together to form a large group for the purpose of buying group health insurance. This type of arrangement is called which of the following?
Health Maintenance Organization (HMO)
Franchise
Association
Multiple Employer Trust (MET)

Sam Johnson is looking at possible methods to classify his employees under his group insurance program. He may choose all of the following except:
Method of compensation
Job classification
Length of service
Age bands

When comparing individual disability income policies with group disability income policies, group policies are generally:
More costly and more restrictive
More restrictive in terms of what constitutes a disability
Made to have longer elimination periods
Less costly and have more liberal benefits

Wildlife Manufacturing Company has a non-contributory health plan. How many employees must participate to meet enrollment requirements?
75%
90%
50%
100%

A large group of 2,000 employees has renewed for another year. The premiums have increased by 12% over the previous year. The new rates were most likely a result of:
Higher than expected claims for that particular group of people

The longest pre-existing period for conditions that occurred prior to employment under HIPAA is:
6 months
12 months

Guaranteed issue is a process by which eligible employees may enroll in the company’s group plan without restriction. Guaranteed issue is usually available on what basis?
At any time the employee wishes to enroll
At the employer’s discretion
At the insurance company’s discretion
At the time of hire or other annual open enrollments
Under HIPAA an insurance company may look back how far on pre-existing conditions for a late enrollee?
6 months
12 months
18 months

An employee changes employers and has diabetes. He has worked for his previous employer for 4 years and is covered by a HIPAA eligible group. He will have full coverage under the new employer when:
At the end of any eligibility period under the new employer plans.

HIPAA recognizes time served under group plans to determine pre-existing condition restrictions. If a person is not covered, what is the maximum period they are allowed to go without coverage before the HIPAA requirements become void?
6 months
5 months
90 days
63 days

John is over 65 and has been enrolled in Medicare Part A. He remains enrolled on his employer’s group plan. If he has a claim, which plan pays first?
Medicare will be primary and his employer’s plan will function as a supplement.
The employer plan will be primary and Medicare will be secondary as long as he is actively at work.

Sally and James are married and they work for the same employer. Both have family coverage under the employer group plan, since the employer pays the full premium for all employees. What will the reimbursement be in the event that Sally or James has a claim?
Both Sally and James will receive full reimbursement from the plan, even if that results in a higher payment than the claim.
The spouse who has the sickness or accident will receive reimbursement up to the benefit maximum under the contract, and coverage for the well spouse will make up the difference up to 100% of the bill, but there will be no excess payment.
To qualify as an association group benefit program, an organization must:
Be formed for the purpose of setting up an insurance plan
Have no common business affinity
Exist for at least two years

A group plan will generally accept all employees without underwriting questions. What are the circumstances where the insurance company can accept or reject a member under a group plan?
The group has had excessive claims
An employee has declined coverage when eligible and later elects to join the group

An association seeking group insurance must meet all of the following requirements EXCEPT:
Must be formed for the purpose of buying insurance

In a non-contributory plan:
The employer may choose who they want to cover
The employer may exclude hazardous occupations
The employee must pay part of the cost
100% of the employees must be covered

Why do group policies include coordination of benefit (COB) provisions?
To allow the insured to collect double when they have two insurance plans
To limit payment to 100% of the loss and no more

COBRA eligibility may be triggered as a result of any of the following events EXCEPT:
An employee loses eligibility for group coverage as a result of reduction in hours
Termination of employment
An employee dies
An employee is promoted

When group insurance is compared to individual insurance, all of the following are true EXCEPT:
More people are covered by individual plans than by group plans
Maternity coverage covers the expenses for child delivery. Which of the following statements is correct regarding maternity coverage?
Individual policies may not offer this benefit or have limitations
Group policies treat maternity like any other sickness or accident

When an employee has enrolled in a group health plan, he/she will receive what document?
An abridged copy of the master contract
A certificate of coverage

All of the following are true about group insurance EXCEPT:
There are usually no health questions for group
The rates for larger groups can be based on that group’s claims experience
The rates may change on the anniversary of the contract
Every employee can tailor make his/her own plan within the group

Smaller employer group rates are usually determined by a preset table that deals with the demographic make up of that group of individuals. This process is known as:
Industry rating
Group rating
Community rating

An employee’s eligibility for group enrollment may be determined by all of the following EXCEPT:
Number of hours worked weekly or monthly
Job classification
Gender

The process by which an employee may enroll in an employer group without regard or restriction for any pre-existing condition is referred to as:
Automatic enrollment
Conditional enrollment
Prospective enrollment
Guaranteed Issue

While the definition of a pre-existing condition may vary to some degree, a pre-existing condition is one that:
The employee received treatment or was diagnosed prior to joining the group 12 months before employment.
Matilda is starting a new job on Monday. She has been covered under her prior employer’s group plan for 6 months, but she has been treated for a stomach disorder just prior to joining her new employer. When will she have full coverage under the new plan if they do not offer guaranteed issue?
Immediately: The new company may not look back on pre-existing conditions.
After six months, since Matilda has 12 months of credible coverage

HIPAA rules on renewability apply to:
Individual policies

Group insurance plans typically have a provision called coordination of benefits. This occurs when an insured is covered by more than one group plan. Why is this provision in the contract?
It provides the contract with a formal method to deny claims.
It allows the insured to choose which contract will pay the claim.
It prevents over insurance

Both spouses are covered by their employer group plans for full family coverage. Based on usual guidelines, how is the order of coverage determined?
The father’s coverage is always primary
The first qualification is which parent has been covered longest
Primary coverage is usually determined by which parent’s birthday comes earliest in the year.

Valerie has a health insurance policy that states that the insurance company may not cancel the policy, but they may increase the rates on a specified class of insureds. Valerie has a:
Non-cancellable policy
Optionally renewable policy
Guaranteed renewable policy

Karl has an individual health insurance policy with Wildlife Mutual. Wildlife also sells group contracts and his employer decides to purchase group coverage for his employees through that company. Karl enrolls in the group, but he also continues to pay premiums on his individual plan. When Karl has a claim, what can he expect?
Karl will receive full benefits from both contracts, since there is no coordination of benefits on individual plans.

Sometimes small businesses are grouped together in order to obtain insurance as one large group. This practice is a characteristic of which of the following?
A Blue Cross/Blue Shield plan
A Franchise Plan
A HMO (health maintenance organization)
A multiple employer trust or M.E.T.

HIPAA requirements deal with, on a federal level, groups of what size?
100 or more
50 or more

COBRA is intended to accomplish which of the following in regard to a group health policy:
Terminate coverage at the time of resignation or other separation from employment
Protect employees and their dependents from immediately losing health insurance under the group plan in the event of a separation by a listed number of events

All of the factors below are factors in underwriting a Group Health Insurance Plan EXCEPT:
Stability of the group
Type of industry
Individuals with certain health conditions

COBRA is a provision that allows a terminating employee to continue health insurance under his employers plan for a specified period of time. If an employer fails to allow this benefit, his consequences may include which of the following?
Private lawsuits under ERISA
IRS excise Taxes
Liability for past and future medical expenses during the qualified beneficiary’s continuation period.
All of the Above
You belong to a system that provides both health care services and health care insurance. You belong to:
PPO
HMO

An HMO found guilty of unfair trade practices can be subject to:
Imprisonment
Fines not exceeding $25,000
Fines up to $50,000
Both imprisonment and fines up to $50,000

If Sally belongs to an HMO, she can expect which of the following included in her benefits?
Annual physical
Immunization shots as required
Age related preventative treatment
All of the above

Steve is considering the HMO option offered by his employer. Which of the following can Steve expect if chooses this option?
Choice of any doctor he wishes to use.
Treatment for diagnosed illness only
Annual physical and preventative care

Before an HMO may offer coverage and benefits to the public, the HMO must do which of the following:
Obtain a certificate of authority from the state’s Department of Insurance.
A Health Maintenance Organization (HMO) uses a method called capitation. Which of the following describes capitation?
Sets a limit on the number of doctors that can be employed by the HMO.
Pays a fixed monthly fee to the health provider for each member regardless of the services they may use.

HMOs (Health Maintenance Organizations) typically:
Provide annual physicals and preventative services

Blue Sky HMO has an open panel plan. The plan is:
A group of physicians, who contract with the HMO for services, but maintain a private practice.

Carl is considering the HMO option on his employer’s plan. Which of following benefits may not be provided by the HMO?
Hospital care
Prescription Drugs

All of the following are medical cost management techniques designed to minimize overall health costs EXCEPT:
Preventative care
Requiring a second opinion for surgery
Differing the payment amounts for specified illnesses

An HMO is an IPA model HMO. The HMO members can expect any of the following EXCEPT:
Annual physicals and other wellness benefits
Choice of any surgeon

An HMO allows it members to choose approved physicians who are in private practice. This is called:
Staff Model HMO
Open panel HMO

Why do most insurance plans pay for benefits in an outpatient service facility?
It is more convenient for the patient
Out patient services do not require as much time
The cost is usually much less for the same service as an inpatient admission.

Henry works for GHI Corp and they have announced an annual re-enrollment for the HMO plan. Under most HMOs, Henry has how long to make his decision to join the HMO?
60 days
10 days
45 days
30 days

An HMO (Health Maintenance Organization) is considered to be what type of organization:
Regular licensed insurance company
A pre-paid service organization
A provider under an HMO arrangement could be:
A physician
A hospital
A diagnostic laboratory
All of the Above

Under HMO guidelines, rules are very specific about when a member should receive certificates and handbooks outlining their coverage. When must an HMO deliver this material to an enrolling member?
7 days
10 days

Sally is reading her HMO contract. She sees the term “Capitation” listed in the wording. The HMO uses Capitation to describe:
The maximum number of doctors who may be listed in the panel.
The per member fee paid to the state for licensing
The number of times a patient may have service each month
The flat fee the HMO pays the doctor per subscriber each month regardless of services rendered.

An HMO has a limited number of health care providers that are owned or employed by the HMO. This type of HMO is:
Gatekeeper system
Open Panel
Capitation System
Closed Panel
Which of the following gives a subscriber the broadest choice in health care providers without paying a penalty?
Closed-Panel PPO
Open-Panel PPO

Which of the following employ capitation as a plan for paying health care providers?
HMO

All the following statements about PPO arrangements are correct EXCEPT
No difference in deductible is permitted between care received by preferred and non-preferred providers.

A point-of-service (POS) plan is MOST like a Health Maintenance Organization (HMO) in which of the following ways?
Both are generally nonprofit organizations.
Both all subscribers to use outside providers.
Both use a primary care physician

A technique used to evaluate the clinical necessity, appropriateness, and/or efficiency of health care services, procedures, or settings is known as
Adverse selection
Retrospective review
External review
Utilization review

The principal difference between a preferred provider organization (PPO) and a point-of-service plan (POS) is that a
PPO allows the individual to use any service provider, whereas a POS requires the individual to use only pre-selected providers.
The principal difference between a preferred provider organization (PPO) and a point-of-service plan (POS) is that a
PPO allows the individual to use any service provider, whereas a POS requires the individual to use only pre-selected providers.

All the following are considered basic health care services offered by HMOs EXCEPT:
Rehabilitative and home health services
Of the following statements about HMOs, which is CORRECT?
They place special emphasis on preventive health care.
A Health Maintenance Organization (HMO) is known for stressing which type of medical care?
Preventative and wellness care to keep its members well.

An HMO plan is characterized by all of the following EXCEPT:
Community rating
Periodic wellness testing
Annual open enrollments
Free choices of any provider
The theory of providing preventative care under an HMO is:
Diagnosing and treating a problem at the earliest possible date will reduce health care cost in the long run.

Harold is enrolled in an HMO program through his employer. He notes in his benefit booklet that he must select a primary care physician for his medical treatment and consultation. There are specialists listed in the panel of doctors, but none are listed as primary care physicians. How will Harold be able to access these specialists?
He can choose to make an appointment with any physician on the list
He must consult his primary care physician and receive a referral to a specialist based on his primary doctor’s evaluation.

In an HMO a member may be required to have a primary physician to be the focal point for all treatment and service. All of the following are true about the primary care physician relationship EXECPT:
The primary care physician will have records from all physicians and other providers in the HMO to coordinate the patient’s treatment.
The primary care physician will provide referrals to specialists and other providers when required.
The primary care physician can decide what is covered and what is not for the member.

An HMO member can usually qualify for benefits when there is an emergency in all of the following EXCEPT:
While on vacation out of the HMO area
While on business out of the HMO area
Using an urgent care facility when the situation is critical
Using a non HMO emergency room when you are in the HMO area

Gilda is at home and she discovers that her child is running an extremely high fever. Gilda places a call to her primary care physician advising her that she is going to go to the emergency room. Which of the following is true?
As long as Gilda takes her child to an HMO approved hospital she will have benefits

An HMO will generally cover all of the following services from a hospital EXCEPT
In patient care, including ancillary services
Out patient surgery
X-ray and laboratory
Out patient prescription drugs

An HMO hospital benefit will usually provide all of the following services EXCEPT:
Specified mental health conditions
Hospital room and board
Eyeglasses and hearing aids

In addition to the basic health services an HMO may also offer which of the following services?
Health education programs (quit smoking, prepare for childbirth, etc.)

An HMO will offer basic services to all members. All of the following services are offered as a basic service EXCEPT
Doctor services
Preventive and routine care like annual physical and immunizations
Rehabilitation therapy
Durable equipment

Carl has enrolled in an HMO plan through his employer. The price is very low and attractive. Carl reads that he must use the doctor listed in his directory or lose benefits. This type of HMO is known as a (an):
Open panel HMO
Staff model HMO
Closed panel HMO

Betty has enrolled in an HMO through her employer. The booklet she receives indicates that she may choose any doctor or specialist without a referral, but approved HMO doctors will provide service at lower or no out-of-pocket cost. Betty is enrolled in:
Open panel HMO

Derrick has a plan with his employer that provides co-pays and a higher payment from the insurance company if he uses designated providers. He, may, however, use other providers if he chooses, but the reimbursement will be lower. Derrick’s employer most likely has what kind of plan?
IPA
HMO
PPO

A PPO Plan will usually have all the following features EXCEPT:
Higher reimbursement for in network providers
Office visit co-pays
Mandatory referrals to specialists

A PPO network may have a contract that involves any of the following EXCEPT:
The Contracting network
Physicians, hospitals and other providers
The participating employee

PPO networks contract with individual physicians and also with physician groups. What is the disadvantage of contracting with physician groups?
Contracting with physician groups provides higher discounts to services
Contracting with groups allows the network and the physicians to have one individual act on their behalf.
Physicians may leave the group from time to time to begin an individual practice and not be part of the network at the time of service

Max is enrolled through his employer’s group plan. While he has a generous reimbursement schedule for benefits, all of his medical care must be focused through a designated physician whom he may choose. The designated physician must make all referrals, but there is no restriction on the network. Max most likely has:
A POS plan (Point of Service)

Both HMO and PPO plans may allow out of network access. If a member elects to use out of network providers, he/she may expect any of the following results EXCEPT:
Lower benefits reimbursement
Lower quality of care

To be considered an out of network a provider must:
Provide service at multiple locations
Be in a non-recognized specialty
Not have a contract with the network

George is a participant in his employer’s medical plan. The plan requires that he select a primary care physician for all medical treatment. George suffers from severe allergies. He wants to see a specialist about his problem. George should:
Tell his primary care physician that he is going to see a specialist for allergies
Request that his primary care physician refer him to an allergist

Ken has a medical plan through his employer that provides a schedule of benefits and payment allowances for those benefits in his employee group certificate booklet. Ken most likely in enrolled in a:
PPO Plan
HMO Plan
Point of Service Plan
Basic Surgical Expense Plan

Joe is qualified for disability benefits as a result of an off the job accident. He returns to work after 9 months. Unfortunately, Joe has a heart attack and must go out on disability again. Which of the following is true?
Joe will continue benefits without a new waiting period.
Joe will have to satisfy a new elimination period since the new disability is not related to the first.

The factor that affects rates and benefits for a disability policy primarily is:
Occupational class
Interest on reserves
Morbidity tables

Bill is a small business owner. He is considering the purchase of a Business Overhead Expense plan (BOE). He can expect the policy to pay which of the following in the event he is disabled?
His salary up to the policy maximum
His home mortgage
Rent or mortgage on his business property

Frank has been out on disability and receives benefits under his current policy. His health has improved, but not enough for him to return to full time employment. He can work part time. He can continue to receive benefits at a reduced basis if his policy has which of the following provision?
Rehabilitative Employment Benefit
Recurrent Disability Benefit
Residual Disability Benefit

Kenneth is injured on the job. He is disabled to the point that he is unable to resume the duties of his job at injury, but he is capable of performing the duties of another occupation. His disability will be classified as:
Total lifetime disability
Total disability for two years and then partial disability
Partial disability

Which of the following policies will not reimburse for specified medical expenses?
Major medical policies
Daily hospital indemnity
Disability Income
A disability income plan is designed to pay benefits for which of the following?
Unemployment benefits
On the job injuries
Medical expense
Weekly or monthly income as a result of sickness or accident

All of the policies listed below will pay a death benefit EXCEPT:
Ordinary life policy
Disability income

Samantha has qualified for a disability benefit under her current plan. Samantha can expect to begin receiving benefits at the end of:
The disability period
The probationary period
The benefit period
The elimination period elected under the policy.
A disability policy can be provided on a noncancellable and guaranteed renewable basis because:
The benefits are fixed and will not increase at a later date

Arthur has been issued a health policy with a probationary period. He should understand which of the following?
The waiting period for accidents may be different than for sickness.

Bernie is disabled and wants to apply for disability under Social Security. In order to qualify, he must meet all of the following requirements, EXCEPT:
Total and permanent disability and he must not be able to work
He must have earned the necessary number of quarters of coverage
There is a 6 month waiting period

Rudy suffered an injury in an automobile accident. His policy covers disabilities as a result of an accident. In this case, he did not qualify for benefits. His injury most likely:
Was an outpatient procedure that did not require hospitalization
Did not meet the threshold to qualify for disability payments

Robert has been notified that he does not qualify for full disability benefits, but his policy does contain a provision for partial disability that he does qualify for. His current policy pays $1,000 per month in the event of a full disability. What benefit should he expect for a partial disability?
$750
$600
$300
$500

To protect against a disabled person receiving more income by being disabled than they can earn by working, most group disability plans will offset policy benefits with any of the following benefits, EXCEPT:
Wage continuation plans
Medicaid

Edward has been treated for kidney stones in the past. He is applying for disability benefits. His agent should explain to him that he might have which of the following added to his policy:
A longer elimination period for benefits
A waiting or probationary period before disabilities related to his pre-existing condition is covered.
Carl is unable to work due to a medical condition. He has been confined to his home for four months and wants to begin the process for filing a disability claim with Social Security. All of the following are true EXCEPT:
He should wait until he has completed 5 months of waiting.
He should be eligible for Medicare before he applies.
A business overhead expense policy will cover all of the following expenses EXCEPT:
Copy machine lease
50% of the owner’s salary

Larry, Moe and Curly are equal partners in a business that has been valued at $500,000 by their accountant. None of the three want to be in business with their partner’s families in the event one is disabled. The business entity should purchase which of the following?
Three Disability Buy-Sell policies for $100,000 each
Six Disability Buy-Sell policies for $100,000 each
Life insurance will cover this need
Three Disability Buy-Sell policies of $167,000 each
A disability plan that pays a benefit based on loss of earnings is considered which of the following?
A non-cancellable plan
A residual disability plan

The owner of CEO, Inc. is concerned about his key employees becoming disabled. He should consider a(n):
Key person disability plan

An insurance company must pay a disability benefit no less frequently than:
Weekly
Bi-weekly
Quarterly
Monthly

Hal has a disability income contract with Gigantic Mutual. If he qualifies for benefits, he should expect to receive:
A monthly income for a specified period of time

All of the following are true concerning Worker’s Compensation laws EXCEPT:
All states require employers to have Worker’s Compensation Insurance.
he definition of accident is determined by which of the following theories?
Accidental means and Accidental Bodily Injury

Rebecca is disabled and not able to work. When can she file a claim with the Social Security Administration for disability benefits?
After one year
As soon as she is diagnosed as total and permanently disabled
After 3 months (90 days)
After 5 months (150 days)

In order to qualify for Social Security disability, one must:
Be confined to the house or other facility
Have a disability that is expected to last longer than 12 months
Accidental Death and Dismemberment policy will usually pay benefits for which of the following?
Elliott loses three fingers working on his lawnmower
Manford loses the use of his left hand in an auto accident
Suzanne loses her eye as a result of a flying puck from a hockey game

A disability policy can be written as noncancellable, which means that premiums and benefits are guaranteed for the life of the contract because:
The benefits are not affected by inflation

Ralph has qualified for benefits under his disability plan. The company is required to pay him at what minimum frequency?
Weekly
Bi-weekly
Monthly

Xavier has a noncancellable disability policy. He has an accidental injury, but he is not disabled. He does receive a one-time payment for his accident. He is most likely receiving a benefit from which of the following?
A partial disability benefit
A nondisabling injury benefit

Most disability policies will not cover more that 60-70% of pre-disability compensation. Why is this true?
Disability income is a volatile product and the insurance company is hedging.
To go any higher would require the insurance company to increase reserves beyond legal limits.
To provide a higher level of income might create over insurance.

Hiram is looking at various disability contracts. He is concerned about the definition of disability as it varies on different contracts. The best definition from his standpoint is:
Total and permanent and not being able to work at all
Inability to perform any occupation
Inability to perform the duties of his own occupation

Jerome has a policy with a waiver of premium provision. How long must Jerome be disabled before his premiums will be waived due to a qualifying disability?
20 days for accidents
4 weeks for accidents or sickness
90 days for accidents, 6 months for sickness
3 or 6 months for any disability

Ben has a COLA (Cost of living adjustment) rider on his disability policy. Any adjustment to his benefit will be tied to:
Dow Jones Average
Gross National Product (GNP)
Consumer Price Index (CPI)

Harold has been issued a disability policy. In reading the policy, he finds that he must be insured for at least 15 or 30 days before he will be able to claim benefits for a disability due to a sickness. This time period is called the:
Elimination period
Probationary period

Hector has a disability policy that will pay partial disability benefits this means that Hector’s benefit will be:
Payable when he has had the policy for less than one year
Payable when he is not totally disabled

Reginald is trying to find a disability policy that will fit into his budget. In order to lower his premium, he should look at which of the following?
Consider a longer elimination period

Zebadiah is injured and unable to go to work due to his injury. His definition of disability reads: “Disability means the insured’s inability to perform the duties of any occupation for which he is reasonably qualified by education, training or experience.” This definition is:
Known as the “own occupation” definition and he can work at other jobs and still be considered disabled.
Known as a limited occupation and he must be hospital confined to receive benefits.
Known as rehabilitative disability and he must try to return to work as soon as possible to begin rehabilitative employment.
Known as the “any occupation” definition. This is more restrictive than the own occupation definition for disability.

George has a disability policy that states he must be disabled for 180 days before he can collect benefits. This feature is known as which of the following?
The deductible period
The elimination period

An elimination period for a disability policy can be considered which of the following?
A method of increasing the insurance company’s liability
A method for the insured to accept a short-term risk to lower the premium cost

Disability insurance can be used in a business for which of the following needs?
Funding a buy-sell agreement
Business overhead Expense protection
Key person insurance protection
All of the above

Sigmund’s disability policy has a “recurrent disability provision”. This means:
The plan will only pay for a disability once.
The insured will not have to serve a new elimination period if he goes out for the same disability within a set period of time.
Sets a limit on how many times any one disability can be claimed.

Mike Donaldson is involved in a serious auto accident. As a result of the accident, Mike is disabled and his passenger is also seriously injured. Mike has a disability income plan. Which of the following losses will the disability plan reimburse?
Medical expenses for his passenger
The other driver’s loss of income
Mike’s out-of-pocket medical expense
Mike’s loss of income

Dr. Haley, an ophthalmologist, is severely injured in a skiing accident. He has a business overhead expense policy (BOE) and he qualifies for benefits on that policy. All of the following are true EXCEPT:
He will be reimbursed for rent on his office
He will be reimbursed for leased equipment
He will be reimbursed for his home utilities

What is the elimination period for filing Social Security disability benefits?
360 days
180 days
90 days
150 day
Charles has been out on disability for a heart condition. He later has another episode of the same heart condition. Under a disability policy, this is referred to as which of the following?
A new spell of illness
A recurrent disability

Amanda has an Accident policy. She reads the phrase “accidental bodily injury”. She asked her agent to explain this to her. His correct response would be:
You will receive varying benefits depending on the type of accident
You will have less restrictions on your claims than if the policy read accidental means

Dennis has provided a disability plan for his top employees in the event they become sick or injured. What is this called?
Decreasing term disability
Key person disability

Lazarus has been disabled for 6 months. What other requirements must he meet to qualify for waiver of premium?
All premiums must be current
He must be under a physician’s care

Your disability policy states that you will qualify for benefits as a result of your inability to perform the duties of any job that you are qualified by prior training, education, or experience. It further states that you must lose income as a result of this circumstance. You most likely have
An income replacement policy

Your disability policy defines your eligibility for disability benefits as your inability, due to sickness or accident, to perform the essential duties of your occupation. That definition is known as
Any occupation for disability
Own occupation for disability

Your disability policy states that you will qualify for benefits in the event you are not able to perform the essential duties of your occupation as a result of a sickness or an accident for 5 years and any occupation for which you have had prior experience, education or training thereafter. You are a surgeon who has a neurological problem in his arm. You are not able to perform surgery, but you can practice internal medicine. What benefits might your expect when your disability is approved?
Full benefits until you recover or reach a specified age
Full benefits reduced by the income you earn as an internal medicine doctor.
Full benefits for five years and no benefits thereafter
Your disability policy states that to be considered disabled you must not be able to work as a result of an accident or sickness. That definition is known as:
Any occupation definition

Sam is involved in a serious accident. He will not be able to return to his job as an instructor for an undetermined amount of time. He also has training as a welder. His disability policy states that Sam will be considered disabled in the event he is not able to perform the duties of any occupation for which he has been trained, has education or prior experience. Sam is also not able to perform the duties as a welder. Sam should expect the following:
A full benefit until his health allows him to return to work.
Full benefits until he can return to work or work in another suitable occupation.
George is blinded in an accident. His disability policy begins benefits as soon as his disability is confirmed. This type of disability it known as:
Immediate
Presumptive

An example of presumptive disability might be any of the following EXCEPT:
Total Blindness
Complete loss of hearing
Amputation of a leg at the hip
Severance of a hand

All of the following Government benefit programs will provide benefits for medical benefits Except:
OASDI
Social Security Disability

Samantha has suffered a heart attack and she expects to be unable to work for the foreseeable future due to unexpected complications. She is covered by a group disability policy, and she has qualified for benefits under that plan. Samantha has also qualified for Social Security disability benefits after the prescribed waiting period. Samantha’s disability benefit is 60% of her salary at the time of disability. How will Social Security disability affect her benefits?
Samantha will receive 60% of her salary plus the benefits provided by Social Security.
Samantha will receive 100% of the Social Security benefits; however, her employer’s benefits will be reduced so her total benefit will not exceed 60% of her salary at the time of disability, including what Social Security pays.

Judy is injured while she is on her job. Her company covers Judy with short-term disability, long-term disability and Workers Compensation. What plan will pay benefits to Judy in the event she is unable to work as a result of the on-the-job injury?
Workers Compensation will pay up to specified limits with the employer’s long-term disability plan making up any short fall of total income benefits after an elimination period.

Richard purchases a disability policy while he is a bookkeeper in a family business. He leaves the family business to work on an offshore oil platform and he becomes disabled. His policy states that he has a $1,000 monthly benefit for a qualifying disability, but he receives $750.00 per month. His policy most likely has a:
Residual disability clause
Presumptive disability clause
Own occupation definition
Change of occupation clause

A change of occupation provision will allow the insurance company to do any of the following at the time of claim EXCEPT:
Pay the benefits stated in the policy
Increase the premiums for that individual

Walter is reading his disability policy and notices that there is a clause concerning “Rehabilitation”. He is trying to understand the difference between the rehabilitation benefit as opposed to partial disability. The rehabilitation benefit differs from partial disability in the following way:
Rehabilitation requires a period of total disability and usually provides a benefit for a specified time to transition back to work

James has been out on disability for three years. He has recovered from his condition to the point where he can return to work on a part time basis, but he may never be able to return full time. In order for James to receive benefits on this basis, his disability plan should have which provision?
Rehabilitative employment
Residual disability
Partial disability

A short-term disability policy will provide short benefit periods of less than two years. In most cases the benefit period is shorter. One common exclusion for short-term disability policies is:
Only accidents qualify for benefits
On the job injuries are not covered

Hal is covered by a short-term disability through his employer. These plans may be designed with any of the following features EXCEPT:
Benefits may be paid as a percent of income
Benefits may be paid as a flat indemnity amount
Benefits will coordinate with Worker’s Compensation
Long-term disability has a benefit that will provide income payments for longer time periods. The maximum duration of a long-term disability payment is usually:
10 years only
To age 65 in all cases
Age 65 or a specified period of time if the insured is over a specified age when disabled

A person that is disabled under Social Security is eligible for Medicare benefits after how long?
5 months (150 days)
24 months (720 days)
29 months (870 days)

Harry has been disabled for 2.5 years. He has been on his employer group through COBRA most of that time, but his coverage expired due to time limits. He is not eligible for Medicare Part A and Part B. What is the status of his employer plan?
His employer plan has expired and it is not an issue in this case.

Which type of policy generally requires an elimination period to qualify for benefits?
Dread disease policy
A major medical plan
A dental plan
A disability plan

A disability plan states that there is a 14-day elimination period to qualify but this may be waived. The waiver will generally apply to what event?
Pre-existing conditions
Accidental injury

Anderson Carpet Company has purchased business overhead expense insurance. All of the following are covered under this policy EXCEPT:
The employer’s salary

The insurance company that Johnathan works for has classified Jonathan as totally disabled. Under the waiver of premium, how long is the waiting period?
30 days
60 days
1-3 months
3-6 months
A group long-term disability plan provides benefits under an employer-sponsored plan. A group plan may contain all of the following features EXCEPT:
Benefits will be coordinated with Social Security disability benefits.
Benefits will not be paid for on-the-job losses
The benefit is not usually stated as a percent of income

An individual disability will be characterized in all of the following ways EXCEPT:
The benefit is a stated dollar amount based on a percentage of income per month
The premium is established by the insured’s occupation and health status
The benefit may be paid annually

What is the maximum number of days in a Skilled Nursing Facility is covered under Medicare Part A?
20 days
60 days
80 days
100 days

Medicare supplement plans must contain a provision that allows a free look period. What is the minimum time for a free look?
10 days
30 days

Medicare Part A provides which of the following benefits:
Hospice Care

Medicaid is a program that:
Is co-funded by states and the federal government
Provides benefits for eligible low income individuals
Is administered by individual states
All of the above

Medicare will require the individual participant to pay a premium for which of the following parts?
Part A
Part B
Part D
Part B and Part D

Mark is soon to reach age 65. At age 65 he will become eligible for which of the following:
Medicare Part A
Medicare Part B
Medicare Part D
All of the above

The free look for Medicare Supplement Plans and Long Term Care policies is:
10 days for Medicare Supplement, 45 days for Long term Care
30 days for Medicare Supplement, 60 days for Long term Care
30 days for both Medicare Supplement and Long Term Care

Medicare Part B provides benefits for all of the following benefits EXCEPT:
Durable medical equipment at home
Outpatient Prescription drugs

Medicare Part A pays for hospital expenses. What is the maximum out-of-pocket for the patient in this plan?
The per admission deductible
The difference between a private and semi-private room charge
There is not limit on out-of-pocket

The Smithermans are covered by Medicare Part A & B. There are concerned that this will not cover their entire medical bill in the event there is a sickness or an accident. The Smithermans should consider purchasing a:
Determine if the are eligible for Medicaid
Purchase a Medicare Supplement plan that will cover some of the cost not paid by Medicare.

Medicare was instituted for the primary reason of:
Providing medical services for the indigent
Providing medical services for individuals who are 65 or older

Medicare Part A will pay for the first 60 days of hospitalization in full after the required deductible. How long must a member be out of the hospital before a new benefit period begins?
30 days
90 days
60 days

Part A Medicare will provide services for all of the following EXCEPT:
Home health care
Surgery

Long Term Care benefits may be available through all of the following, EXCEPT:
Individual Policy
Medicare Part B

If an individual covered under Medicare Part A is in the hospital beyond 90 days, benefits may be subject to:
Deductibles
Co-insurance
Out-of-pocket maximum
Lifetime reserve of equal to a maximum of 60 days of hospitalization
Long Term Care policy has which of the following renewability options:
Non-Cancellable
Guaranteed renewable
None of the Above
All of the Above

Medicare Part B includes benefits for:
Doctor’s services

Medicare is primarily funded through:
General fund of the federal government
FICA payroll taxes

All of the follow are true about Medicare Part A EXCEPT:
There is a deductible to enter the hospital
There is a coinsurance beyond 60 days of confinement
Outpatient prescription drugs are subject to the doughnut hole

A fully insured individual qualifies for Medicare at age___ .
Age 62 if a widow
At any age with end stage renal failure

All of the following Government benefit programs will provide benefits for medical benefits EXCEPT:
OASDI
Social Security Disability

Which of the following is not a limited risk policy?
Travel Accident
Medicare Supplement

All of the following statements regarding Medicare Part A are true, EXCEPT:
Covers hospitalization
Coverage is mandatory
Covers hospice care
Covers outpatient prescription drugs
A long term care policy has an elimination period before benefits are payable. How long is the usual elimination period?
365 days
90 days only
30 days or longer
Medicare was enacted in 1965 and took effect in 1966. Medicare is part of what larger system?
OASDI
Railroad Retirement
Social Security

Health polices can be all of the following, EXCEPT:
An indemnity Contract
A valued Contract

Nathan incurs a $5,500 hospital bill. His major medical plan has a $500 deductible. Expenses beyond the deductible are payable at 80%, not to exceed $2,000 out-of-pocket expense. Nathan had $400 of charges that he paid before entering the hospital. How much will his insurance company pay towards his hospital bill?
$4,320

Martin has gall bladder surgery that requires a 4 day hospital stay. His policy has a $500 deductible and pays 80% with a maximum out-of-pocket of $5,000. The hospital bill is $8,500. What is Martin’s part of the bill?
$6,400
$6,800
$1,700
$2,100
Charles has a major medical policy that has a $1,000 deductible and a maximum out of pocket of $2,000. He has 80/20 coinsurance. He incurs a medical bill of $7,000. What will he have to pay?
$4,800
$2,200

Sarah wants to have her face lifted to look better. There is no medical necessity for this procedure. The insurance company will:
Pay the benefit if Sarah has been covered for two years
Pay a reduced benefit since it is not medically necessary
Exclude the benefit entirely

Harold has a policy that provides $5,000 basic hospital expense with a supplemental major medical that has a $500 deductible and 80/20 thereafter. He receives a surgeon’s bill for $3,000. How much will Howard pay out-of-pocket?
$0
$500
$1,000
Samantha has a basic plan with a supplemental major medical through her employer. The deductible that will be applied when she is eligible for major medical benefits is called which of the following?
An integrated deductible
A corridor deductible

Marilyn has a major medical policy that has a $500 deductible and pays 80% of the benefit after the deductible. Marilyn has a hospital stay that results in a $21,000 bill. How much will Marilyn owe for her part of the bill?
$2,100
$4,100
$500
$4,600

Max has a policy that pays part of his medical bill without any deductible. He most likely has a(n):
Disability Income
Basic Medical Expense Plan

A hospital income plan pays benefits based on which of the following?
Aggregate stop loss
Reimbursement schedule
Co-insurance
Flat payment per day in the hospital

Harry has a major medical plan that has a new deductible for each illness or accident he incurs. What is the name for this type of deductible?
Annual deductible
Carryover deductible
Per cause deductible

Major Medical Plans usually allow benefits for all of the following EXCEPT:
Non-occupational accidents
Diagnostic testing
Surgical Procedures
Experimental drugs and treatment
Gail has been in the hospital and has a total bill of $9,000. Her insurance policy contains a $200 deductible and a $5,000 maximum out-of-pocket provision. Benefits are paid at 80%/20%. How much will Gail have to pay on this bill?
$2,000
$1,960

Harland is confined to the hospital for 10 days for surgery. He has a hospital expense policy that provides $100 per day for a room, plus $1,000 for miscellaneous hospital charges and $500 for surgery. The hospital charges $200 per day for room, $1,500 for miscellaneous services and the doctor charges $1,500 for his fee. How much will Harland’s policy pay?
$5,000
$1,500
$2,200
$2,500

Barney has a surgical expense policy listed as a “$1,000 Basic Surgical Expense Policy”. This means which of the following?
Any surgery will pay $1,000
The plan will pay $1,000, only if the surgeon is board certified
Only the most complex surgery will be reimbursed at $1,000 and other procedures by the dollar value of procedure.

Caroline recently was admitted to the hospital. During this visit, she incurred a $7,000 charge. Her major medical plan has a $500 deductible and pays 80% after the deductible is satisfied. Her plan has a maximum out-of-pocket of $2,500. How much did Caroline owe for her part of the bill?
$2,500
$2,200
$1,800

Medical expense plans are what type of contracts?
Point value
Substandard Risk
Reimbursement

A major medical expense plan:
Provided only through a group plan
Supplements Medicare
Has large lifetime benefit maximums

Major medical may have any of the following deductibles, EXCEPT:
Flat
Stacked

Which of the following is not covered under a basic medical insurance plan?
Private nursing
Income Replacement

Susan has paid the maximum out-of-pocket required on her major medical plan for the year. Any additional claims will be reimbursed at what level?
80%
90%
100%

George has a hospital indemnity plan that pays $100 per day while he is an inpatient. He was admitted to the hospital for five days. What benefit should he expect?
Nothing if he did not have surgery
$500

Walter has a major medical policy with a $500 deductible, 80/20 coinsurance and a $1,500 maximum out-of-pocket. His hospital bill is $6,500. How much will the insurance company pay?
$5,200
$1,500
$1,800
$4,800

In a basic hospital expense policy, the ancillary hospital charges are usually paid as follows:
Whatever is considered reasonable and customary
A multiple of the daily room and board rate

The death benefit for an Accidental Death and Dismemberment policy is referred to as which of the following?
Maximum benefit
Principal Sum

Jim participates in an employer paid disability income plan. He qualifies for and receives $6,500 in benefits. How much of these benefits must he include in his taxable income for that tax year?
He may exclude the first $100 per week of benefits
He has no tax due at all
Only the first 13 weeks is taxable
All is taxable, since the employer paid all of the premiums
Disability income benefits are paid tax-free to the insured on which of the following bases?
The employer pays the entire premium
It does not matter who pays the premium
The insured pays 100% of the premiums with after tax dollars
Kent is calculating his income tax. He is itemizing his deductions. Which of the following is not an allowable medical expense as a medical deduction?
Dental Expenses
Hearing Aids
Premiums for health insurance
Disability Income premiums

Benefits for an employer sponsored disability income plan are taxable in the following situations:
The employee pays 100% of the premium with after-tax dollars
The employer shares the premium with the employee
The benefits received from a non-contributory group disability program will be:
Free of tax for the first $100 per week
Fully taxable to the employee receiving benefits.

All benefits for individual health insurance policies are taxed as follows EXCEPT:
Benefits received from a Hospital Indemnity plan are taxable to the extent the benefits exceed the premium paid.
Which of the following statements it not true about the taxation of health insurance policy premiums?
Premiums for individual health, accident, disability or long-term-care policies are never deductible

Monica works for the Global Map Company. Global Map provides accident, health, dental and vision coverage for it’s employees. Allow of the following are true statements about employer provided coverage EXCEPT:
Global Map can deduct the premiums for the group coverage as a business expense.
The employees are not taxed for the premiums.
The benefits that the employees receive for health and accident coverage are tax-free
The benefits that the employees receive for group long-term disability coverage are tax-free

Michelle’s company does not offer employer paid disability coverage under their group plan. Michelle opts to pick up the coverage and pay the premium herself. Which of the following is true?
Michelle’s benefits would be tax deferred.
The benefits would be subject to FICA for the first six calendar months following her disability.
Both of the above.
Neither of the above.
Sally is the sole proprietor of the Sally Pie Company. She has purchased health insurance and long-term care insurance. How much of the premiums for her health insurance and long-term care insurance are deductible from her gross income?
100%

When are individual Medicare supplement insurance premiums deductible as medical expense?
From the first dollar paid for premiums
After the individual has met the policy deductible
When combined with other unreimbursed medical expense the amount exceeds 10% of the individual’s adjusted gross income.

Maggie is 35 years of age. She has purchased a long-term care policy. If her combined premiums and unreimbursed medical expense exceed 7.5% (10% in 2013), she can deduct ________ per year of her premiums for her long-term care policy.
$310

Maggie’s grandmother is 72 years old. She has purchased a long-term care policy. If her combined premiums and unreimbursed medical expense exceed 10%), she can deduct ________ per year of her premiums for her long-term care policy.
$1,000
$2,600
$3,850

All of the following statements are true regarding employer paid long-term care insurance premiums EXCEPT:
The premiums are deductible as a business expense
The coverage can be part of a flexible spending account

The Boxer Box Company has a long-term care policy that was originally issued in January 1995 and does not fulfill all of the criteria required of LTC policies issued after January 1997 to meet tax-qualified status. Which statement about this policy is true?
The policy is invalid and they must provide a new policy that meets current requirements.
The policy was automatically tax-qualified under a grandfather rule.

The federal standards established new eligibility requirements in January 1997. Which of the following is not part of the new standards that are required for tax-qualification?
A licensed health care professional must certify that the individual is chronically ill.
The certification must state that the condition is expected to last at least 120 days

In order to meet the federal standards for eligibility for tax-free benefits, the insured must –
Be unable to perform at least two of the activities of daily living for at least 90 days
Need supervision because of cognitive impairment
Be recertified as chronically ill annually
All of the above

Max is receiving Social Security Disability Insurance (SSDI) benefits. At what income level can these benefits be taxable if he files a tax return as an individual?
$10,000
$15,000
$20,000
$25,000

Erik is receiving Social Security Disability Insurance (SSDI) benefits. He files a joint return with his spouse showing income of $60,000. What portion of his benefits could be taxed?
10%
30%
85%
Wendy’s adjusted gross income for 2012 is $100,000. Her unreimbursed medical expenses for health, accident and long-term care premiums for 2012 amount to $8,200. She will be able to take a tax deduction of –
$8,200
$5,000
$1,200
$700

Janet is self-employed. Which of the following statements is not true about the limitations of her deductions for health insurance premiums?
Her deduction is not limited to amounts over 7.5% of her adjusted gross income.
She can deduct 100% of the cost of health insurance for herself, her spouse and dependents.
The deduction can exceed the amount of her earned income

Health insurance reimbursements generally are not taxable income to individuals. All of the following statements about tax liability are true EXCEPT:
If your reimbursements exceed your actual expenses the excess can be included in your income.
Hospital, surgical or medical expenses reimbursed through your employer’s health plan are not taxable.
There is dollar limit on the amount of tax-free medical reimbursements you can receive in a year.

The Color Candy Company provides both short-term and long-term disability to all eligible employees. They provide this benefit at no cost to the employees, and deduct the premiums from its income as a business expense. If an employee receives benefits under either of the plans –
They are tax-free
They are fully taxable

Jeff and Nancy Brown purchased individual disability policies from an insurance company. They paid their premiums with after-tax dollars. Any benefits received due to a disability are _______.
Fully taxable

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