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Quizzes Created: 4 | Total Attempts: 10,026

Questions: 50 | Attempts: 519 | Updated: Mar 22, 2023

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Questions and Answers

1.

The Coordination of Benefits clause found in group health Master Contracts is used to:
- A.
  
  Avoid double payment of benefits to an insured who has duplicate group coverages
- B.
  
  Integrate Disability income benefits with Major Medical benefits
- C.
  
  Investigate the claims history of an insured
- D.
  
  Avoid duplicate claims to an employer for the same employee
Correct Answer
A. Avoid double payment of benefits to an insured who has duplicate group coverages

Explanation
The Coordination of Benefits clause in group health Master Contracts is used to avoid double payment of benefits to an insured who has duplicate group coverages. This means that if an insured individual has multiple group health insurance plans, this clause ensures that the total amount of benefits received does not exceed the actual expenses incurred. It prevents the insured from receiving duplicate payments for the same medical expenses from different insurance plans, thereby avoiding unnecessary financial burdens on insurers and preventing potential fraud or abuse of the system.

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2.

In which of the following health policies are both the renewability and the premiums guaranteed?
- A.
  
  Optionally Renewable
- B.
  
  Noncancellable
- C.
  
  Guaranteed Renewable
- D.
  
  Conditionally Renewable
Correct Answer
B. Noncancellable

Explanation
Noncancellable health policies guarantee both the renewability and the premiums. This means that the policy cannot be canceled by the insurer as long as the premiums are paid on time, and the premiums cannot be increased by the insurer. It provides the policyholder with the assurance that their coverage will not be terminated or altered as long as they continue to fulfill their premium obligations.

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3.

An Accident and Health policy Notice of Claim provision requires that an insured give written notice to the insurer within a MAXIMUM of how many days after a loss?
- A.
  
  15
- B.
  
  20
- C.
  
  30
- D.
  
  45
Correct Answer
B. 20

Explanation
The Notice of Claim provision in an Accident and Health policy requires the insured to provide written notice to the insurer within a maximum of 20 days after a loss. This means that the insured must inform the insurance company about the claim within 20 days to ensure that it is valid and can be processed. Waiting longer than the specified time limit may result in the claim being denied.

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4.

An applicant for insurance submits an application to an insurer for underwriting but does not forward any premium payment with the application. Legally, the applicant is making:
- A.
  
  An inquiry for an offer
- B.
  
  An offer
- C.
  
  A counteroffer
- D.
  
  An acceptance
Correct Answer
A. An inquiry for an offer

Explanation
The applicant is making an inquiry for an offer because they have submitted an application to the insurer without making any premium payment. This indicates that they are interested in obtaining insurance coverage and are seeking information about the terms and conditions of the policy. However, since no payment has been made, it cannot be considered as a formal offer.

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5.

In an Accidential Death and Dismemberment (AD&D) policy, the term "capital sum" refers to:
- A.
  
  The benefit paid for death caused by a dread disease
- B.
  
  The monthly disability income paid if an insured loses a limb or the sigh in one eye
- C.
  
  A lump sum payment made when disease causes the amputation of an arm or a leg
- D.
  
  A lump sum payment made for an accidental dismemberment
Correct Answer
B. The monthly disability income paid if an insured loses a limb or the sigh in one eye

Explanation
The term "capital sum" in an Accidental Death and Dismemberment (AD&D) policy refers to the monthly disability income paid if an insured loses a limb or the sight in one eye. This means that if the insured experiences a covered accident resulting in the loss of a limb or sight in one eye, they will receive a monthly payment to help compensate for the disability.

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6.

M and N own a small interior design studio that employs six people. The owners are concerned about the financial continuation of the business if either of them should become permanently disabled. In this situation, a producer would MOST likely recommend which of the following types of contracts?
- A.
  
  Basic Hospital
- B.
  
  Disability Buy-Out
- C.
  
  Comprehensive Major Medical
- D.
  
  Short-Term Disability Income
Correct Answer
B. Disability Buy-Out

Explanation
A producer would most likely recommend a Disability Buy-Out contract in this situation. This type of contract provides financial protection to the owners of the interior design studio in case either of them becomes permanently disabled. It ensures that the business can continue to operate smoothly by providing funds for the buy-out of the disabled owner's share of the business. This helps to secure the financial continuation of the business and mitigate the potential impact of a disability on its operations.

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7.

Which of the following statements is CORRECT about a Disability Income policy with a Guaranteed Insurability rider?
- A.
  
  The insured may periodically increase the amount of benefits payable under the policy.
- B.
  
  The insured may assign the policy to a member of the insured's family.
- C.
  
  The insurer is not permitted to cancel the policy.
- D.
  
  The insurer will issue the policy without a medical examination.
Correct Answer
A. The insured may periodically increase the amount of benefits payable under the policy.

Explanation
A Disability Income policy with a Guaranteed Insurability rider allows the insured to periodically increase the amount of benefits payable under the policy. This means that the insured has the option to adjust their coverage as their needs change over time, without having to go through the underwriting process again. This can be beneficial in ensuring that the policy remains adequate and provides sufficient coverage in the event of a disability.

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8.

An insured becomes disabled three years after his Disability Income policy is issued. The disability is caused by a condition that existed prior to the policy issue date but was not specifically excluded from coverage. In this situation, the insurer will most likely take which of the following actons?
- A.
  
  Pay the full claim
- B.
  
  Pay the claim for a maximum of six months only
- C.
  
  Deny the claim on the basis of misrepresentation
- D.
  
  Deny the claim because it involves a pre-existing condition
Correct Answer
A. Pay the full claim

Explanation
The insurer will most likely pay the full claim because the disability was caused by a condition that existed prior to the policy issue date but was not specifically excluded from coverage. This means that the insurer cannot deny the claim based on a pre-existing condition.

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9.

A married insured has an Accidental Death and Dismemberment (AD&D) policy that names his brother as the primary beneficiary and his son as the contingent beneficiary. If the insured and his brother are both killed instantly in a train accident, the policy would be paid to the following?
- A.
  
  The insured's estate
- B.
  
  The brother's estate
- C.
  
  The insured's son
- D.
  
  The insured's spouse
Correct Answer
C. The insured's son

Explanation
In this scenario, the insured's brother is named as the primary beneficiary and the insured's son is named as the contingent beneficiary. The primary beneficiary receives the policy payout if the insured dies, but if the primary beneficiary is also deceased, the contingent beneficiary becomes the next in line to receive the payout. Since both the insured and his brother are killed in the accident, the policy would be paid to the insured's son, who is the contingent beneficiary.

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10.

Health insurance policies are offered on a "take it or leave it" basis and referred to as which of the following types of contracts?
- A.
  
  Aleatory Contracts
- B.
  
  Valued Contracts
- C.
  
  Unilateral Contracts
- D.
  
  Contracts of Adhesion
Correct Answer
D. Contracts of Adhesion

Explanation
Contracts of adhesion refer to contracts where one party has significantly more bargaining power than the other and the terms of the contract are presented on a "take it or leave it" basis. In the case of health insurance policies, the insurance company typically has more power and control over the terms of the contract, while the insured individual has limited ability to negotiate or modify the terms. Therefore, health insurance policies can be considered as contracts of adhesion.

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11.

The Consideration clause in an accident and health policy states the:
- A.
  
  The applicant pays the initial premium
- B.
  
  Conditions under which benefits are paid
- C.
  
  Premiums will be refunded during the free look period
- D.
  
  Certain claims will be excluded under the policy
Correct Answer
A. The applicant pays the initial premium

Explanation
The consideration clause in an accident and health policy states that the applicant is responsible for paying the initial premium. This means that in order for the policy to be in effect, the applicant must make the required payment. The consideration clause is a common provision in insurance contracts and ensures that both parties fulfill their obligations for the policy to be valid.

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12.

Under an Accidental Death and Dismemberment (AD&D) policy, insurable interest must exist at which of the following times?
- A.
  
  When a change of beneficiary is requested
- B.
  
  At the inception of the policy
- C.
  
  When a beneficiary other than a relative is named
- D.
  
  At the time a claim is submitted
Correct Answer
B. At the inception of the policy

Explanation
Insurable interest must exist at the inception of the policy under an Accidental Death and Dismemberment (AD&D) policy. This means that the policyholder must have a financial interest or relationship with the insured person at the time the policy is taken out. This ensures that the policyholder has a legitimate reason to protect the insured person's life or well-being. Having insurable interest at the inception of the policy helps prevent fraudulent or speculative insurance practices.

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13.

Group health insurance specifies that what percentage of eligible individuals MUST be offered coverage under a noncontributory plan?
- A.
  
  25
- B.
  
  50
- C.
  
  75
- D.
  
  100
Correct Answer
D. 100

Explanation
Group health insurance typically requires that 100% of eligible individuals must be offered coverage under a noncontributory plan. This means that all eligible individuals within the group must be provided with health insurance without any contribution or cost-sharing requirements on their part. This ensures that everyone in the group has access to health insurance coverage, regardless of their individual financial situation or ability to pay.

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14.

An individual who has had a heart murmur since birth is likely to be issued an individual health policy that includes:
- A.
  
  A Guaranteed Insurability rider
- B.
  
  An Exclusionary/Impairment rider
- C.
  
  A Waiver of Premium rider
- D.
  
  A Double Indemnity rider
Correct Answer
B. An Exclusionary/Impairment rider

Explanation
An individual who has had a heart murmur since birth is likely to be issued an Exclusionary/Impairment rider in their individual health policy. This rider is typically added to exclude coverage for any medical expenses related to the pre-existing condition, in this case, the heart murmur. The purpose of this rider is to limit the insurance company's liability for potential future claims associated with the pre-existing condition. By adding this rider, the insurance company can still provide coverage for other medical conditions but exclude coverage for the heart murmur.

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15.

Which of the following definitions of disability would cover a permanent partial disability?
- A.
  
  Own occupation
- B.
  
  Any occupation
- C.
  
  Residual disability
- D.
  
  Presumptive disability
Correct Answer
C. Residual disability

Explanation
Residual disability is the most suitable definition of disability that would cover a permanent partial disability. Residual disability refers to a condition where an individual is unable to perform all the duties of their occupation due to a disability, but can still perform some of the duties. This definition acknowledges that the disability is permanent and only affects certain aspects of the individual's ability to work. Therefore, it is the most appropriate option for covering a permanent partial disability.

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16.

Medicare Supplement policies are primarily designed to:
- A.
  
  Offset the high cost of Medicare
- B.
  
  Provide additional retirement income to supplement Social Security retirement benefits
- C.
  
  Provide additional benefits beyond those provided by Medicare
- D.
  
  Provide a reinsurance network that spreads the Medicare risk among private insurance companies
Correct Answer
C. Provide additional benefits beyond those provided by Medicare

Explanation
Medicare Supplement policies are designed to provide additional benefits beyond those provided by Medicare. These policies are meant to fill in the gaps in coverage that Medicare may not cover fully, such as deductibles, copayments, and coinsurance. They can also provide coverage for services that Medicare does not cover, such as vision, dental, and hearing. Medicare Supplement policies are purchased in addition to original Medicare to provide extra coverage and help individuals manage their healthcare costs more effectively.

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17.

A health care plan that reimburses a flat fee for medical care it provides at a clinic it owns and operates is referred to as:
- A.
  
  A Health Maintenance Organization (HMO)
- B.
  
  Medicaid
- C.
  
  Meicare
- D.
  
  A Multiple Employer Trust (MET)
Correct Answer
A. A Health Maintenance Organization (HMO)

Explanation
A health care plan that reimburses a flat fee for medical care it provides at a clinic it owns and operates is referred to as a Health Maintenance Organization (HMO). HMOs are a type of managed care organization that offer comprehensive health care services to their members for a fixed monthly fee. They typically have their own network of doctors and hospitals and emphasize preventive care. The flat fee payment structure encourages cost-effective and efficient care delivery, as the HMO assumes financial risk for the services provided.

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18.

Which of the following reports may include information obtained by a telephone call to the proposed insured?
- A.
  
  Medical Information Bureau (MIB) report
- B.
  
  Attending physician's report
- C.
  
  Inspection report
- D.
  
  Precertification Review
Correct Answer
C. Inspection report

Explanation
The inspection report may include information obtained by a telephone call to the proposed insured. This is because an inspection report involves a physical examination of the proposed insured's property or assets, and during this process, the inspector may need to contact the insured via telephone to gather additional information or clarify certain details. Therefore, the inspection report may contain information obtained through a telephone call.

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19.

Which of the following definitions MOST accurately describes the Probationary Period?
- A.
  
  The period of time from the date of the loss until the benefits begin
- B.
  
  The period of time from the date of the loss until benefits are actually received by the policyowner
- C.
  
  The waiting period a new hire must satisfy prior to becoming eligible for group health coverage
- D.
  
  The period of time once a claim is received by the insurance company before it pays benefits to the policyowner
Correct Answer
C. The waiting period a new hire must satisfy prior to becoming eligible for group health coverage
20.

Suicide, pre-existing conditions and self-inflicted injuries are dealt with in which of the following features?
- A.
  
  Extension of coverage
- B.
  
  Benefits clause
- C.
  
  Riders
- D.
  
  Exclusions
Correct Answer
D. Exclusions

Explanation
Exclusions are the features that deal with suicide, pre-existing conditions, and self-inflicted injuries. Exclusions are specific conditions or situations that are not covered by an insurance policy. In this case, suicide, pre-existing conditions, and self-inflicted injuries are excluded from coverage, meaning that the insurance policy does not provide benefits or coverage for these situations.

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21.

When delivering a policy to a client, a producer should take all of the following actions EXCEPT:
- A.
  
  Collect any premiums due
- B.
  
  Fully explain all exclusions and/or riders
- C.
  
  Keep the policy in the producer's office for safe-keeping on behalf of the client
- D.
  
  Review all benefits provided by the policy
Correct Answer
C. Keep the policy in the producer's office for safe-keeping on behalf of the client

Explanation
The producer should not keep the policy in their office for safe-keeping on behalf of the client. The policy should be given to the client for their safe-keeping. The producer should collect any premiums due, fully explain all exclusions and/or riders, and review all benefits provided by the policy.

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22.

Which of the following health policies requires a beneficiary designation?
- A.
  
  Travel Accident
- B.
  
  Medicare Supplement
- C.
  
  Blanket
- D.
  
  Long Term Care
Correct Answer
A. Travel Accident

Explanation
Travel Accident policies typically require a beneficiary designation. This means that the policyholder must specify who will receive the benefits in the event of their death due to a covered accident while traveling. This is important because it ensures that the benefits are paid out to the intended recipient and helps to avoid any confusion or disputes regarding the distribution of the policy proceeds. The other health policies listed, such as Medicare Supplement, Blanket, and Long Term Care, may not necessarily require a beneficiary designation as they may have different payment structures or coverage provisions.

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23.

Which of the following statements is CORRECT about a Waiver of Premium provision in a Disability Income policy?
- A.
  
  It allows the insurer to deduct premiums due from the disabled insured's benefit payments.
- B.
  
  It allows the insurer to increase the amount of premium during the insured's time of disability.
- C.
  
  It allows the insured to extend the length of the Grace Period while disabled
- D.
  
  It allows the insured to maintain a policy in force while disabled and unable to pay premiums.
Correct Answer
D. It allows the insured to maintain a policy in force while disabled and unable to pay premiums.

Explanation
The correct answer is that a Waiver of Premium provision in a Disability Income policy allows the insured to maintain a policy in force while disabled and unable to pay premiums. This means that if the insured becomes disabled and is unable to work, the insurance company will waive the premium payments for the policy, allowing the policy to remain active and providing the insured with the benefits outlined in the policy. This provision provides financial protection for the insured during a period of disability.

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24.

Five years ago, at age forty-five, X stated that he was forty years old on a disability income insurance application. X now submits a claim and the insurer discovers X's true age. The insurer will most likely take which of the following actions?
- A.
  
  Deny the claim due to the material misrepresentation on the applicaton
- B.
  
  Pay the claim as filed because the policy becomes incontestable after two years
- C.
  
  Pay the claim and cancel the policy
- D.
  
  Adjust the benefits downward according to the benefits that X would have been entitled to based on the premiums
Correct Answer
D. Adjust the benefits downward according to the benefits that X would have been entitled to based on the premiums

Explanation
The correct answer is "Adjust the benefits downward according to the benefits that X would have been entitled to based on the premiums." This is because X made a material misrepresentation on the disability income insurance application by stating that he was forty years old when he was actually forty-five. The insurer is likely to adjust the benefits downward based on the premiums that X would have been entitled to if his true age had been disclosed. This is a fair course of action as it takes into account the misrepresentation while still providing some benefits to X.

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25.

Which of the following provisions designates to whom claim payments are made?
- A.
  
  Time of Payment of Claims
- B.
  
  Claim Forms
- C.
  
  Notice of Claim
- D.
  
  Payment of Claims
Correct Answer
D. Payment of Claims

Explanation
The provision that designates to whom claim payments are made is "Payment of Claims." This provision outlines the process and requirements for making claim payments to the appropriate recipients. It ensures that the payments are made to the rightful claimants and helps in maintaining transparency and accountability in the claims settlement process.

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26.

When periodic claim payments are required under a long-term disability income policy, an insurer MUST make payments to an insured at least once every:
- A.
  
  Month
- B.
  
  Three months
- C.
  
  Six months
- D.
  
  Year
Correct Answer
A. Month

Explanation
Under a long-term disability income policy, the insurer is obligated to make periodic claim payments to the insured. The frequency of these payments is determined by the terms of the policy. In this case, the correct answer is "month," indicating that the insurer must make payments to the insured at least once every month. This ensures that the insured receives regular financial support to compensate for their long-term disability.

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27.

Which of the following types of provisions guarantees renewability to a specified date or age unless certain specified events occur?
- A.
  
  Noncancellable
- B.
  
  Optionally Renewable
- C.
  
  Guaranteed Renewable
- D.
  
  Conditionally Renewable
Correct Answer
D. Conditionally Renewable

Explanation
Conditionally renewable provisions guarantee renewability to a specified date or age unless certain specified events occur. This means that the policy can be renewed until a certain date or age, as long as the specified events do not happen. If the specified events occur, the policy may not be renewable.

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28.

The Social Security program provides all of the following EXCEPT:
- A.
  
  Retirement
- B.
  
  Survivor
- C.
  
  Disability
- D.
  
  Workers compensation
Correct Answer
D. Workers compensation

Explanation
The Social Security program provides disability benefits, retirement benefits, and survivor benefits. However, it does not provide workers compensation. Workers compensation is a separate program that provides benefits to employees who are injured or become ill due to their job. While both programs provide financial support, they serve different purposes and have different eligibility criteria.

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29.

An insurer must provide claim forms to an insured within a MAXIMUM of how many days after receiving notice of an Accident & Health claim?
- A.
  
  Five
- B.
  
  Fifteen
- C.
  
  Twenty
- D.
  
  Thirty
Correct Answer
B. Fifteen

Explanation
An insurer is required to provide claim forms to an insured within a maximum of fifteen days after receiving notice of an Accident & Health claim. This ensures that the insured has the necessary paperwork to file their claim and begin the process of receiving compensation for their accident or health-related expenses. It is important for insurers to promptly provide claim forms to insured individuals to ensure a smooth and efficient claims process.

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30.

The Elimination Period in most Disability Income policies applies:
- A.
  
  To each separate disability
- B.
  
  To claims for accidents only
- C.
  
  During the first 30 days of the contract
- D.
  
  During short-term disabilities that are easily managed
Correct Answer
A. To each separate disability

Explanation
The elimination period in most Disability Income policies applies to each separate disability. This means that for each new disability claim, there is a waiting period before the policyholder can start receiving benefits. The elimination period is a predetermined length of time, usually stated in days or weeks, during which the policyholder must be disabled before benefits become payable. This allows the insurance company to ensure that the disability is legitimate and not a temporary or minor condition. Once the elimination period is satisfied for a specific disability, the policyholder can start receiving benefits for that particular disability.

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31.

Under a Guaranteed Renewable Accident & Health policy, an insurer retains the right to:
- A.
  
  Increase the premium rate for one insured without increasing the rate for others in the same class
- B.
  
  Increase the premium rate for an entire class of insured
- C.
  
  Increase the benefits for an individual insured
- D.
  
  Decrease benefits for one insured without decreasing benefits for others in the same class
Correct Answer
B. Increase the premium rate for an entire class of insured

Explanation
Under a Guaranteed Renewable Accident & Health policy, the insurer retains the right to increase the premium rate for an entire class of insured. This means that the insurer can raise the premium rates for all individuals within a specific group or category of insured individuals. This allows the insurer to adjust the rates based on various factors such as the overall claims experience of the group or changes in the cost of providing coverage. It ensures that the insurer can effectively manage the financial risks associated with providing coverage to a specific class of insured individuals.

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32.

Which of the following statements is CORRECT about coinsurance?
- A.
  
  It applies to deductibles as well as to claim payments
- B.
  
  It is effective for the first claim payment and waived for future claims
- C.
  
  Insurance companies may adjust the coinsurance ratio after issuing a policy
- D.
  
  It helps control overutilizaiton of benefits
Correct Answer
D. It helps control overutilizaiton of benefits

Explanation
Coinsurance helps control overutilization of benefits. This means that when a policyholder has coinsurance, they are required to pay a percentage of the cost of covered services or treatments. This encourages policyholders to be mindful of their healthcare utilization and avoid unnecessary or excessive use of benefits. By sharing the cost with the policyholder, coinsurance helps prevent overuse of benefits and promotes responsible healthcare decisions.

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33.

The PRIMARY purpose of Medicaid is to:
- A.
  
  Pay for expenses not covered by Medicare
- B.
  
  Provide Disability Income benefits to people on Medicare
- C.
  
  Provide Medical Expense coverage to persons meeting certain minimum income requirements
- D.
  
  Provide funds for people injured in natural disasters
Correct Answer
C. Provide Medical Expense coverage to persons meeting certain minimum income requirements

Explanation
Medicaid is a government program that aims to provide medical expense coverage to individuals who meet specific income requirements. Unlike Medicare, which primarily covers healthcare costs for individuals aged 65 and older, Medicaid is designed to assist low-income individuals and families with their medical expenses. Therefore, the primary purpose of Medicaid is to provide medical expense coverage to persons meeting certain minimum income requirements.

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34.

J has a physical impairment, attends school, and is incapable of self-sustaining employment and/or self care. Which of the following statements is CORRECT about J's medical coverage and under J's father's group plan?
- A.
  
  J's coverage ceases, but J may apply for group student coverage
- B.
  
  J's coverage automatically discontinues at age twenty-six
- C.
  
  J's coverage continues only as long as J is a full-time student
- D.
  
  J's coverage continues as long as J is continually incapacitated and is financially dependent on J's father
Correct Answer
D. J's coverage continues as long as J is continually incapacitated and is financially dependent on J's father

Explanation
J's coverage continues as long as J is continually incapacitated and is financially dependent on J's father. This means that as long as J remains physically impaired and unable to sustain employment or self-care, and is financially dependent on their father, their medical coverage will continue under the father's group plan.

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35.

A precertification review prior to a nonemergency hospitalization is an example of:
- A.
  
  Managed care
- B.
  
  Medicaid
- C.
  
  Medicare
- D.
  
  Disability Income
Correct Answer
A. Managed care

Explanation
A precertification review prior to a nonemergency hospitalization is an example of managed care because it involves the process of obtaining approval from a managed care organization before receiving certain medical services. This practice is commonly used by insurance companies to control costs and ensure appropriate utilization of healthcare resources. Managed care aims to coordinate and manage healthcare services for patients, often through networks of providers and utilization management techniques like precertification reviews.

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36.

The purpose of the Medical Information Bureau (MIB) is to:
- A.
  
  Recommend the premium rates for health policies issued to substandard risks
- B.
  
  Share medical data among member companies
- C.
  
  Provide background data for large group health lans
- D.
  
  Provide actuarial data on dread diseases
Correct Answer
B. Share medical data among member companies

Explanation
The purpose of the Medical Information Bureau (MIB) is to share medical data among member companies. This means that the MIB collects and maintains medical information from various sources and makes it available to its member companies. This allows these companies to access important medical data when evaluating applications for insurance or determining premium rates. Sharing medical data helps member companies make more informed decisions and manage risks effectively.

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37.

A health care plan designed to combine small employers together into a group to purchase medical expense insurance for their employees is called a:
- A.
  
  Risk retention grop
- B.
  
  Multiple Employer Trust (MET)
- C.
  
  Preferred Provider Organization (PPO)
- D.
  
  Third Party Administrator (TPA)
Correct Answer
B. Multiple Employer Trust (MET)

Explanation
A Multiple Employer Trust (MET) is a health care plan that allows small employers to join together and pool their resources to purchase medical expense insurance for their employees. By combining their purchasing power, these small employers can negotiate better rates and benefits for their employees. This helps to provide affordable health care coverage for employees who may not have access to it otherwise. A MET is a cost-effective solution for small employers to offer comprehensive health care benefits to their employees.

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38.

Under a group health plan, an employer may offer additional benefits to classes of employees on the basis of all of the following factors EXCEPT:
- A.
  
  Length of employment
- B.
  
  Gender
- C.
  
  Salary grade
- D.
  
  Job category
Correct Answer
B. Gender

Explanation
Under a group health plan, an employer may offer additional benefits to classes of employees based on factors such as length of employment, salary grade, and job category. However, it is not permissible to offer additional benefits based on an employee's gender. This is because gender-based discrimination is prohibited under various laws, such as Title VII of the Civil Rights Act of 1964. Therefore, offering additional benefits based on gender would be considered discriminatory and illegal.

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39.

All of the following elements are required of a contract EXCEPT:
- A.
  
  Assignment
- B.
  
  Acceptance
- C.
  
  Legal capacity
- D.
  
  Legal purpose
Correct Answer
A. Assignment

Explanation
The concept of assignment is not a requirement for a contract. Assignment refers to the transfer of rights or obligations under a contract to another party. While assignment can occur in certain situations, it is not an essential element for a contract to be valid. The other options listed - acceptance, legal capacity, and legal purpose - are indeed necessary components for a contract to be enforceable.

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40.

An insured whose Disability Income policy contains a Change of Occupation clause takes a new job in a more hazardous occupation and fails to notify the insurer of the change. One year later, the insured becomes disabled. The insurer will most likely take which of the following actions?
- A.
  
  Cancel the policy and refund one year's pemiums
- B.
  
  Settle the claim according to what the premiums would have purchased under the more hazardous occupation
- C.
  
  Pay the claim in full and then cancel the policy
- D.
  
  Pay the claim after deducting an extra one-year payment
Correct Answer
B. Settle the claim according to what the premiums would have purchased under the more hazardous occupation

Explanation
If the insured fails to notify the insurer of a change in occupation, the insurer is likely to settle the claim according to what the premiums would have purchased under the more hazardous occupation. This means that the insured will receive benefits based on the higher premium rates associated with the more hazardous occupation. The insurer may not cancel the policy or refund premiums, but they may adjust the claim payout to reflect the increased risk associated with the new job.

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41.

The insurance policy clause that identifies the contracting parties and defines the scope and limits of coverage is called the:
- A.
  
  Insuring clause
- B.
  
  Benefit clause
- C.
  
  Consideration clause
- D.
  
  Renewal clause
Correct Answer
A. Insuring clause

Explanation
The insuring clause in an insurance policy is the clause that identifies the contracting parties and defines the scope and limits of coverage. It is the part of the policy that specifies who is insured and what risks are covered. This clause is crucial as it sets out the basic terms and conditions of the insurance contract, ensuring that both parties understand their rights and obligations.

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42.

Medicare Part A covers which of the following expenses?
- A.
  
  Hospital room and board
- B.
  
  Surgical expenses
- C.
  
  Medications
- D.
  
  Physician's services
Correct Answer
A. Hospital room and board

Explanation
Medicare Part A covers hospital room and board expenses. This means that it pays for the cost of a semi-private room, meals, general nursing care, and other hospital services and supplies. It does not cover surgical expenses, medications, or physician's services, which are typically covered under Medicare Part B.

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43.

A group long-term disability plan is integrated with Social Security when which of the following statements is CORRECT?
- A.
  
  Social Security and group benefits pay a combined maximum limit
- B.
  
  Full group benefits are paid in addition to Social Security benefits
- C.
  
  Full Social Security benefits are paid after group benefits are exhausted
- D.
  
  Half of the allowable Social Security benefits are paid after group benefits are exhausted
Correct Answer
A. Social Security and group benefits pay a combined maximum limit

Explanation
When a group long-term disability plan is integrated with Social Security, it means that the combined benefits from both sources cannot exceed a certain maximum limit. This means that if an individual is receiving benefits from both the group plan and Social Security, the total amount they receive cannot exceed this limit. Therefore, the correct statement is that Social Security and group benefits pay a combined maximum limit.

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44.

Which of the following provisions explains that a producer does not have the authority to waive the provisions of an insurance contract?
- A.
  
  Legal actions
- B.
  
  Reinstatement
- C.
  
  Time limit on certain defenses
- D.
  
  Entire Contract
Correct Answer
D. Entire Contract

Explanation
The provision of "Entire Contract" explains that a producer does not have the authority to waive the provisions of an insurance contract. This means that all the terms and conditions stated in the contract are binding and cannot be altered or waived by the producer. It ensures that both parties involved in the contract are obligated to fulfill their respective responsibilities as outlined in the agreement.

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45.

On June 1, S purchased a Major Medical policy and paid the initial premium to Producer T. On July 1, Producer T received the policy from the insurance company. The policy contained a Ten-Day Free Look provision. On July 3, Producer T attempted to deliver the policy but found that S was not at home. On July 5, Producer T was able to deliver the policy to S. On July 7, S decided he did not want the policy. S had 10 days from which of the following dates to return the policy to the company and obtain a full premium refund?
- A.
  
  July 1
- B.
  
  July 3
- C.
  
  July 5
- D.
  
  July 7
Correct Answer
C. July 5

Explanation
The correct answer is July 5 because the Ten-Day Free Look provision allows the policyholder to return the policy within 10 days of receiving it and obtain a full premium refund. In this case, the policy was delivered to S on July 5, so he has until July 15 to return it and receive a refund.

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46.

The Internal Revenue Service (IRS) considers Disability Income benefits paid under an employer-paid group Disability Income to be:
- A.
  
  Taxable for thirteen weeks only
- B.
  
  Nontaxable for twenty-six weeks only
- C.
  
  Fully taxable
- D.
  
  Exempt from taxation
Correct Answer
C. Fully taxable

Explanation
The correct answer is fully taxable. This means that Disability Income benefits paid under an employer-paid group Disability Income are subject to income tax. This is because these benefits are considered as a form of income and should be reported on the individual's tax return. Therefore, the individual receiving these benefits will need to include them as taxable income when filing their taxes.

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47.

Which of the following laws requires an insurer to notify an applicant in writing that an investigative consumer report may be made on the applicant?
- A.
  
  Uniform Provisions Law
- B.
  
  Freedom of Information Act
- C.
  
  Medical Information Bureau Disclosure Act
- D.
  
  Fair Credit Reporting Act (Insurance Information and Privacy Protection Act)
Correct Answer
D. Fair Credit Reporting Act (Insurance Information and Privacy Protection Act)

Explanation
The Fair Credit Reporting Act (Insurance Information and Privacy Protection Act) requires an insurer to notify an applicant in writing that an investigative consumer report may be made on the applicant. This law aims to protect the privacy and rights of individuals by ensuring that they are informed about the collection and use of their personal information for insurance purposes. By providing written notification, applicants have the opportunity to understand and potentially dispute any information contained in the investigative consumer report.

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48.

An Eligible Expenses provisions in a comprehensive major medical policy commonly identifies all of the following types of covered health care services EXCEPT:
- A.
  
  Professional services of doctors and other medical practitioners
- B.
  
  Hospital charges for semi-private room and board
- C.
  
  Experimental and investigative services
- D.
  
  Pre-approved home health care
Correct Answer
C. Experimental and investigative services

Explanation
The correct answer is experimental and investigative services. This is because an Eligible Expenses provision in a comprehensive major medical policy typically covers professional services of doctors and other medical practitioners, hospital charges for semi-private room and board, and pre-approved home health care. However, experimental and investigative services are usually not covered as they involve treatments or procedures that are still being researched or are not yet proven to be effective.

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49.

A producer and an applicant complete an application for a health policy and submit it to the insurer for underwriting without any premium. The underwriter issues a policy and mails it to the producer for delivery to the applicant. The producer should take all of the following actions during the delivery of the policy to the applicant EXCEPT:
- A.
  
  Collect the initial premium payment
- B.
  
  Issue a conditional receipt
- C.
  
  Have the applicant complete a statement of continued good health
- D.
  
  Explain the Free Look provision which begins on the policy delivery date
Correct Answer
B. Issue a conditional receipt

Explanation
The producer should take all of the following actions during the delivery of the policy to the applicant except issuing a conditional receipt. A conditional receipt is typically issued when the applicant pays the initial premium, which is not the case in this scenario as no premium was submitted with the application. Therefore, the producer does not need to issue a conditional receipt.

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50.

Under the Claims Forms provision of a health policy, if the insurance company fails to send claim forms within the time period required, the insured should:
- A.
  
  Expect a full refund of all premiums paid plus interest
- B.
  
  Submit the claim in any form, which must be accepted by the company as adequate proof of loos
- C.
  
  Request the Department of Insurance mediate the claim settlement
- D.
  
  Wait for the claim form to arrive
Correct Answer
B. Submit the claim in any form, which must be accepted by the company as adequate proof of loos

Explanation
Under the Claims Forms provision, if the insurance company fails to send claim forms within the required time period, the insured should submit the claim in any form. The company is obligated to accept this form as adequate proof of loss. This means that the insured does not have to wait for the claim form to arrive and can still proceed with the claim by submitting it in any format acceptable to the company.

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Current Version
Mar 22, 2023

Quiz Edited by
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Aug 15, 2016

Quiz Created by
Gohealth

Health - Pearson Practice

The Coordination of Benefits clause found in group health Master Contracts is used to:

In which of the following health policies are both the renewability and the premiums guaranteed?

An Accident and Health policy Notice of Claim provision requires that an insured give written notice to the insurer within a MAXIMUM of how many days after a loss?

An applicant for insurance submits an application to an insurer for underwriting but does not forward any premium payment with the application. Legally, the applicant is making:

In an Accidential Death and Dismemberment (AD&D) policy, the term "capital sum" refers to:

M and N own a small interior design studio that employs six people. The owners are concerned about the financial continuation of the business if either of them should become permanently disabled. In this situation, a producer would MOST likely recommend which of the following types of contracts?

Which of the following statements is CORRECT about a Disability Income policy with a Guaranteed Insurability rider?

A married insured has an Accidental Death and Dismemberment (AD&D) policy that names his brother as the primary beneficiary and his son as the contingent beneficiary. If the insured and his brother are both killed instantly in a train accident, the policy would be paid to the following?

Health insurance policies are offered on a "take it or leave it" basis and referred to as which of the following types of contracts?

The Consideration clause in an accident and health policy states the:

Under an Accidental Death and Dismemberment (AD&D) policy, insurable interest must exist at which of the following times?

Group health insurance specifies that what percentage of eligible individuals MUST be offered coverage under a noncontributory plan?

An individual who has had a heart murmur since birth is likely to be issued an individual health policy that includes:

Which of the following definitions of disability would cover a permanent partial disability?

Medicare Supplement policies are primarily designed to:

A health care plan that reimburses a flat fee for medical care it provides at a clinic it owns and operates is referred to as:

Which of the following reports may include information obtained by a telephone call to the proposed insured?

Which of the following definitions MOST accurately describes the Probationary Period?

Suicide, pre-existing conditions and self-inflicted injuries are dealt with in which of the following features?

When delivering a policy to a client, a producer should take all of the following actions EXCEPT:

Which of the following health policies requires a beneficiary designation?

Which of the following statements is CORRECT about a Waiver of Premium provision in a Disability Income policy?

Five years ago, at age forty-five, X stated that he was forty years old on a disability income insurance application. X now submits a claim and the insurer discovers X's true age. The insurer will most likely take which of the following actions?

Which of the following provisions designates to whom claim payments are made?

When periodic claim payments are required under a long-term disability income policy, an insurer MUST make payments to an insured at least once every:

Which of the following types of provisions guarantees renewability to a specified date or age unless certain specified events occur?

The Social Security program provides all of the following EXCEPT:

An insurer must provide claim forms to an insured within a MAXIMUM of how many days after receiving notice of an Accident & Health claim?

The Elimination Period in most Disability Income policies applies:

Under a Guaranteed Renewable Accident & Health policy, an insurer retains the right to:

Which of the following statements is CORRECT about coinsurance?

The PRIMARY purpose of Medicaid is to:

J has a physical impairment, attends school, and is incapable of self-sustaining employment and/or self care. Which of the following statements is CORRECT about J's medical coverage and under J's father's group plan?

A precertification review prior to a nonemergency hospitalization is an example of:

The purpose of the Medical Information Bureau (MIB) is to:

A health care plan designed to combine small employers together into a group to purchase medical expense insurance for their employees is called a:

Under a group health plan, an employer may offer additional benefits to classes of employees on the basis of all of the following factors EXCEPT:

All of the following elements are required of a contract EXCEPT:

An insured whose Disability Income policy contains a Change of Occupation clause takes a new job in a more hazardous occupation and fails to notify the insurer of the change. One year later, the insured becomes disabled. The insurer will most likely take which of the following actions?

The insurance policy clause that identifies the contracting parties and defines the scope and limits of coverage is called the:

Medicare Part A covers which of the following expenses?

A group long-term disability plan is integrated with Social Security when which of the following statements is CORRECT?

Which of the following provisions explains that a producer does not have the authority to waive the provisions of an insurance contract?

The Internal Revenue Service (IRS) considers Disability Income benefits paid under an employer-paid group Disability Income to be:

Which of the following laws requires an insurer to notify an applicant in writing that an investigative consumer report may be made on the applicant?

An Eligible Expenses provisions in a comprehensive major medical policy commonly identifies all of the following types of covered health care services EXCEPT:

Under the Claims Forms provision of a health policy, if the insurance company fails to send claim forms within the time period required, the insured should: