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Review Test 1

by anonymous

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Question 1

Insurance is:

Question 2

Which of the following is the foremost doctrine in establishing a legal insurance contract?

Question 3

When must insurable interest be shown in an AD&D policy?

Question 4

Mathematicians who analyze statistical risk information for insurance companies are called:

Question 5

Which of the following is another term for “insurance company?”

Question 6

What term means the insured’s demand for payment of benefits?

Question 7

Risk pooling is characterized by:

Question 8

All of the following are true regarding insurable interest EXCEPT:

Question 9

Actuaries are characterized by all of the following EXCEPT:

Question 10

In life and health insurance, a person’s greatest asset is:



Question 1

All of the following must be provided by an HMO EXCEPT:

Question 2

Which of the following is not an HMO preventive care service?

Question 3

Which group health insurance rating system bases premiums on the actual or projected costs of insureds in a particular geographic location with reference to insureds’ age, gender, occupation and health?

Question 4

Group health insurance policy rates are usually based on:

Question 5

Rebecca has a contributory employer group health plan for her employees. How many employees must participate in the group health plan?

Question 6

Which type of care is a system of cost containment methods used by insurers or their agents to control cost and access to health care services, where insurers and providers review and preauthorize treatment plans?

Question 7

Continuation of coverage for group medical plans shall continue for up to __ months after the date of death, divorce, or termination, subject to payment of premiums.

Question 8

Small employer plans are designed to provide affordable health and accident coverage for employers who have less than __ employees on average for the year.

Question 9

What type of insurer retains risk?

Question 10

Unfair trade practices are subject to fines of up to ______ for each violation.


Question 11

The Commissioner may require up to __ hours of continuing education per renewal period for producer licensed for less than 25 consecutive years.

Question 12

How old must a person be to obtain a license as insurance producer in Maryland?

Question 13

Regarding insurance fraud, the Commissioner may:

Question 14

Licenses expire ___________on the anniversary of the date the license was issued?

Question 15

The Commissioner sets rules and regulations for minimum standards loss ratios based on claims experience and earned premiums in accordance with the _____.

Question 16

Insurers must report _________of a producer and update the producer register with the Commissioner within 30 days of the effective date.

Question 17

As a disciplinary action, the Commissioner may assess penalties of ________.

Question 18

Advertisements may be:

Question 19

“An insurer or producer may not cancel, refuse to underwrite, or renew a particular insured risk or class of risks based wholly or partly on race, color, religion, gender, blindness, or any other arbitrary reason.” The previous text defines what?

Question 20

The Medicare Part D “doughnut hole” occurs:


Question 21

Which of the following correctly states the Part D late enrollment penalty?

Question 22

____________ is an intentional misrepresentation or concealment of material fact made by one party in order to cheat another party out of something that has economic value.

Question 23

Benefits under a disability income policy are provided through which of the following methods?

Question 24

On his application for a life insurance policy, James writes that he is a smoker, age 34, and is in generally good health. One year after the policy is issued James is diagnosed with lung cancer. James did not indicate on his life insurance application that he had lung cancer. Which of the following best explains James’ situation, and how the insurer will handle the situation?

Question 25

All of the following are true regarding HMOs EXCEPT:

Question 26

Which health insurance contract pays a death benefit?

Question 27

Which statement is false regarding PPOs and open/closed panels?

Question 28

Who receives the master policy under a group insurance contract?

Question 29

All of the following are true regarding group insurance underwriting considerations EXCEPT:

Question 30

Why are life and health insurance contracts said to be contracts of adhesion?

Qestion 31

Janice applies for a life insurance policy. She submits the application with initial premium for $100,000 whole life. The agent returns the policy with a higher premium and hazardous occupation exclusion. What has the insurer made?

Question 32

The __________ of the policy are the rights and responsibilities of all parties of the contract.

Question 33

Jane has group health coverage through her employer. In which of the following cases will Medicare be primary payor?

Question 34

All of the following are true regarding Medicare hospital insurance EXCEPT:

Question 35

In 2011 a person who is not eligible for premium-free Part A coverage must pay:

Question 36

How is Medicare Part A primarily funded?

Question 37

Which of the following explanations best describes why insurers exclude losses for self-inflicted injuries?

Question 38

Who does the "other insurance in this insurer" provision protect?

Question 39

Which health provision states, “The insurer is not liable for any loss or injury in consequence of the insured's being intoxicated or under the influence of any narcotic unless administered on the advice of a physician?”

Question 40

Which of the following insurers cannot be categorized as “commercial”?


Question 51

Medicaid is operated on the:

Question 52

All of the following are Medicare supplement additional benefits EXCEPT:

Question 53

Which Medicare supplement plan pays 50% of the Medicare Part B coinsurance for non-preventive care services?

Question 54

Matthew is a janitor for the local high school. He washes the hallway floors every night during the winter to make sure the slush, snow and salt from outside don’t pose a hazard to students. One night, Matthew unintentionally forgets to wash the hallway that connects the science wing to the main lobby. The next morning, three students walk in through the school’s lobby, slip on a puddle of water, fall and are injured. What type of hazard is shown in this example?

Question 55

Which of the following elements of insurable risks states that the loss must occur with a degree of regularity so that the insurer can establish what premium is required to adequately cover the risk?

Question 56

What type of hazard is an insured's careless attitude?

Question 57

Which factor is the most crucial for underwriting life insurance?

Question 58

Health insurers use the ___________________, which is the rate a specific population is predicted to get injured, sick or disabled.

Question 59

Premiums for all of the following health insurance policies are tax-deductible as a business expense EXCEPT:

Question 60

ABC employer pays the entire cost of the group health insurance premiums. Which of the following is true regarding the taxation of premiums and benefits?

Question 61

Flexible spending accounts are characterized by:

Question 62

Precertification of medical services is used in which of the following medical care arrangements?

Question 63

Samantha is concerned about driving to work on major highways. She does not purchase insurance, nor avoid the major highways. What method of handling risk is Samantha using?

Question 64

A person who does not take steps to transfer, avoid or reduce exposure to risk is engaging in which method of handling risk?

Question 65

Which method of handling risk is insurance?

Question 66

Which accident & health renewability provision is the same as the guaranteed renewable provision except that premiums cannot be increased?

Question 67

Roy purchases an individual health insurance policy from ABC Insurance Company. If he has had asthma since the age of 5, what action will the insurance company take in underwriting/issuing his policy?

Question 68

Of the following renewal provisions for health insurance, which is least favorable to the insured?

Question 69

For individual health insurance policies, how soon must the insured notify the insurer of a loss?

Question 70

Of the following health insurance provisions, which states that an insurance agent may not waive any provision or make any change in an insurance contract?


Question 71

Angie allows her comprehensive major medical plan to lapse. If her policy is reinstated on January 10th and she contracts mononucleosis on January 19th, what benefits will she receive?

Question 72


Question 73

Of the following, which is a financial risk?

Question 74

Neil is a generally healthy individual but worries about being hospitalized for a severe accident or injury, especially the costs associated with such a catastrophic medical loss. Of the following, what is the best way for Neil to manage his risk?

Question 75

HMOs control health costs through which of the following methods?

Question 76

All of the following are characteristics of HMOs EXCEPT:

Question 77

All of the following are cost control features of HMOs except:

Question 78

Which of the following information sources contains the best underwriting information?

Question 79

Which report may contain information gathered through a telephone call made to the proposed insured?

Question 80

_____________is/are used to classify risks and assign premium rates that accurately reflect the amount of risk undertaken by the insurer.

Question 81

What type of policy provides limited, specialized health insurance coverage?

Question 82

What is the term insurers use for individuals who receive health insurance on a prepaid health plan?

Question 83

All of the following terms are synonymous with maximum annual deductible EXCEPT:

Question 84

Gerald has a major medical policy with a $500 deductible and 80/20 coinsurance. He incurs a $20,000 covered loss. How much does Gerald pay on the claim?

Question 85

A deductible in major medical policies where the insured must pay for each cause in which medical care is sought is called a(n):

Question 86

Another term which means the same as insurance policy is:

Question 87

Jenny applies for a life insurance policy on her husband Jack. She names her daughter Julie as the beneficiary. Which of the following is true about insurable interest and establishing a legal contract?

Question 88

Risk pooling is best described by which the following?

Question 89

Edward applies for a medical expense policy on March 1st. He hands his completed application with initial premium to the insurer at this time. The agent gives Edward a conditional receipt. Edward is required to take a medical exam on March 10th. The insurer discovers that Edward has a medical condition that will require the coverage to be modified by an impairment rider. The insurer issues the coverage on March 29th and the agent delivers the policy to Edward on April 2nd. Edward must sign a statement of continued good health upon policy delivery. On what date did Edward?s policy take effect?

Question 90

April submits her health insurance application to the insurer without the initial premium on December 5th. The insurer approves the application on December 15th. The agent delivers the policy to April on December 20th. April returns the signed statement of good health and initial premium to the agent on December 22nd. On what day did April's coverage begin?

Question 91

Which of the following statements is false regarding short-term disability income policies?

Question 92

What type of business disability insurance pays periodic income benefits to businesses when a key employee is disabled?

Question 93

Long-term disability income policies pay benefits for periods of:

Question 94

What percent of clinical laboratory services, such as blood tests and urinalysis, will Medicare Part B pay?

Question 95

What coverage is provided by Medicare Part B?

Question 96

Medicare pays the remaining 80% of covered Part B charges after:

Question 97

Which of the following correctly places the laws regarding the regulation of insurance in chronological order?

Question 98

What is the main reason most health insurance coverage is purchased through group plans?

Question 99

Which of the following terms describes a situation where an employer keeps the same group health plan for many years?

Question 100

W has a physically disabled child, who is in high school, and is incapable of self-sustaining employment. Which of the following statements accurately describes the child’s coverage under W’s health insurance?

Question 101

Jake is an insurance agent. He owns the renewals on his clients' policies. What type of agent is Jake?

Question 102

XYZ insurer is incorporated in the District of Columbia, but is authorized to sell life and health insurance in Maryland, New York, Pennsylvania and West Virginia. Which of the following is true?

Question 103

DEF insurer is nonadmitted. All of the following are possible explanations for why DEF insurer cannot sell insurance in a state EXCEPT:

Question 104

Which of the following is true regarding the treatment of preexisting conditions in Medigap and LTC polices?

Question 105

Which of the following terms describes a disability which automatically qualifies the insured for total disability benefits?

Question 106

The waiver of premium feature in a disability income policies require the insured’s disability be:

Question 107

What type of disability is characterized as something the insured is never expected to recover from, causing the insured to be unable to work permanently?

Question 108

Lee submits an application with initial premium for a life insurance policy on March 3rd. The insurer requires him to take a medical exam on March 10th. The insurer determines from the medical exam that Lee has a health condition. The insurer makes a counter-offer on March 16th. The insurance agent meets with Lee on March 21st and explains that the coverage has been modified with a higher premium to account for Lee's health condition. Lee agrees to the terms of the counter-offer and gives the agent a check for the additional premium. On which day did Lee's coverage begin?

Question 109

The agent must provide the buyer's guide to the applicant:

Question 110

Which base plan covers surgical costs including surgeon fees, anesthesia, and post-surgery recovery?

Question 111

Which of the following is true regarding taxation of medical expense plans?

Question 112

HIPAA applies to employers with ___ or more employees.

Question 113

HIPAA requires that hospital stay benefits are provided to mothers for ___hours after a cesarean delivery.

Question 114

Which of the following best describes creditable coverage?

Question 115

Which disability income cash benefit provides coverage of job training services to a totally disabled insured, so the insured can resume working at his prior employment or begin a new occupation?

Question 116

All of the following are true regarding the hospital confinement rider in disability income policies EXCEPT:

Question 117

All of the following are true regarding direct response insurance marketing EXCEPT:

Question 118

Industrial life insurance sold be debit agents who collect weekly premiums is:

Question 119

This employee cannot bind life and health insurance and works for the insurer:

Question 120

Disability income policies:

Question 121

What is the purpose of the elimination period in disability income policies?

Question 122

Most disability income benefits are paid:

Question 123

Rhonda, a wealthy 70-year old, needs help getting dressed and transferring from the bed to her walker. What policy would you recommend to her?

Question 124

All of the following are acceptable benefit amounts for a long-term care policy EXCEPT:


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