All of the following statements are true regarding creditor group health insurance EXCEPT:
Some lenders obtain creditor group insurance, which provides specialized life and health insurance coverage to its borrowers to protect the lender for losses resulting from the disability or death of the borrower. Usually, premiums for creditor group insurance are paid by the borrower, and the lender is the policy’s beneficiary.
All of the following groups may purchase group health insurance coverage EXCEPT:
Groups must have at least two employees to be eligible for group insurance coverage.
_________ is the possibility of a loss occurring.
Risk is the possibility of a loss occurring.
_________________ is the expectation that all parties to the contract have acted in good faith, do not commit fraud, conceal or misrepresent facts.
Utmost good faith is the expectation that all parties to the contract have acted in good faith, do not commit fraud, conceal or misrepresent facts.
Maria purposefully fails to disclose information about her medical history on her application for a life insurance policy. This is an example of:
Maria intentionally omitted information that is material to the risk insured. This is an example of concealment.
Benefits under a life insurance policy are provided through which of the following methods?
All of the following are used in determining a life insurance policy's gross premium EXCEPT:
Morbidity is used for determining health insurance premiums. Mortality is used in determining life insurance premiums.
Earned surplus is described by all of the following statements EXCEPT:
All of the following may not be included in a consumer report, unless the consumer credit report is requested for a life insurance policy with a face amount of $150,000 or more, EXCEPT:
Adverse information dating back more than seven years is prohibited.
What is the purpose of the Fair Credit Reporting Act?
The Fair Credit Reporting Act (FCRA) was passed in 1970 with the purpose of regulating the way credit information is collected and used.
A written report by a consumer reporting agency about a consumer’s credit worthiness, character, general reputation, personal characteristic or mode of living is a(n):
Consumer Reports are any written, oral, or other communication of information by a consumer reporting agency about a consumer’s credit worthiness, character, general reputation, personal characteristics or mode of living which are used to determine a consumer’s eligibility for credit, insurance, employment, or other authorized purposes.
What does HMO stand for?
Health maintenance organizations, or HMOs, are companies that furnish health care service through providers under contract with the organization.
Long-term care insurers may require a physical examination of any applicant of minimum age __ or older.
Long-term care insurers may require a physical examination of any applicant age 80 or older.
Small employer plans are designed to provide affordable health and accident coverage for employers who have less than __ employees on average for the year.
Small employer plans are designed to provide affordable health and accident coverage for employers who have less than 50 employees on average for the year.
To enroll in Medicare Part C, a person must have:
An individual can enroll in Part C if he has Parts A and B, lives in the plan’s service area, and doesn’t have ESRD.
Which part of Medicare is also referred to as Medicare Advantage?
Medicare Part C is also referred to as Medicare Advantage, and was formerly called Medicare+Choice prior to the Medicare Modernization Act of 2003.
This product protects against the risk of living too long:
Annuities protect against the risk of living too long.
The tendency for poorer than average risks to seek out insurance is the definition of:
If ABC Insurer allows adverse selection to take place, which of the following may occur?
The premium payment arrangement in which the employer pays the full cost of insurance is termed:
In a noncontributory group plan, the employer pays all premiums.
All of the following statements are true regarding group insurance EXCEPT:
All of the following are endodontics dental treatments EXCEPT:
Endodontics includes treatment for the pulp, or soft tissue in the core of each tooth – root canal.
Janie wants her teeth whitened for her wedding. What coverage will her dental policy pay?
The policy will not pay for cosmetic dentistry procedures.
Which health insurance provision allows the insurer to adjust policies so they are in alignment with state laws?
The conformity with state statutes provision assures that accident & health insurance policies are always in alignment with the state laws.
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?”
Steven, age 53 purchased a disability income policy when he was 33. When he applied for the policy, he stated his age as 23 on the application. Steven submits a claim and the insurance company discovers the error. What action will the insurance company take?
The insurance company will pay a decreased amount of benefits based on the premiums Steve should have been paying, had his correct age been stated in the policy application.
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?
If a counter-offer is made, then coverage will begin on the day that the applicant agrees to the terms of the counter-offer, not the date of the application.
Jeanine submits an application with initial premium for a $100,000 life insurance policy. She is issued a conditional receipt and is not required to take a medical exam. If Jeanine dies in a plane crash a week later, what will the insurer do?
Since Jeanine was issued a conditional receipt, the insurer will pay the death benefit as long as Jeanine's policy would have been issued as applied for.
Of the following accident and health insurance provisions, which specifies the person or entity to which claims are paid?
The payment of claims provision specifies how and to whom claim payments are made.
How long is the grace period for health insurance policies with monthly-due premiums?
Health insurance policies with monthly-due premiums have 10-day grace periods.
For individual health insurance policies, how soon must the insured submit proof of loss to the insurer?
For individual health insurance policies, proof of loss must be submitted to the insurer within 90 days of the date of loss.
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?
The insurer issues the policy with modified coverage, so the policy takes effect on the date of delivery - when Edward agrees to the terms of the modified coverage and signs the statement of continued good health.
All of the following statements are true regarding Social Security disability benefits EXCEPT:
Disabilities must be total and permanent for Social Security disability benefits to pay a covered worker.
Insurers must report _________of a producer and update the producer register with the Commissioner within 30 days of the effective date.
Insurers must report termination of an appointment and update the producer register with the Commissioner within 30 days of the effective date of termination.
Advertisements may be:
Advertisements may not be false or misleading. Words or phrases known only to those with knowledge of insurance terminology are prohibited. Advertisements for insurance policies must disclose the any exceptions, reductions, or limitations within the policy, including waiting periods. The name of the insurer must be clearly stated,
and no trade mark, logo, or slogan may be used that would mislead the true identity of the insurer.
“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?
Unfair Discrimination 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 or unfair discrimination.
Regarding insurance fraud, the Commissioner may:
Under insurance fraud regulation, the Commissioner is given broad powers to investigate insurance fraud. The Commissioner may order the production of documents and records, testimony by relevant persons, by subpoena and under oath. Individuals with the belief that an act of insurance fraud has or will occur are required to provide such information to the Commissioner. The Commissioner may involve or assist federal, state, and local law enforcement in the prosecution of any individual or entity suspected of insurance fraud.
How old must a person be to obtain a license as insurance producer in Maryland?
No individual may act as an insurance producer in the state of Maryland without a license. The minimum requirement to obtain a license is that the applicant must be at least 18 years of age.
he Commissioner sets rules and regulations for minimum standards loss ratios based on claims experience and earned premiums in accordance with the _____.
The Commissioner sets rules and regulations for minimum standards loss ratios based on claims experience and earned premiums in accordance with the NAIC to ensure insurers are providing benefits that are reasonable in relation to the premiums charged.
As a disciplinary action, the Commissioner may assess penalties of ________.
The Commissioner may place on probation, suspend, revoke, refuse to issue or renew, or otherwise limit any license or certificate, as well as assess penalties of $100 to $500 as a disciplinary action.
n addition to any greater penalty provided under the law, violation of Maryland insurance laws and regulations is a ________offense, subject to a fine up to $100,000.
In addition to any greater penalty provided under the law, violation of Maryland insurance laws and regulations is a misdemeanor offense, subject to a fine up to $100,000.
Unfair trade practices are subject to fines of up to ______ for each violation.
Unfair trade practices are subject to fines of up to $2,500 for each violation.
What type of health insurance policy is intended to insure a debt?
Credit health insurance is intended to insure a debt. If a debtor becomes disabled, payments to a creditor are made for the disabled insured until the insured can resume work. Credit health insurance can be sold individually or through a group plan. Credit insurance is most commonly sold through a group plan.
All of the following are true regarding PPOs EXCEPT:
Which of the following health insurance policies strictly pay for cancer-related medical expenses?
How is Medicare Part A primarily funded?
Medicare Part A is funded with FICA payroll taxes.
How is Medicare Part B funded?
Medicare Part B is funded through monthly premium payments and federal revenue.
All of the following are types of specialized limited health insurance policies EXCEPT:
Limited policies are specialized health insurance policies that provide specific coverage. Limited policies include accidental death & dismemberment (AD&D), travel accident, dread disease, hospital income, credit health, prescription, vision, dental and blanket coverage. HMOs are a type of comprehensive care.
All of the following are cost control features of HMOs except:
The IPA or individual practice association model, is a way of organization HMOs, not a cost-control mechanism.
Which of the following terms is a small dollar amount that HMO members must pay each time they visit the doctor?
Copayments are small dollar amounts that HMO members are charged each time they visit the doctor or utilize a medical service.
How long is the elimination period in short-term disability income policies?
Long-term disability income policies pay benefits for periods of:
Long-term disability income policies provide long benefit periods of two years or more.
Insurance departments in each state began forming after the passing of what law/court ruling?
After the McCarran Ferguson Act was passed state insurance departments began to form, and state laws regarding licensing, rates and trade practices were passed.
HIPAA requires that hospital stay benefits are provided to mothers for ___hours after a cesarean delivery.
HIPAA requires that hospital stay benefits are provided to mothers for 48 hours after a normal vaginal delivery and 96 hours after a cesarean delivery.
Which legislation requires continuation of group health coverage based on qualifying events for up to 18 months?
COBRA is federal legislation which legally permits individuals and their dependents to continue their group health coverage after a qualifying event for up to 18 months. OBRA extends COBRA coverage for up to 29 months.
Per HIPAA, all of the following are considered preexisting conditions EXCEPT:
Maternity is not a preexisting condition.
All of the following are true regarding direct response insurance marketing EXCEPT:
Insurance marketed and sold through the Internet is a form of direct response marketing.
Which of the followings statements correctly identifies the law of agency?
The law of agency states that the acts of an insurance agent are deemed the acts of the insurer.
Which type of insurance marketing sells policies with large amounts of coverage for a low premium and typically limited coverage period?
Insurance policies sold through vending machines are primarily accident policies sold at airports. Policies with large coverage are purchased at a low premium; however, the policy is valid for a limited period of time, which in most cases is the duration of the insured’s flight.
Isaac works as a college professor. When the recession hits, he loses his job and must work for his brother's lawn cutting business. If Isaac becomes disabled while cutting lawns, how will his disability income policy benefits be affected?
Since Isaac changed occupations to one more hazardous, his disability income benefits will be lowered.
All of the following are true regarding the AD&D rider for disability income policies EXCEPT:
A disability income policy may include an AD&D rider that covers accidental injury. The rider functions just like a standalone AD&D policy, paying a principal sum for accidental death or loss of vision in both eyes, or loss of two or more limbs, and a capital sum for loss of one hand, one foot, or loss of vision in one eye.
ABC Company pays dividends. The company sells life, health, property and casualty insurance. The company is managed by a board of directors. The company is for-profit. Based on the information provided, ABC Insurer CANNOT be a(n):
ABC Company could be a mutual or stock insurer, but cannot be a noncommercial organization because it is explicitly described as being a for-profit company selling life, health, property and casualty insurance. Noncommercial organizations specifically sell health insurance and operate on a not-for-profit basis.
What is term used for an insured covered under a Blue Cross/Blue Shield health plan?
Insureds under noncommercial insuring organizations are termed “subscribers.”
All of the following are Medigap provisions EXCEPT:
The loss ratio (total amount of benefits paid out compared to the total amount of premium dollars collected) for Medicare Supplement policies must be at least 75% for group contracts and 65% for individual contracts.
A person is eligible for PACE if he:
Individuals who meet all of the following are eligible for PACE: age 55 and above; resides in a PACE organization’s service area; and state-certified as requiring nursing home care.
All of the following Medigap plans cover Medicare preventive care Part B coinsurance EXCEPT:
All plans except M and N cover the Medicare preventive care Part B coinsurance.
What is the minimum renewability required for Medigap policies?
Medigap policies must be at least guaranteed renewable, but may also be noncancelable
All of the following are true regarding recurrent disability EXCEPT:
Recurrent disability occurs when the insured again becomes disabled from the same or related event or condition that caused the prior disability. Policies must state the terms for or whether a recurrent disability is considered an existing or new claim, as well as, any waiting or elimination periods associated with payment of benefits.
A ___________ is the amount owed by the insured for benefits or services received before the insurer will pay benefits.
A deductible is the amount owed by the insured for benefits or services received before the insurer will pay benefits.
Which clause under a health insurance policy describes the limits of coverage and identifies the parties to the contract?
The insuring clause states the scope of coverage, the promise to pay benefits under the terms of the policy, any conditions within the policy, and any definitions required by law.
PURE RISK is to SPECULATIVE RISK as FINANCIAL RISK is to:
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?
The best approach for Neil to manage his risk of accident and injury is to purchase a health insurance policy. C.S.O tables and mortality rates are related to life insurance.
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?
Some losses are guaranteed to happen. For example, people who live in a flood plain are highly likely to undergo a flood. Socially-funded insurance – the National Flood Insurance Program – steps in to provide flood insurance coverage to residents living in the flood plain. Which of the following elements of insurable risks is not met by this example?
A group of people who live in a flood plain are all highly likely to undergo loss caused by flood. In this example, exposures are not selected randomly because all people in the flood plain are at risk. When a flood occurs in a particular geographic location, all people in that geographic vicinity are likely to be affected.
Which of the following definitions best describes hazard?
All of the following are not elements of insurable risks EXCEPT:
For all of the above to be elements of insurable risks, they should read as follows: 1.) large number of homogenous units; 2.) Loss must be significant causing economic hardship; 3.) Loss must occur by chance or accident; and 4.) Loss is definite and measurable.
The agent asks Jeremy if he has high cholesterol. Jeremy responds that he does not. However, Jeremy finds out from his doctor six months later that he does, in fact, have high cholesterol. Jeremy:
Which report may contain information gathered through a telephone call made to the proposed insured?
Investigative Consumer Reports (synonymous with inspection report) contain information on a consumer’s character, general reputation, personal characteristics, or mode of living but are obtained through personal interviews with neighbors, friends, or associates of the consumer. Investigative consumer reports do not use credit information from creditors, credit records, or credit reporting agencies. Investigative consumer reports cannot be performed unless the consumer has been notified in writing of the report within three days of when the report was initially requested.
Which of the following best describes the main purpose of the Medical Information Bureau?
The MIB collects and shares medical information with member insurance companies.
The law of large numbers and spreading the uncertainty of loss over a large number of people is:
Which of the following are the actuarial tables used by insurers for underwriting?
All of the following are features that must be present for life and health insurance to work properly EXCEPT:
The three factors required for life and health insurance to work properly are: 1.) the law of large numbers, 2.) insurable interest, and 3.) risk pooling. Mortality is the rate at which people die, which is used in the law of large numbers for life insurance. In health insurance, the corresponding rate is morbidity, or the rate at which people get sick.
John has a major medical policy with an $800 deductible and 70/30 coinsurance. He incurs a $10,000 covered loss. Which of the following is true?
John pays the deductible and 30% of $9,200, which works out to a total of $3,560.
How much is the deductible for major medical policies?
The deductible can range in amount from $500 to $5,000, depending on the policy. The purpose of the deductible is to make the coverage affordable for the insured.
Compared to base plans, coverage for medical expenses under major medical is:
Coverage for medical expenses under major medical plans is broader than provided by the base plans.
All of the following are acceptable benefit amounts for a long-term care policy EXCEPT:
The benefit amount is the maximum daily benefit for nursing home care or home health care. LTC policies with larger daily benefits have more expensive premiums. The daily benefit is typically a fixed dollar-per-day amount ranging in amount from $75 to $200 per day, depending on the policy. No matter how much the actual daily cost is, the LTC policy pays the stated daily benefit amount. In other cases, the benefit is reimbursed to the insured on an expense-incurred basis based on the actual charges of LTC care.
What type of health plan is intended to help individuals with activities of daily living?
Long-term care (LTC) policies are intended to help individuals, especially those with advanced ages, with activities of daily living, such as dressing, bathing or eating, when individuals can no longer perform such activities themselves.
An insurer must have a certificate of authority to be authorized to transact insurance in a state.
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?
Jake is an insurance agent. He owns the renewals on his clients' policies. What type of agent is Jake?
The outline of coverage for long-term care policies is also referred to as:
How often must HMOs offer open enrollment?
All HMOs must have a period of open enrollment at least once per year which allows new individuals to enroll in the HMO.
Each HMO member must choose a:
Each HMO member chooses a PCP. The PCP is compensated for the care of that member regardless of whether or not medical services are provided to the member.
What federally-funded program provides benefits to people regardless of age, who qualify for Social Security or Railroad Retirement Board disability benefits, those with end stage renal disease, or those who have Lou Gehrig’s disease?
What organization processes Medicare premium payments?
The SSA (Social Security Administration) enrolls individuals in Medicare and processes premium payments.
What is the purpose of the elimination period in disability income policies?
The purpose of the elimination period is to prevent the insurer from paying short-term disabilities.
Which of the following factors is not used to establish the cost (premiums) for disability income insurance?
Premiums for disability income insurance are based on five factors: insured’s occupation; insured’s earned income; policy’s definition of disability; length of the benefit period; and length of the elimination period.
The cost of disability income policy coverage is based on all of the following EXCEPT:
All of the following health insurance riders will increase the policy's base premium EXCEPT:
The impairment rider excludes coverage; therefore, the premium would not increase.
Optionally renewable is best described as:
Optionally renewable policies provide the insurer the right not to renew the contract for any reason.
Which accident & health renewability provision allows the insurer to renew the contract for certain specified reasons indicated in the policy?
Conditionally renewable policies allow the insurer the right not to renew the contract for any reason specified in the policy.
Which of the following health plans provide tax-free withdrawals?
Jenny's employer provides a short term disability income policy to all employees. Her employer pays 60% of the premiums. When Jenny is disabled, what portion of the benefits will be taxable to her?
With the __________ definition of accident, the reason the accident occurred must be unintentional and unexpected.
The reason the accident occurred must be unintentional and unexpected. The accidental means definition of an accidental injury is more restrictive than the accidental bodily injury definition.
Partial disability is:
What is the minimum frequency that payments under a long-term disability income policy must be made?
Benefits under a long-term disability income policy must be paid to the insured at least once every month.
Why are life and health insurance contracts considered to be unilateral?
Insurance contracts are unilateral because only the insurer is legally bound by the promises made in the policy.
The _______________is the insurer’s promise to pay covered losses as long as the insured pays premiums and abides by the terms and conditions of the policy.
The insuring clause is the insurer’s promise to pay covered losses as long as the insured pays premiums and abides by the terms and conditions of the policy.
Which of the following is not part of the consideration component of an insurance contract?
Only the insurer is legally upheld to performing the promises made in the policy.
Which of the following terms describes a situation where an employer keeps the same group health plan for many years?
A group’s period of coverage affects the risk evaluation in the underwriting process, which affects the premiums set by the insurer. Groups that change insurers often increase their risk, which increases their premiums. This is persistency.
George and Jane are married and have five children. Both George and Jane are employed and covered by their respective employer group health plan. George's date of birth is March 3, 1979. Jane's date of birth is February 13, 1980. What plan will cover their children?
Jane's birthday falls earlier in the calendar year, so the children will be covered under her plan.
All of the following dependents are eligible for coverage under an employer-sponsored group health plan EXCEPT:
Dependents include the employee’s spouse, children, and dependent parents. Stepchildren and adopted children are considered children of the employee.
Which of the following is a nonscheduled plan of charges for basic surgical plans?
Usual, customary and reasonable surgical charges are based on average charges in a particular geographic area.
All of the following are limited medical expense policies EXCEPT:
All of the following statements regarding Health Savings Accounts are true EXCEPT:
Funds in an HSA can be used tax-free (no tax on principal or interest) for qualified health expenses. If funds are used for non-health purchases, a 10% penalty plus tax is assessed.
What type of health insurance is not technically group insurance, covers a small group of people for less than traditional group insurance, and each individual covered is issued an individual policy?
Franchise plans permit small groups to obtain health insurance. The coverage usually costs less and contains some of the benefits of group health insurance. Unlike group insurance, each individual insured under a franchise plan is issued an individual policy. In this way, franchise coverage is not technically “group coverage.”