Nc Health Insurance Exam 1

Front 1

What is Adverse Selection?

Back 1

The tendency of poor risks to buy more insurance.

Front 2

If S declines her company's health insurance because it costs too much she has ______ risk?

Back 2

Retained Risk

Front 3

When it is possible to accurately predict what will happen to a large group of similar indivduals is...

Back 3

The Law of Large Numbers

Front 4

When a company is chartered in Virginia, it is automatically granted the right to do business in Virginia. When that company wants to expand their business to New York, it must first meet the NY requirements to become a NY _______ company.

Back 4

Admitted

Front 5

Explain what Consideration is

Back 5

Something of value exchanged by the parties to the contract.
[Example: The Applicant pays the first premium & the Insurer promises to pay according to the policy.]

Front 6

Risk is best defined as

Back 6

Chance of loss

Front 7

When you purchase an insurance policy, you are

Back 7

Transferring risk

Front 8

With Regard to Insurance, the term consideration means

Back 8

The premium and the statements on the application

Front 9

What is the term which indicates that an insurance contract contains the legally enforceable promises of only one party?

Back 9

Unilateral

Front 10

In purchasing an insurance contract, the applicant must accept the contract as written. This type of contract is referred to as a

Back 10

Contract of adhesion

Front 11

When D can expect to suffer a loss from C’s death... this is known as what?

Back 11

Insurable Interest

Front 12

Explain an agency contract

Back 12

You are the agent and your company is the principal

Front 13

If R signs an application for a $100,000 policy, pays the first premium and receives a conditional receipt,
then dies in an accident four days later, would the policy pay and under what conditions?

Back 13

Yes, only if R would have been approved for the policy as applied for, R’s beneficiary will receive $100,000.

Front 14

Assuming the following are all standard risks and all other factors being equal, which proposed insured would have the lowest premium?

a. Male, age 27
b. Female, age 44
c. Male, age 49
d. Female, age 27

Back 14

Female, age 27

Front 15

What happens when an application for insurance is submitted to the underwriting department for review?

Back 15

If a conditional receipt was issued, the policy becomes effective if approved by the underwriting department and with the results of any required medical exam.

Front 16

At what age may you draw money out of your Health Savings Account for non-medical purposes without penalty?

Back 16

Age 65

Front 17

Which of the following is NOT a service provider?

1) HMOs
2) Blue Cross/Blue Shield
3) PPOs
4) FSAs

Back 17

FSAs

Front 18

G buys his own Disability Income Policy. Any benefits he receives are what? Explain why.

Back 18

tax exempt ...
Because G purchased the policy with his own (net) income which had already been taxed.

Front 19

What feature of a Major Medical policy requires 100% payment of covered expenses after the insured’s claim cost reaches a certain level?

Back 19

the Stop Loss Feature

Front 20

B has a Major Medical policy with a $200 deductible and 80/20 coinsurance allocation. If she suffers a covered loss of $8200, how much will B be required to pay of this loss?

Back 20

$1800

Front 21

What does coinsurance do?

Back 21

It controls policy over-utilization

Front 22

What do Medical Expense companies have in place to eliminate small claims?

Back 22

A Deductible

Front 23

Following the onset of a disability, what is the period of time known as for which the policyowner/insured must wait before becoming eligible for benefits?

Back 23

The Elimination period

Front 24

What is the type of disability which requires no proof of loss of time or duties?

Back 24

Presumptive Disability

Front 25

How do Medical Expense companies reduce adverse selection?

Back 25

By using Pre-existing conditions limitation

Front 26

Explain a recurrent disability.

Back 26

When a disabled person returns to work and suffers a relapse.

Front 27

Explain the purpose of a Residual Disability.

Back 27

It helps to Replace income lost due to a permanent partial disability

Front 28

A policy often used as a salary conitinuation plan for a disabled individual employee is known as a what?

Back 28

Key employee policy.

Front 29

Does the insurance company according to the contract have an obligation to reinstate a Major Medical Policy which lapsed 90 days ago? Explain why.

Back 29

No... The company is NOT under a contractial obligation to reinstate a Lapsed policy - it's only at the company's discretion.

Front 30

Explain how the Reintstatement provision works.

Back 30

1) The company is NOT under a contractial obligation to reinstate a Lapsed policy - it's only at the company's discretion.
2) Companies normally require up to 60 days of Back Premium and THEN a dicision is made.
3) The reinstatement is AUTOMATIC on the 45th day from the Application Date.
4) After a 10 Day Waiting Period THEN Sickness Claims are covered.
* 5) Accident Coverage start on Day ONE.

Front 31

What is the Coordination of Benefits provision in a Group Medical Expense policy designed to do?

Back 31

Allows the insured to collect some benefits from each of the plans of two employed spouses without duplicating benefit payment. ONLY 100% of the COVERED Expenses will be paid regardless of the number of policies the Individual has in place.
** NEVER Try to get more benefits than your entitled to receive this is call FRAUD and is punishable by LAW!!

Front 32

When terminated from employment, what may allow an individual to be able to continue the same Group Health coverage.

Back 32

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986)

Front 33

Benefits paid to employees under a Group nonparticipating Disability Income policy are...

A) partially taxable
B) taxable
C) not taxable
D) deductible

Back 33

taxable

Front 34

Jack and Jill are married. Each has employer-sponsored Major Medical coverage for the entire family. Jack was born June 13, 1979, and Jill was born on April 1, 1981. Whose plan is primary for the children? Explain.

Back 34

Jill's

The Standerd Rule is the policy of the parent whose Birthday comes Earliest in the Year is the PRIMARY For The Children. (**NOT the oldest parent.)

Front 35

In Medicare which part is known as Hospital insurance?

Back 35

Medicare Part A

Front 36

AD&D policies or riders provide a death benefit known as what?

Back 36

Pincipal Sum

Front 37

Under Part B of Medicare, what percentage of the costs does Medicare pay? Explain how.

Back 37

Part B pays 80% only after the annual deductible has been met which is $162.00

Front 38

What should a Medicare enrollee purchase who wants to offset the deductibles and copayments?

Back 38

A Medicare Supplement policy

Front 39

The renewability provision of an MSP or LTC must at least provide the policyowner rights associated with what?

Back 39

Guaranteed Renewable Provision

Front 40

A poverty-stricken 75 year old would use what to cover Medicare deductibles and copayments?

Back 40

Medicaid

Front 41

How many months of continuous nursing home care must a Long Term Care policy provide?

Back 41

12 months

Front 42

A corridor deductible is a feature of which policy?

a) Major Medical
b) Comprehensive Major Medical
c) Base plan
d) Disability income

Back 42

Comprehensive Major Medical

Front 43

Are newborns covered in a Medical Expense Policy?
Explain why/why not.

Back 43

Yes ... ONLY if any required Premium is paid within 31 days of their birth.

Front 44

F owns a Comprehensive Major Medical Policy with a $1000 Base Plan, a $1000 annual deductible and an 80/20 Coinsurance Clause. If F suffers a covered loss and his total submitted claim is $9000, how much will the Insurance Company have to pay?

Back 44

$6600

Front 45

Which renewal provision would be the most expensive for the policyowner?

a) Guaranteed Renewable
b) Noncancellable
c) Optionally Renewable
d) Conditionally Renewable

Back 45

Noncancellable

Front 46

When does the Free Look period begin?

Back 46

On the date that the policy is delivered to the insured.

Front 47

Why does the Additional Monthly Benefit Rider exists?

Back 47

To pay income during a period of disability while the insured is waiting for Social Security to pay or deny benefits.

Front 48

If a lapsed health policy is reinstated, coverage for illness will begin how many days after reinstatement?

Back 48

10 Days

Front 49

A Medicare Supplement Plan B differs from a Plan A in what way?

a) B provides for fewer covered items than A
b) A is more expensive than B
c) B is more expensive than A
d) A provides for more covered items than B

Back 49

B is more expensive than A

Front 50

What does a Long Term Care Insurance policy primarily provide coverage for?

Back 50

The peril of aging.

Front 51

What is referred to as the Capital Sum.

Back 51

The amount of the AD&D policy which pays for the loss of one limb.

Front 52

A typical Medical Expense Policy would cover which of the following?

a) Hospitalization, Doctor office calls, and Custodial Care
b) Doctor office calls, surgery, and lost income
c) Hospice care, Hospitalization, and Doctor office calls
d) Custodial care, Doctor office calls, and Hospice care

Back 52

Hospice care, Hospitalization, and Doctor office calls

Front 53

Can a Pre-existing condition be excluded if a new enrollee in a small group health plan enters into the group and has a 12 month Certificate of Prior Credible Coverage?

Back 53

No ...

Front 54

No tax deduction is available for the entity that pays the Group Health premium.

True or False

Back 54

False

Front 55

In Group Health typically no medical exam is required.

True or False

Back 55

True

Front 56

In Group Health typically no taxes are paid on benefits.

Back 56

True

Front 57

In Group Medical Expense, occupational losses are excluded.

True or False

Back 57

True

Front 58

An insured that owns a Disability Income policy changes occupations to a more dangerous job and never notifies the Insurance Company. If the insured suffers a loss, the insured should expect what?

a) A bill for additional premium
b) No benefit
c) A reduced benefit
d) To be indicted for fraud

Back 58

A reduced benefit

Front 59

Future Income Option gives the insured the right to what?

Back 59

Buy more Disability Income insurance in connection with increased income.

Front 60

A is injured in an auto accident and is now receiving benefits from her individual disability income policy. How are these benefits taxed and paid to the insured?

Back 60

They are NOT Taxed and the Insured receives only a percentage of her normal monthly income.