HEALTH INSURANCE EXAM

PDF Download

HEALTH INSURANCE EXAM

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: consideration clause

Answer:

states the consideration terms. The applicant's consideration in the health insurance contract is the application and the first premium payment. The insurance company's consideration is the promise to pay a benefit when a stated future event occurs.

Question 2: optionally renewable provision

Answer:

the insurer holds the right to cancel the policy on a date specified in the contract. This provision also allows the insurer to increase the premium for anyone who is in the optionally renewable class.Typically, policies are canceled and/or premiums are increased on a policy anniversary date.

Question 3: errors and omissions, or E&O, insurance

Answer:

covers injuries and damages that occur due to professional services a producer rendered or failed to render.

Question 4: short-term disability insurance (STD)

Answer:

some insurers sell a type of DI that has a benefit period ranging from several months to two years. It is called short-term disability insurance (STD). Policies with benefit periods of two years or more are sometimes called long-term disability (LTD) policies.

Question 5: group plan sponsor

Answer:

the policy owner and premium payor

Question 6: integrate the benefits

Answer:

pay with similar benefits the insured may be receiving from other sources. This is especially common with disability income policies, which commonly stipulate the total benefit amount (from all sources) that the insured may receive. The stipulated amount is less than 100 percent of the insured's gross income.

Question 7: income replacement policy

Answer:

a variation of the traditional DI policy. They provide a benefit if the insured becomes disabled, and cannot perform the duties of his or her occupation, and works at another (less demanding) job, and suffers a reduction in income.

Question 8: Annually Renewable Term Life Rider

Answer:

Many insurance companies permit DI applicants to add a life insurance rider to the policy. Its purpose is to provide a death benefit in the event of the insured's death. It is not necessary for the insured to have been disabled at the time of death for the death benefit to be payable. If available, this rider is typically provided in the form of annually renewable term life insurance.

Question 9: probationary period

Answer:

this is the time that must pass after the policy is issued before illness-related disabilities will be covered.The probationary period is typically short-15 to 30 days

Question 10: waiver of premium provision

Answer:

provides that the policy's premium will be waived if the insured is disabled. The insurance continues in force. A waiver of premium can also be added to a policy through a rider.

Question 11: recurrent disability

Answer:

no new elimination period would be required nor would a new maximum benefit period apply.

Question 12: Medicare

Answer:

a federal government program that provides hospital and medical insurance to people age 65 and older.

Question 13: Specified coverage

Answer:

limited to a specific form of care.

Question 14: Elimination periods

Answer:

the waiting period after a loss occurs before benefits begin. During this time, benefits are not paid

Question 15: automatic increase option

Answer:

raises benefit amounts by a specified amount. Increases are generally defined as a percentage increase of the current benefit amount. Increases may be made as frequently as annually but may also be scheduled over longer time periods (for example, every five years).Question 16: social insurance supplement (SIS) rider (also known as a Social Security rider or additional monthly benefit rider)

Answer:

provides an additional monthly benefit before social insurance program benefits begin. (Social insurance programs include Social Security and workers' compensation.)

Question 17: Medical Los Ratio (MLR)

Answer:

The PPACA compels insurers to spend a minimum percentage of premium dollars on providing health care coverage and improving the quality of health care. The MLR ensures consumers that their premiums are spent primarily on health care coverage, and not on insurers' administrative and overhead business costs.

Question 18: residual disability benefit

Answer:

Unlike the standard partial disability benefit (which is payable only if the insured is recovering from a total disability), the residual benefit is payable if the insured suffers a less-than-total disability that forces him or her to cut back employment (and earnings). It is intended to supplement the residual income the insured continues to earn.

Question 19: legal actions provision

Answer:

defines the period of time during which the insured can take a legal action against the insurer because it didn't pay a claim to the insured's satisfaction. Under this provision, the insured cannot take legal action against the insurer until at least 60 days after the insured provides proof of loss to the insurer. Moreover, the insured cannot take legal action against the insurer more than three years after proof of loss was required. In other words, the period during which legal action can be taken ranges from 60 days after proof of loss has been provided to three years after proof was provided.

Question 20: Individual Coverage Mandate

Answer:

Beginning in 2014, all individuals are required to obtain health insurance coverage or pay a penalty. The penalty will start at $95 per person for 2014 and increase each year. (It increases to $325 in 2015 and to $695, or up to 2.5 percent of income, in 2016.) Families will pay half the penalty amount for children, up to a cap of $2,250 per family. Individuals may be eligible for an exemption from the penalty if they cannot obtain affordable coverage.q

Question 21: maximum benefit amount

Answer:

places a cap on the total monthly benefit payable, regardless of the insured's monthly wage and benefit percentage. For example, consider a DI policy that provides a benefit of 60 percent of earnings but also has a $5,000 maximum monthly benefit limit. An insured who earns up to $8,333 per month would qualify for a monthly benefit of the full 60 percent of earnings. However, one who earns anything more than that would be limited to the $5,000 monthly benefit (since $8,333 × 60% = $5,000).

Question 22: preferred provider organizations

Answer:

PPOs

Question 23: Policy exclusions

Answer:

those conditions that are not covered. That is, they are situations in which benefits are not payable because the underlying peril is excluded from coverage.

Question 24: intoxicants and narcotics provision

Answer:

excludes insurer liability if a covered loss results from intoxication or the illegal use of narcotic drugs.