Accident And Health Insurance Basics

Question 1

Health insurance

Answer 1

Is a generic term encompassing several types of insurance contracts, which, though related, are designed to protect against different risks.

Question 2

Disability income insurance

Answer 2

Is designed to provide periodic payments when the insured is unable to work because of sickness or injury

Question 3

What is an Accidental bodily injury

Answer 3

Is an unforeseen and unintended injury that resulted from an accident rather than a sickness

Question 4

What are the two major perils (cause of loss) under health insurance

Answer 4

Accident and sickness OR accident only

Question 5

Accidental death and dismemberment (AD&D) policies do what?

Answer 5

Distinguish between injuries due to accidental means and accidental results.

Question 6

The injury and the cause in an accidental means policy must be

Answer 6

The injury and it’s cause must be unexpected and unintended ( a man loses a leg in a car accident)

Question 7

Accidental results policy

Answer 7

Only the injury must be unexpected and unintended for example a man is cliff- diving and breaks his neck. The man intentionally jumped off the cliff, but not with the intention of breaking his neck.

Question 8

What does Sickness mean?

Answer 8

Illness which manifests while a policy is in force

Question 9

Coinsurance

Answer 9

Sharing of expenses between insured and insurer in percentages

Question 10

Deductible

Answer 10

Dollar amount an insured must pay before benefits begin

Question 11

Copayment

Answer 11

Sharing of the expenses between the insured and insurer in dollar amount

Question 12

Gatekeeper

Answer 12

Primary care physician who refers insured to specialists in an HMO

Question 13

Managed care

Answer 13

A program designed to contain health care costs by controlling the behavior of the participants. That have these characteristics:
Controlled access of providers
Comprehensive case management
Preventive care
Risk sharing
High quality care

Question 14

Extension of benefits

Answer 14

Means continuation of coverage under a specified benefit after discontinuance of original coverage to an employee or dependent. Basic medical benefits will usually be extended for 3 months. Major medical benefits will usually be extended for a period of 12 months.

Question 15

Stop loss provision

Answer 15

Stop loss limit is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses. Insurance pays 100% of the expenses that are above the specified stop loss limit

Question 16

What does it mean for a policy to be Guaranteed renewable?

Answer 16

Policy’s require the insurer to continue coverage as long as the premiums are paid

Question 17

Prepaid plans

Answer 17

Each subscriber pays a set fee (usually monthly) in order to receive the services that are provided under the plan.

Question 18

HMO

Answer 18

Health management organizations
They provide preventive care on a prepaid basis to voluntarily enrolled persons living within a specified geographic area(service area). Insureds pay a premium to the HMO and are provided services. The physicians and hospitals have an agreement with the HMO

Question 19

Indemnity plan

Answer 19

Pays health insurance benefits to the insured based on a predetermined rate set for medical services

Question 20

Multiple -Employer Trust (MET)

Answer 20

Is made up of two or more employers in similar or related businesses who do not qualify for group insurance on their own. The trustee has charge of the funds and all financial activities occur through it. The employer assumes legal responsibility for providing coverage and the employer has no conversion right upon leaving the group.

Question 21

PPO

Answer 21

Preferred provider organizations, the physicians are paid fees for their services rather than a salary, but the member is encouraged to visit approved member physicians that have previously agreed upon the fees to be charged.

Question 22

EPO

Answer 22

Exclusive provider organization is a type of PPO. The members do not choose health care providers from a list of preferred providers. Instead, insureds use specific providers who are paid on a fee-for-service basis.

Question 23

Self-funding plans

Answer 23

Are funded by the employer and administered by a third party. A successful self-funded program will have the following characteristics.
A group big enough to predict losses
Sound statistical data
A stop loss contract
A third party administrator
Flexibility in plan design and procedures

Question 24

What does an Accident policy cover?

Answer 24

Coverage of disability, medical care, death or dismemberment resulting from an accident

Question 25

Dread disease policy

Answer 25

Variety of benefits for a specific disease such as cancer or heart disease policy

Question 26

Critical illness policy

Answer 26

Pays a lump sum to the insured upon diagnosis and survival of a critical illness.

Question 27

Hospital indemnity

Answer 27

Provides a specific amount on a daily, weekly or monthly basis while the insured is in a hospital

Question 28

Credit disability

Answer 28

Covers payments on loans if the insured becomes disabled

Question 29

What are the 4 steps to the underwriting process

Answer 29

Field underwriting by the agent
Company underwriting
Premium determination
Policy delivery

Question 30

Sources of insurability information

Answer 30

Application
Producers/agent report
Attending physician report
Investigative consumer report
MIB report

Question 31

Preferred risk

Answer 31

Reflect a reduced risk of loss and are covered at a reduced rate. Like a non smoker

Question 32

Standard risk

Answer 32

Reflect average exposures and may be insured at standard rates and premiums

Question 33

Substandard risk

Answer 33

Are those that reflect an increased risk of loss. They may be able to obtain insurance but at a higher premium.

Question 34

HIV Exams

Answer 34

If the insurer requires an applicant to get an HIV test, the insurer pays for it and must get written consent from the applicant for the test. Insurers may decline coverage if the results come back positive. The insurer must also provide the client with info concerning HIV/AIDS counseling from a third party.

Question 35

Medical information bureau (MIB)

Answer 35

Is a membership corporation owned by member insurance companies. It is nonprofit.

Question 36

Insurability conditional receipt

Answer 36

Under these terms the insurance coverage becomes effective as of the date of the receipt, provided the application is approved.

Question 37

When are the most common occasions errors and omissions occur

Answer 37

During the interview and the policy delivery

Question 38

Elimination period

Answer 38

Is a type of deductible that is commonly found in disability income policies. It is a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable.

Question 39

What are term health policies and are they renewable?

Answer 39

When an individual needs health insurance for a specified period of time coverage is considered term health policy, which is not renewable. When the term expires, the insured must purchase another policy.