CH 8 Health Insurance Basics

Question 1

What do limited health policies cover?

Answer 1

A specified accident or disease.

Question 2

Most health policies will pay the accidental death benefits if the death is caused by an accident and occurs within how many days?

Answer 2

90 days.

Question 3

In health insurance, what is considered a sickness?

Answer 3

An illness that first arises while the policy is in force.

Question 4

Who is responsible for paying the cost of a medical examination required in the process of underwriting?

Answer 4

The insurer.

Question 5

Whose responsibility is it to determine that all the questions on an insurance application or answered?

Answer 5

The agents.

Question 6

If an agent makes a correction on the application for health insurance, who must initial the correct answer?

Answer 6

The applicant.

Question 7

During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?

Answer 7

Underwriting.

Question 8

Who’s responsibility is it to inform an applicant for health insurance about the insurers information gathering practices?

Answer 8

The agents.

Question 9

During the application process for health insurance, a producer is trying to obtain credible information about the applicant that would help underwriters determine if the risk is insurable. What role is the producer acting?

Answer 9

Field underwriter.

Question 10

In medical expense contracts, what is the term that describes the payment method when the insured is responsible for paying the medical expenses, and then the insured pays directly to the insured?

Answer 10

Reimbursement.

Question 11

If an insurer decides to obtain medical information from different sources in order to determine the insurability of an applicant, who must be notified of the investigation?

Answer 11

The applicant.

Question 12

What type of hospital policy pays a fixed amount each day that the insured is in the hospital?

Answer 12

Hospital indemnity.

Question 13

Who is a field underwriter?

Answer 13

The agent/producer.

Question 14

When should an agent obtain a statement of good health from the insured?

Answer 14

When the premium was paid upon policy delivery and not at the time of application.

Question 15

What is the capital sum in Accidental Death and Dismemberment (AD&D) coverage?

Answer 15

A percentage of the principal sum.

Question 16

What is the entire contract and health insurance underwriting?

Answer 16

The application and the policy issued.

Question 17

In insurance, what is the term used for cause of loss?

Answer 17

Peril.

Question 18

Who must sign a health insurance application?

Answer 18

The policy owner, the insured (if different), and the agent.

Question 19

In health insurance, the policy itself and the insurance application form what?

Answer 19

The entire contract.

Question 20

What is adverse selection?

Answer 20

People who are more likely to submit insurance claims are seeking insurance more often than preferred risks.

Question 21

Under a credit disability policy, payments to the creditor will be made for the insurer until what point in time?

Answer 21

Until the period of disability ends or until the debt is repaid.

Question 22

What is the term used for a written request for an insurer to issue an insurance contract based on the provided information?

Answer 22

Application.

Question 23

What are the two types of expenses that are covered by health insurance?

Answer 23

Expenses related to healthcare, and expenses that compensate for loss of income.

Question 24

If an applicant does not receive his or her insurance policy, who would be held responsible?

Answer 24

The agent.

Question 25

The insureds health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have?

A) Accident only
B) Restrictive
C) Accidental death
D) Comprehensive

Answer 25

Accident only.

Question 26

Which benefits would a disability plan most likely pay?

A) Medical expenses associated with a disability
B) Income lost by the insureds inability to work
C) Rehabilitation costs
D) Copayments

Answer 26

Income lost by the insureds inability to work.

Question 27

All of the following would be factors in rating a health insurance policy EXCEPT

A) The deductible and copayment selected
B) The nationality of the applicant
C) The occupation of the applicant
D) Type of benefits provided in the contract

Answer 27

The nationaility of the applicant.

Question 28

When is the insurability conditional receipt given?

A) After the application has been approved and the premium has been paid
B) When an insured individual needs to obtain an insurability receipt for tax purposes
C) If the applicant is approved before the premium is paid
D) When the premium is paid at the time of application

Answer 28

When the premium is paid at the time of application.

Question 29

Which is generally true regarding insureds who have been classified as preferred risks?

A) They can borrow higher amounts off of their policies
B) They can decide when to pay their monthly premiums
C) They keep a higher percentage of any interest earned on their policies
D) Their premiums are lower

Answer 29

Their premiums are lower.

Question 30

Medicaid is sponsored by what kind of sources?

A) Federal only
B) State only
C) Both state and federal
D) Private companies

Answer 30

State and federal

Question 31

Which of the following is the most common time for errors and omissions to occur on the part of an insurer?

A) Application process
B) Policy delivery
C) Policy renewal
D) Underwriting

Answer 31

Policy delivery.

Question 32

Which of the following would an accident-only policy NOT cover?

A) Amputation of a leg that was burned during a house fire
B) Surgery to repair a wrist damage by tendonitis
C) Hospitalization costs due to a boating accident
D) Death from a motorcycle accident

Answer 32

Surgery to repair a wrist damaged by tendonitis.

Question 33

A health insurance plan that covers all accidents and sicknesses that are not specifically excluded from the policy is referred to as a

A) Broad plan
B) Comprehensive plan
C) General plan
D) Service plan

Answer 33

Comprehensive plan.

Question 34

The agent is known as the “field underwriter” because of the information he/she gathers for the insurer. This helps the insurer

A) Reduce the number of staff underwriters
B) Avoid adverse selection
C) Comply with state law
D) Learn about the underwriting process

Answer 34

Avoid adverse selection.

Question 35

Each of the following factors is a significant consideration in the underwriting of individual health insurance risks EXCEPT

A) Applicant’s physical condition
B) Applicant’s occupation
C) Applicant’s geographical location
D) Applicant’s age

Answer 35

Applicant’s geographical location.

Question 36

Which is the primary source of information used for insurance underwriting?

A) Application
B) Applicant interviews
C) Medical records
D) Private investigations

Answer 36

Application.

Question 37

What is the best way to change an application?

A) Erase the previous answer and replace it with the new answer
B) White-out the previous answer
C) Draw a line through the incorrect answer and insert the correct one
D) Start over with a new application

Answer 37

Start over with a new application.

Question 38

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

A) Charge a higher premium
B) Require a yearly medical examination
C) Lower its insurability standards
D) Refuse to issue the policy

Answer 38

Charge a higher premium.

Question 39

What phase begins after a new policy is delivered?

A) Elimination period
B) Grace period
C) Free-look period
D) Insurability period

Answer 39

Free-look period