Ch.7 health

Question 1

Adverse selection

Answer 1

a phenomenon where individuals at higher risk for health issues are more likely to engage with health insurance, potentially leading to higher costs and market instability

Question 2

Age change

Answer 2

the date halfway between birthdays when the applicant’s age changes to the next higher age

Question 3

Agent’s report

Answer 3

The agent’s report is where the agent records personal observations about the proposed insured. It is a confidential way for the agent to provide relevant underwriting information to the insurance carrier

Question 4

Claims experience

Answer 4

an insured’s history of claims or rate of loss. The greater the claims experience, the higher the required premium

Question 5

Community rating

Answer 5

Insurance carriers generally base community ratings on their overall claim experience and healthcare costs in a geographical area

Question 6

Constructive delivery

Answer 6

occurs when an insurance carrier gives up all control of a policy and releases it for unconditional delivery to someone acting for the policyholder, including the company’s own agent

Question 7

Delivery receipt

Answer 7

Insurance companies require producers to obtain signed delivery receipts as proof of delivery. The delivery receipt is important because it can designate the start of the policy’s free-look period

Question 8

Earned premium

Answer 8

represents the amount of the insurance premium that corresponds to the time period for which the insurer has provided coverage

Question 9

Unearned premium

Answer 9

the part of the insurance premium that covers future periods of coverage and is considered a liability until the insurer earns it over time as the policy period progresses

Question 10

Health insurance premium formula

Answer 10

morbidity – interest + expenses

Question 11

Information and Privacy Protection Act

Answer 11

Each insurer must conform with state and federal laws privacy. This act also prohibits insurers from basing their decisions solely on previous adverse underwriting decisions

Question 12

Expense factor

Answer 12

also known as the “load,” or “loading factor,” factors the insurer’s operating expenses’ into the premiums. Some of these expenses include commissions, administrative costs, overhead, profits, and regulatory reserves

Question 13

Inspection report

Answer 13

a report that contains general information regarding the health, habits, finances, and reputation of an applicant. This report is developed by a firm that specializes in rendering this type of service

Question 14

Medical information Bureau

Answer 14

a service organization that collects medical data on life and health insurance applicants for member insurance companies

Question 15

Medical report

Answer 15

may be needed to provide further underwriting information. This report may be based on a recent examination with the applicant’s physician or an examination conducted as part of the underwriting process

Question 16

Moral Hazard

Answer 16

applicant habits or lifestyles that indicate a higher than average level of risk for the insurer. Such habits include excess drinking, recreational drug use, and dishonest business practices

Question 17

Non-medical

Answer 17

This term refers to an application evaluated without a medical exam

Question 18

Outline of coverage

Answer 18

describes the basic benefits, conditions, and other terms of an insurance policy without using industry jargon

Question 19

Policy fee

Answer 19

a small transaction fee charged by some insurers for the first or subsequent policy years

Question 20

Policy term

Answer 20

the period of time a policy will remain in existence when premiums are being paid. It can also be described as a single renewal period for renewable policies

Question 21

Premium mode

Answer 21

the frequency of premium payments. If the policy has an annual premium, the insurer can assess an extra charge if premiums are paid quarterly, semiannually, or monthly

Question 22

Replacement

Answer 22

A legal act, substituting an existing policy or asset with a new one, whether it’s a policy replacement, replacement of property after a loss, or changes in life insurance coverage

Question 23

Special class

Answer 23

refers to coverage tailored for unique or higher-risk groups, such as individuals with chronic conditions or specific health needs. These policies often offer enhanced benefits and more specialized care compared to standard plans

Question 24

Special questionnaire

Answer 24

gather more detailed information about a non-medical aspect of the applicant’s life—usually about an activity that often entails a greater than average level of risk

Question 25

Trial application

Answer 25

an application submitted without the initial premium

Question 26

Taxation of disability income insurance

Answer 26

if you pay disability insurance premiums with after-tax dollars, benefits are generally tax-free. If premiums are paid with pre-tax dollars or by your employer, the benefits are usually taxable

Question 27

Taxation of medical expense insurance

Answer 27

premiums for medical expense insurance paid with after-tax dollars are generally tax-deductible and benefits are tax-free. Premiums paid with pre-tax dollars or by your employer usually result in tax-free benefits as well, though you cannot claim a deduction for those premiums again

Question 28

Mandatory second options

Answer 28

generally include coverage for second medical opinions, alternative treatments, appeal processes, preventive care, and choices of healthcare providers, ensuring that policyholders have access to comprehensive and flexible care options

Question 29

Pre-Certification review

Answer 29

a process where health insurance companies assess the need and coverage of specific medical services or treatments before they are provided, aiming to ensure appropriateness and manage costs

Question 30

Ambulatory surgery

Answer 30

refers to surgical procedures that do not require an overnight stay in a hospital

Question 31

Case management

Answer 31

involves coordinating and managing care for patients with complex needs to improve health outcomes, enhance efficiency, and control costs