Chapter 7 Review (Health): Underwriting and Policy Issue

Question 1

If the information in the medical section warrants further investigation into the applicant’s medical conditions, the underwriter may need an

Answer 1

attending physician statement (APS).

Question 2

Information from the MIB (Medical Information Bureau) helps insurance companies from adverse selection by applicants, as it detects

Answer 2

misrepresentations, helps identify fraudulent information, controls the cost of insurance, and helps underwriters evaluate risk.

Question 3

An insurance company would NOT notify the MIB if an application is _____.

Answer 3

declined

Question 4

Besides outright rejection, there are three techniques commonly used by insurers in issuing health insurance policies to _____ _____:

o Attaching an exclusion (or impairment) rider or waiver to a policy

o Charging an extra premium

o Limiting the type of policy or coverage issued

Answer 4

substandard risks

Question 5

The insurance company will NEVER alter the PROVISIONS of an insurance policy

Answer 5

due to risk

Question 6

if the insured changes to a less hazardous job, the insurer will return any excess unearned premium under the

Answer 6

Change of occupation provision

Question 7

Men show a _____ rate of disability than women, except at the upper ages

Answer 7

lower

Question 8

Women are sometimes required to undergo more expensive testing like a

Answer 8

Pap test, which is used for detecting cervical cancer

Question 9

Women have a _____ life expectancy than men

Answer 9

longer

Question 10

A producer may be the beneficiary of an applicant’s policy if the producer has _____ _____ on an insured.

Answer 10

insurable interest

Question 11

Whereas mortality rates show the average number of persons within a larger group of people who can be expected to die within a given year at a given age, _____ rates show the expected incidence of sickness or disability within a given group during a given period of time.

Answer 11

morbidity

Question 12

The most practical way to estimate the cost of future claims is to rely on _____ _____ based on past claims experience

Answer 12

claims tables

Question 13

• _____ _____ have been constructed for hospital expenses based on the amounts paid out in the past for the same types of expenses
• _____ _____ have also been developed for surgical benefits, covering various kinds of surgery based on past experience

Answer 13

Experience tables

Question 14

This concept requires health insurance providers to offer health insurance policies within a given geographical area at the same price to all individual or group plans without medical underwriting, regardless of their health status.

Answer 14

Community Rating

Question 15

The policy feature that permits the policyowner to select the timing of premium payments

Answer 15

Premium Mode (Mode of Premium Provision)

Question 16

• For health insurance, _____ _____ options include

o Annual

o semi-annual

o quarterly

o Monthly

Answer 16

premium payment

Question 17

Unlike life insurance, there is no _____ _____ option for health insurance policies

Answer 17

“single-pay”

Question 18

The _____ _____ denotes that coverage will be effective once the applicant proves to be insurable either on the date the application was signed or the date of the medical exam–whichever is later.

Answer 18

conditional receipt

Question 19

Under a _____ _____, coverage is guaranteed until the insurer formally rejects the application

Answer 19

binding receipt

Question 20

Happens when the insurer “approves” the application, they are _____ _____ _____

Answer 20

“issuing the policy”

Question 21

Premium taxation:

• When premiums are paid before your paycheck is taxed or removed from your taxable income when you file taxes
• The Benefits __________ (because you are already saving taxes on the premiums)

Answer 21

will be taxed

Question 22

Premium taxation:

• When premiums are paid after your paycheck is taxed and are not removed from your taxable income
• The benefits of the policy would be _____ _____.

Answer 22

tax free

Question 23

Premiums paid for personal disability income insurance are __________ by the individual insured, but the disability benefits are __________ to the recipient

Answer 23

not deductible

tax-free

Question 24

When a group disability income insurance plan is paid for entirely by the employer and benefits are paid directly to individual employees who qualify, the premiums are deductible by the employer. The benefits, in turn, are _____ to the recipient

Answer 24

taxable

Question 25

If an employee contributes to any portion of the premium, her benefit will be received tax-free in ________________.

Answer 25

proportion to the premium contributed

Question 26

Incurred medical expenses that are reimbursed by insurance may ____________.

Answer 26

not be deducted from an individual’s federal income tax

Question 27

Incurred medical expenses that are not reimbursed by insurance may only be deducted to the extent they exceed _____ of the insured’s adjusted gross income (AGI)

Answer 27

7.5%

Question 28

For self-employed individuals, _____ of their health insurance premium is tax deductible (as of 2003)

Answer 28

100%

Question 29

A higher deductible will help __________.

Answer 29

limit claims

Question 30

In an effort to reduce unnecessary surgical operations, many health policies today contain a provision requiring the insured to obtain a second opinion before receiving _____ _____.

This approach for cost management is known as:

Answer 30

elective surgery

Mandatory Second Opinions

Question 31

To control hospital claims and prevent unnecessary medical costs, many policies today require policy owners to obtain approval from the insurer before entering a hospital for elective surgeries.

This form of cost management is known as:

Answer 31

Precertification Review

Question 32

A pre-hospitalization authorization program (pre-certification) determines whether the requested treatment is ____________.

Answer 32

medically necessary

Question 33

Pre-admission, pre-hospitalization, and pre-certification are all common names used for this particular type of managed care

Answer 33

Precertification Review

Question 34

Pre-admission testing, also known as pre-admission certification, usually involves evaluating an individual’s overall health __________________.

Answer 34

prior to being hospitalized for surgery

Question 35

Preadmission testing helps control health care costs primarily by reducing ___________________.

Answer 35

the length of hospitalization

Question 36

• A health insurance company’s opportunity to review a request for medical treatment to confirm that the plan provides coverage for your medical services
• Health care is reviewed as it is being provided
• Involves monitoring the appropriateness of the care, the setting, and the length of time spent in the hospital
• This ongoing review is directed at keeping costs as low as possible and maintaining effectiveness of care by determining if the recommended treatment is appropriate

This form of cost management is known as:

Answer 36

Concurrent (Utilization) Review

Question 37

The advances in medicine now permit many surgical procedures to be performed on an outpatient basis where once an overnight hospital stay was required these outpatient procedures are commonly referred to as ______________.

Answer 37

ambulatory surgery

Question 38

• _____ _____ is sometimes referred to as Utilization Review.
• _____ _____ involves a specialist within the insurance company, such as a registered nurse, who reviews a potentially large claim as it develops to discuss treatment alternatives with the insured.
• The purpose of _____ ______ is to let the insurer take an active role in the management of what could potentially become a very expensive claim.
• Most of these services are performed on a prospective basis, a concurrent basis, a retrospective basis or a combination of all three.

Answer 38

Case management

Question 39

A _____ _____ involves analyzing a case before admission to determine what type of treatment is necessary.

Answer 39

prospective review

Question 40

_____ _____ involves the monitoring of a hospital stay by a nurse while a patient is in the hospital to determine when they will be released, if they require home health care or if a transfer to another facility such as a hospice center is warranted.

Answer 40

Concurrent review

Question 41

_____ _____ involves an analysis of care, after the fact, to determine if it was necessary and appropriate. The purpose of this review is not to deny claims but to monitor trends regarding treatment so that future actions may be taken to reduce or eliminate unnecessary health care costs, especially in high cost areas.

Answer 41

Retrospective review

Question 42

A _____ _____ _____ plan allows the insured to choose either an in-network or an out-of-network provider at the time care is needed.

Answer 42

point-of-service

Question 43

With Point-of-Service plans, all care is coordinated by the insured’s _____ _____ _____, which includes referrals to specialists

Answer 43

primary care physician

Question 44

P is self-employed and owns an individual disability income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?

Answer 44

$0.