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Disability Income Insurance > Disability Income Insurance > Flashcards

Disability Income Insurance Flashcards

1
Q

Health insurance

A

Covers economic losses due to the perils of accidental injury and/or sickness

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2
Q

What can health insurance also be known as

A

Disability insurance, accident and health (A and H) insurance or accident and sickness (A and S) insurance

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3
Q

Accidental injury

A

Accidental bodily injury that is unintentional or unexpected
and sudden resulting from an accident (i.e heart attack would not be covered - this is an illness)

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4
Q

Sickness

A

illness and disease that manifests itself after the policy is in force

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5
Q

Disability income insurance

A

Provides benefits to replace income lost due to a disability caused by illness and/or accident

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6
Q

Does disability insurance cover medical expenses

A

No, it is only there to replace loss of income

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7
Q

Medical expense insurance policy

A

Covers hospital, surgical and other medical expenses

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8
Q

Dental expense insurance policy

A

Covers the costs of dental exams and treatment that are excluded from medical expense coverage

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9
Q

Long-term care insurance

A

Pays for expenses arising out of institutional and/or noninstitutional health and social services incurred by a person unable to perform some or all of the activities of daily living because of illness or disability

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10
Q

Accidental death and dismemberment

A

Covers loss of life, limb or sight as a result of an accident, but not as a result of illness

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11
Q

Besides monthly income (indemnity payments) what other benefits can disability cover

A
  • Lump sum payments
  • Rehab
  • Medical reimbursement for nondisabling injury
  • Periodic payments to cover loan payments
  • Daily benefits paid while hospitalized
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12
Q

What are the three types of disability income coverage

A
  • Own occupation
  • Any occupation for which the insured is reasonably suited
  • Any occupation
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13
Q

Define own occupation for disability

A

The insured would qualify for benefits if he were unable to perform the major duties of his own occupation

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14
Q

Any occupation for disability

A

The insured can’t work at any gainful occupation

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15
Q

Any occupation for which the insured is reasonably suited for disability

A

Benefits only pay if the insured is unable to perform the duties of any occupation for which he is reasonably suited by education, training or experience. (you will only get paid if you go from working as a CEO to working at mcdonalds)

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16
Q

Define income replacement policies

A

Provide for replacement of a percentage of the insured’s lost income due to disability using the “any occupation” definition.

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17
Q

When computing lost income, what will the insurer take into consideration

A

Other sources of income i.e. workers’ comp, part-time work, other disability policies.

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18
Q

Define presumptive disability

A

The insurer will presume that a total loss of sight, hearing, speech or the use of two limbs is a total and permanent disability.

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19
Q

How will the insurer pay in presumptive disability

A

The insurer will either pay a lump sum or a monthly income (even if the insured is still able to work)

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20
Q

Define elective indemnity

A

Lump-sum payments

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21
Q

Define partial disability

A

The insured is only able to perform some of his tasks, but not all of them

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22
Q

How does partial disability pay

A
  • Will only pay if the insured is first eligible for total disability
  • Usually in an amount that is no more than 50% of the total disability benefit
  • Generally limited to a benefit period of no more than six months
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23
Q

How is residual disability calculated

A

It is based on a percentage of earnings lost and it is usually only paid if the income loss exceeds a certain percentage

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24
Q

Define loss of earnings tests

A

The insured usually has to undergo a physical exam every 6 months to prove continued disability

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25
Q

Define indemnity for disability

A

monthly or weekly income paid to a disabled person

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26
Q

Generally, disability income policies cover what only

A

Total disabilities

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27
Q

Define peril in disability insurance

A

A cause of a loss due to an accident/sickness or an accident only

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28
Q

What two things go into a sickness peril

A
  • The sickness or disease happened after the effective date
  • There is usually a probationary period (illness will not be covered during probation, however, a disability will be covered)
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29
Q

Define occupational disability income coverage

A

Work related (most benefits are covered under workers comp) - you will receive something regardless if you are injured at work or not at work

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30
Q

Define non-occupational disability income coverage

A

Non- work related - if you are injured at work, you will receive nothing.

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31
Q

What are 7 policy exclusions (disability)

A
  • War or military service
  • Certain types of aviation accidents
  • Illegal use of controlled substances
  • Attempted suicide
  • Intentionally self-inflicted injuries
  • Injury incurred while committing a felony
  • Occupational injury or illness
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32
Q

How long is a short-term disability policy

A

One year or less

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33
Q

How long is a long-term disability policy

A

Two years or more (you usually have to collect before a certain age)

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34
Q

What is the maximum benefit payment amount for disability

A

The policy will not pay more than the insured’s prior income, it’s usually 60 to 80 percent

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35
Q

Why does disability not pay so much

A
  • Benefits are non taxable

- Want to motivate the member to return to work

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36
Q

Define a deductible in the form of a waiting period

A

Sets a minimum period of time the disability must last before the insured is eligible for benefits

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37
Q

What are the two options if the member has a recurrent disability

A
  • If the disability recurs within six months after the insured has returned to work, it will be considered part of the original claim
  • If the disability recurs longer than six months after the insured has returned to work, then it is treated as a new claim
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38
Q

Define credit accident and health insurance

A

Form of disability income coverage that provides for the insurer to make loan payments to the creditor of a specific loan or other credit transaction while the insured is disabled.

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39
Q

Define hospital income insurance or hospital indemnity insurance

A

Disability income that pays a set daily benefit amount when the insured is confined to a hospital.

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40
Q

What are six types of riders that can be offered with disability

A
  • Accidental death and dismemberment
  • Waiver of premium provision
  • Accident medical expense rider
  • Future increase option rider
  • Annual renewable term rider
  • Cost-of-living adjustment rider
  • Return of premium rider
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41
Q

Define accidental death and dismemberment rider for disability

A

The insurer would pay a lump sum and/or disability income benefits in the event of death or dismemberment resulting from an accident

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42
Q

Define a waiver of premium provision

A

The insured does not need to pay any premiums while he is totally and permanently disabled.

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43
Q

Define accident medical expense rider

A
  • Pays to cover medical expenses

- Reimburse for taking time off work

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44
Q

Define future increase option rider

A

Allows the insured to buy additional coverage without proof of insurability (premium based on the insured’s attained age at the time of the purchase)

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45
Q

Define annual renewable term rider

A

Allows the insured to renew the policy each year up to a certain age without evidence of insurability (showing how healthy or unhealthy you are) , but at a premium that can increase

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46
Q

Define return of premium

A
  • Returns a percentage of the premium (usually 80%) at certain intervals (usually every 10 years), less any claims paid during that interval
  • Also allows the refunded premium to earn interest if left with the insurer and can by used to pay for future premiums
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47
Q

To qualify for Social Security benefits, a person must:

A
  • Meet definition of disabled (very strict)
  • Have disability insured status or special insured status
  • Have a disability that is expected to last 12 months or end in death
  • Complete a five month waiting period before benefits are payable (be disabled for more than five months)
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48
Q

Define disability insured for SS

A

You qualify by working a certain period of time (usually 20 hours in a 40 hour work week)

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49
Q

Define special insured status for SS

A

Applies to certain persons disabled before age 31

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50
Q

Will SS be decreased if the member is also getting workers comp

A

Yes

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51
Q

Define a social insurance rider

A

Used to add coverage equal to an amount that the insured could be expected to receive in disability benefits from a social insurance program (if you don’t qualify to earn your SS, you can use the rider that acts like an SS)

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52
Q

Define additional monthly benefit (AMB)

A

Adds income during the first year of disability, because it usually takes a year before Social Security pays benefits.

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53
Q

Would an employee be tax for the amount of disability premium that his employer paid for his group disability

A

No - the employee would not be taxed

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54
Q

Would the employee be taxed for their premium that they paid for their disability coverage

A

No - the employee would not be taxed

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55
Q

Would the employee be taxed on benefits received from group disability

A

Yes

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56
Q

Define buy-sell agreement

A

For co-owners - an agreement that they will purchase the interest of another owner at a prearranged price if an event occurs, such as disability of one owner.

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57
Q

Define a cross-purchase arrangement

A

Each co-owner owns a disability buyout policy on each of the other co-owners and is paid the income necessary to buy out the interest of the disabled partner

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58
Q

Define an entity plan

A

The partnership or corporation owns disability buyout policies on each co-owner and is paid the funds to buy out the disabled owner’s interest

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59
Q

Define key employee disability insurance

A

Provide income to a key employee to cover the cost of hiring and training a replacement if that key employee becomes disabled

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60
Q

Define accidental death and dismemberment coverage

A

Covers loss of life, limb or sight as a result of an accident

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61
Q

What kind of policy is an AD&D policy?

A

Valued policy

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62
Q

Define valued policy

A

It will pay a specified amount of money if there is a loss instead of paying the amount of the actual loss

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63
Q

Define principal sum (face value)

A

The amount paid if there is an accident within the policy period that causes the insured to die within a specified period after the accident (YOU DIE)

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64
Q

Define capital sum

A

The amount payable for dismemberment losses (YOU HAVE SOMETHING CUT OFF)

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65
Q

What if you lose sight in one eye

A

You only get one half of the principal sum

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66
Q

What if you lose sight in both eyes

A

You get all of the principal sum

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67
Q

Define dismemberment

A
  • Total loss of sight

- Severance of a limb at or above a major joint

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68
Q

Is a heart attack covered under AD&D

A

NO - it has to be from an accident. A heart attack is an illness/disease

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69
Q

After primary beneficiary, who is next to receive the benefits

A

The contingent beneficiary

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70
Q

Who is 4th in line to receive benefits

A

The person’s estate

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71
Q

If the beneficiary is irrevocable, can the policyholder change the beneficiary

A

No - the beneficiary would have to change it

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72
Q

Provide an example of private insurance

A

Moda - we issue commercial insurance (not group)

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73
Q

What four types of insurances does the government provide

A
  • Social Security
  • Medicare
  • Tricare
  • Medicaid
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74
Q

Define limited insurance

A

Covers only specific things - like cancer only

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75
Q

Define comprehensive insurance

A

Covers multiple exposures

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76
Q

Define fee-for-service

A

The insured pays premiums, and the insurer pays the providers for the services performed

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77
Q

Define prepaid

A

HMOs - charge for services in advance and then cover services (Keizer) - no coinsurance

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78
Q

Define benefit schedule

A

Lists the amount to be paid for each treatment

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79
Q

Define coverage for usual, customary and reasonable (UCR)

A

They do not specify an amount to be paid - it provides benefits up to the reasonable and customary amount charged by physicians for the service in the area.

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80
Q

Define master policy

A

Group insurance - issued to a group sponsor to insure individual members of the group.

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81
Q

Define absolute schedule

A

Maximum dollar amount to be paid for a procedure

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82
Q

Define relative value

A

Assigns a value to a procedure (like 80% coinsurance)

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83
Q

Define unit factor in relative value

A

Is expressed as a dollar amount and based on geographic area

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84
Q

What are 7 examples of limited coverage policies

A
  • Accident
  • Blanket
  • Vision care
  • Prescription drugs
  • Specified disease
  • Credit disability
  • Hospital indemnity
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85
Q

Define blanket policy

A

Group policy purchased by an entity (I am covered my trimet when I ride the max)

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86
Q

Define diagnostic dental care

A

Routine diagnostic procedures - oral exams and x-rays

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87
Q

Define preventive dental care

A

Teeth cleaning and fluoride treatment

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88
Q

Define restorative dental care

A

Used to restore the use of teeth - fillings, inlays and crowns

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89
Q

Define oral surgery

A

Teeth extraction - surgical treatment of diseases or injuries

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90
Q

Define endodontics

A

Treatment of diseases of the dental pulp within the teeth - root canal

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91
Q

Define periodontics

A

Treatment of the gyms and other supporting structures

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92
Q

Define prosthodontics

A

Replacement of missing teeth and structures using artificial devices - bridgework and dentures

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93
Q

Define a scheduled (or basic) dental plan

A

Lists all services to be covered and how much they will be covered up to a maximum amount (low cost and low coverage option)

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94
Q

Define nonscheduled (comprehensive) dental plan

A

Covers expenses on a usual, customary and reasonable (UCR) basis - with deductibles and coinsurance

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95
Q

What are the three different levels in a nonscheduled dental plan

A
  1. Diagnostic and preventive
  2. Basic restorative
  3. Major restorative
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96
Q

Where does periodontics fall in the levels

A

Level 2 - basic restorative

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97
Q

How does a combination plan cover dental

A

Usually diagnostic and preventive are UCR and other services are on a schedule

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98
Q

What to remember for COBRA and dental

A

Dental coverage is not normally available on an individual basis, it usually will not include a conversion privilege.

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99
Q

What does CDHP stand for

A

Consumer driven health plan

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100
Q

What does HDHP stand for

A

High deductible health plan

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101
Q

How does a CDHP work

A
  • Member does not make a copayment or pay coinsurance at the time that they receive care
  • Provider sends claim to insurance
  • Insurance tells provider the correct amount to charge the member
  • Member pays bill from HRA or HSA
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102
Q

On HDHP how do they calculate the family limits

A

Usually these are twice the amount of single coverage

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103
Q

What two things make up an HSA

A
  • Funds accumulate without a limit
  • Contributions by an individual are tax deductible, and those made by an employer are not included in the individual’s taxable income
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104
Q

Is there a limit on how much you can put into your HSA

A

Yes - up to the annual max contribution or the deductible (which ever is less)

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105
Q

What 5 things can you use your HSA to pay for

A
  • Deductible
  • Copays
  • Prescriptions
  • Long-term care insurance
  • Premiums for COBRA while unemployed
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106
Q

Can you use your HSA dollars for other things (like a vaca) if you are under 65

A

Yes, however, they are taxable and subject to a 20% penalty

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107
Q

Can you use your HSA dollars for other things if you are over the age of 65

A

Yes, however, taxes will apply (there is no penalty)

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108
Q

What does HRA stand for

A

Health reimbursement account

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109
Q

What 5 things make up an HRA

A
  • Only the employer contributes
  • Withdrawals are tax free for qualified expenses
  • Unused credit maybe carried over without limits
  • Credits do not earn interest and are forfeited if the health plans are switched
  • HRA is administered by the health plan or the employer
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110
Q

What is the biggest difference between an HSA and an HRA

A

An HSA is portable, an HRA stays with the employer

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111
Q

Are distributions from an HSA taxable

A

No

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112
Q

Define per-cause limit for medical

A

Limits the amount the insurer will pay for any one cause of claim (injury or illness)

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113
Q

Define cumulative deductible

A

Applied to all injuries or illnesses during the calendar year

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114
Q

Define carry over provision

A

Carrying over the amount paid in the last quarter towards your deducible to the following plan year

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115
Q

Define a per-cause deductible

A

Deductible would have to be satisfied during a specified accumulation period for each separate illness or injury before expenses for that condition are covered.

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116
Q

Define common accident/common sickness provision

A

If more than one insured member of a family in injured in the same accident or has the same illness, only one deductible needs to be satisfied.

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117
Q

Define a flat deductible

A

Initial deductible that must be satisfied before benefits are payable

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118
Q

Define a corridor deductible

A

In supplemental policies - a deductible will apply after basic coverage is used up, and before major benefits are applied

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119
Q

Define integrated deductible

A

Equal to the greater of the limits of the basic plan benefits or a specified deductible amount (depends on how much is covered under basic) page 257

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120
Q

Define stop-loss

A

Limit on the amount for which the insured is responsible on a per-claim or per-year basis (OOP)

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121
Q

When is Medicare the primary payor (3)

A

When secondary is:

  • Individual policy
  • Medicare supplement
  • Medicare carve-out
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122
Q

When is Medicare the secondary payor

A

When primary coverage is:

  • Employer has at least 20 employees, the member is 65 and elects to stay covered under employer
  • Employer has at least 100 employees, the member is not 65, but qualifies for Medicare due to disability
  • Employee qualifies for Medicare due to kidney failure - Medicare is secondary for the first 30 months
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123
Q

Where can you not get coverage

A

Costa Rica

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124
Q

What are 3 instances where care can be obtained outside the US

A
  • The member is in the US when the emergency occurs and a Canadian/Mexican hospital is closer
  • The member lives in the US and a Canadian/Mexican hospital is closer
  • The member is traveling between Alaska and another state and a Canadian hospital is closer
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125
Q

When is enrollment for Medicare Part A automatic (2)

A
  • Member is 65 and has been receiving SS or Railroad Retirement benefits before age 65
  • Member has been receiving SS or Railroad Retirement disability for 24 months
    (for purposes of the test - think of enrollment as automatic)
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126
Q

Can you enroll in Medicare early

A

Yes, you just have to pay premiums

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127
Q

Define initial enrollment period (IEP)

A

Seven-month period starting three months before the month of the person’s 65th birthday and ending three months after that birthday

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128
Q

When is the Special Enrollment Period (SEP)

A

Member can enrollment in Part A or B at an eight-month period that begins when employment ends or coverage under the group health plan ends (whichever comes first)

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129
Q

What 4 things does Part A cover

A
  • Semiprivate room
  • Regular nursing
  • Intensive care
  • Drugs and lab tests
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130
Q

Will Part A cover a private room

A

Only if it is medically necessary

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131
Q

Define a benefit period in Part A

A

Person is eligible for coverage up to 90 days, when they first enter the hospital and when they leave hospital

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132
Q

What if a patient re-enters the hospital at 60 days

A

There is no additional deductible

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133
Q

Does Part A have a deductible and coinsurance

A

Yes

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134
Q

When does coinsurance kick in

A

During days 61 through 90 (after 60 days)

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135
Q

What if the member’s hospital stay lasts more than 90 days

A

The member can use 60 of his reserve days

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136
Q

When will the member be responsible for entire cost

A

After 150 days (that means they used up their 90 days and 60 reserve days

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137
Q

What is the number of days that you are remitted back to the hospital that it is considered the same benefit period

A

If you are remitted within 60 days of discharge

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138
Q

Define diagnosis related group (DRG)

A

Groupings of conditions with a separate fee listed for each

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139
Q

Under Part A, how are hospitals payed

A

Prospective payment system

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140
Q

Define prospective payment system

A

The hospital is paid based on the DRG, regardless of the length of stay or the actual cost of treatment

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141
Q

What three 3 do quality improvement organizations look for

A
  • Was care reasonable and necessary
  • Met quality standards
  • Was delivered in an appropriate setting
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142
Q

What 4 things define a skilled nursing facility

A
  • Provide skilled care under doctor
  • Has doctor available for emergency care
  • Provides 24 hour nursing care
  • Has at least one full-time registered nurse on staff
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143
Q

For Part A to pay for a skilled nursing facility what must apply

A

The patient must be admitted to the facility within 30 days after a stay in a hospital of at least 3 days

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144
Q

How many days under SNF

A

100 days

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145
Q

What about cost share under SNF

A

No deductible - coinsurance for days 21-100

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146
Q

Is there a limit on the number of days that Part A will pay for home health

A

No - unlimited number

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147
Q

What are the limits for part-time home health care

A

Care is provided no more than six days per week and no more than three consecutive weeks

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148
Q

Does Part A cover custodial care (homemaker/household services)

A

No - this is not considered medical care

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149
Q

When is hospice care covered

A

When a patient has less than six months to live

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150
Q

What is the cost share for hospice care

A

None

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151
Q

Is respite care covered in a hospice

A

Yes - up to 5 consecutive days

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152
Q

Basically what does Part B cover

A

Non-hospital

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153
Q

Is Part B automatic

A

No - it is voluntary, but it will be provided with Part A unless specifically declined

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154
Q

Similarly to Part A, when can a member enroll in Part B

A
  • Initial 7 month window
  • Open enrollment
  • Special 8 month window following termination of group coverage
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155
Q

What are 6 categories that Part B covers

A
  • Physician and surgeon services
  • Outpatient
  • ER
  • Home health not covered by Part A
  • Ambulance
  • Devices (braces, pacemakers)
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156
Q

Is there cost sharing for Part B

A

Yes - there is a deductible and coinsurance

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157
Q

What is the coinsurance rate for Part B

A

Medicare will pay 80% of allowable charges

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158
Q

How do they determine the allowable charges (permissible amount)

A
  • Based on a fee schedule, adjusted geographically, known as the Medicare approved amount
  • Are not based on the usual and customary charges
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159
Q

What plans are considered traditional Medicare plans

A

Part A and Part B

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160
Q

What is another word for Medicare Part C

A

Medicare Advantage

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161
Q

What types of things does Part C cover

A
  • Long-term care, custodial care, dentures, dental, glasses, hearing aids, drugs
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162
Q

What is another word for Medicare Part D

A

Medicare Prescription Drug Coverage

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163
Q

Under Part D, what do they not base the premium on

A

The member’s health condition or the number of prescriptions needed

164
Q

When can a person enroll in Part D

A
  • Initial

- Open

165
Q

What is required for Part D to be creditable

A

The average payments that the Plan pays for the drugs is the same payment or a larger payment than the standard Medicare drug coverage

166
Q

What if a person’s Part D is non-creditable

A

They may pay a late enrollment penalty if they decide to purchase Part D to go along with their group coverage

167
Q

How do participating providers pay claims for Medicare

A
  • They agree not to charge more than the Medicare approved amount
  • They are paid directly by Medicare (except for deductibles and coinsurance)
  • Not allowed to charge patient anything else
168
Q

How do nonparticipating providers pay claims for Medicare

A
  • They accept patients on a case by case basis

- They can charge up to 115% of Medicare

169
Q

What is the difference between the Medicare approved amount and what the actual charge is called

A

Excess charge or balance billing

170
Q

How does the patent pay for a nonparticipating provider

A

Patient pays the entire charge and is then reimbursed by Medicare

171
Q

Who handles Medicare claims and payment for Part A

A

Intermediaries

172
Q

Who handles Medicare claims for Part B and D

A

Carriers

173
Q

Who handles Medicare claims for Part C

A

Insurance company

174
Q

What are two qualifying events to change Medicare Advantage plans under the special enrollment period

A
  • Moving out of the service area

- Changing nursing homes

175
Q

How is blood covered under Part A and Part B

A
  • Member pays full cost for first three pints
  • Member will not be charged if hospital receives the blood at no charge from the blood bank
  • This requirement is once per calendar year for both Part A and Part B
176
Q

What does a Medicare supplement plan cover

A
  • Deductibles
  • Coinsurance
  • Charges above Medicare limits
  • Costs for uncovered services
177
Q

What does OBRA stand for

A

Omnibus Budget Reconciliation Act

178
Q

What does OBRA do

A

Sets requirements for Medicare supplement insurance

179
Q

How long is the open enrollment period for Medicare supplement

A

Six month window after a member turns 65 and is enrolled in Part B or becomes enrolled in Part B regardless of age

180
Q

To be eligible for a Medicare supplement policy, the member needs to be enrolled in what

A

Both Part A and Part B

181
Q

What are the plan names of Medicare supplement policies

A

Plans A-N

182
Q

What is the difference between the Medicare supplement policies

A

Each policy offers the same benefits and covered, regardless of the insurer selling the policy, the only difference is the premium

183
Q

All insurance companies selling Medicare Supplement policies are required to make what plan available

A

Plan A “core plan”

184
Q

If an insurance company offers Medicare Supplement policy, what must they also offer

A

They must also offer either Plan C or Plan F

185
Q

What are the core benefits that are required to be offered in Plan A

A
  • Medicare Part A coinsurance
  • Additional 365 days of hospital covered, paid 100%
  • Medicare Part B coinsurance/copayment
  • Reasonable cost for the first three pints of blood
  • Part A hospice coinsurance/copayment
186
Q

Which plans are considered catastrophic

A

Plans M and N (deductibles, premiums less)

187
Q

What does ADLs stand for

A

Activities of Daily Living

188
Q

When does Medicare cover nursing care

A
  • Only after hospitalization
  • Only in a SNF setting
  • Only for 100 days
189
Q

What does long term care insurance cover

A
  • SNFs

- Rehab

190
Q

Is there a waiting period (elimination period) with long term care insurance

A

Yes, typically there is a waiting period of service days, versus calendar.

191
Q

Define a calendar day waiting period

A

Begins on the first day of LTC service and counts consecutive days until the waiting period has been satisfied

192
Q

Define service day waiting period

A

One day of service may equal one day of the waiting period, or a certain number of service days per week may count for seven days of the waiting period.

193
Q

What are two interesting exclusions under LTC

A
  • Coverage for mental illness or nervous disorders without a demonstrable organic cause (Alzheimer’s would be covered, because you can show an organic cause)
  • Assistance needed in less than three activities of daily living
194
Q

Who administers Medicaid

A

State government

195
Q

Do Medicare and Medicaid cover custodial care

A

No

196
Q

Who is offered LTC under group policies

A

The employee, and sometimes their spouse

197
Q

What is the policy owner responsible for

A
  • Applying for coverage
  • Keeping the policy in force
  • Paying premiums
198
Q

What are the 5 master policy provisions

A
  • Explain eligibility requirements
  • Establish when coverage is effective for an individual
  • State the minimum number of persons and percentage of the group which must be covered
  • Establish coverage limits for members
  • Cite the duties of the master policy owner
199
Q

What does each insured family get as evidence of coverage

A

A certificate of insurance

200
Q

When comparing individual to group contracts, generally group contracts have:

A
  • Higher maximums
  • Broader benefits
  • Fewer exclusions
  • Less stringent underwriting
201
Q

Define the birthday rule

A

When a dependent is covered under both parents, the parent who has the earliest birth day (month/day) will be primary

202
Q

What are three examples of employment-related groups

A
  • Individual employer groups
  • Multiple employer trusts (MET)
  • Multiple employer welfare arrangements (MEWA)
203
Q

Define a trust

A

Provides group benefits to employees of two or more employers within a specific industry

204
Q

Define MET (multiple employer trusts)

A

It is a type of MEWA that is fully insured and organized as a trust (smaller)

205
Q

What three things does an association have to have in order to provide insurance

A
  • Have to be in existence for at least one year
  • Have a constitution and bylaws
  • Have been organized other than the purpose of obtaining insurance
206
Q

Define stop-loss insurance

A

Covers loses in excess of a specified amount

207
Q

If you are self insured, what do you need

A

You need enough assets or stop loss insurance in the even that you have any major losses

208
Q

With group coverage, what 4 things does the underwriter take into consideration

A
  • Who is eligible to form the group
  • Geographic area
  • Composition of the group (age and gender)
  • Percentage of eligible members participating
209
Q

Define a contributory plan

A

Members pay part of the premium

210
Q

How many eligible members must participate in a contributory plan?

A

75%

211
Q

Define a noncontributory plan

A

Members do not pay any of the premium

212
Q

How many eligible members must participate in a noncontributory plan

A

100%

213
Q

Define persistency factors and how it pertains to an insurer

A

Persistency refers to keeping coverage in force - an insurer would prefer to insure a group that does not move insurers frequently

214
Q

What is the group premium based on

A

Experience rating (based on the claims experience from the group)

215
Q

What does experience rating take into account

A
  • The average age of the group members
  • The coverage limits and deductibles
  • Occupational hazard
216
Q

Define the doctrine of comity

A

The policy must conform only to the laws of the state

217
Q

If you change your insurance carrier, can you transfer over coinsurance and deductibles

A

Yes you can

218
Q

Under changing insurance carriers, define no loss - no gain

A

Prohibits the new carrier from denying benefits to group members who have existing claims with another carrier

219
Q

Under changing insurance carriers, define extension of benefits

A

If a person is hospitalized on the date of termination and then is replaced by a new plan, they are granted an extension

220
Q

How many days does a terminated employee have to elect COBRA coverage

A

60 days

221
Q

How much will a COBRA member pay

A

100% of the premium

2% admin costs

222
Q

What are the reasons for 18 months of COBRA coverage

A
  • Reduction of hours
  • Termination of employment
  • Layoff
223
Q

What is the reason for 29 months of COBRA coverage

A

Disabled

224
Q

What are the reasons for 36 months of COBRA (for dependents only)

A
  • Employee died
  • Divorce
  • Medicare
  • Aged off
225
Q

What are four reasons when COBRA does not apply

A
  • Termination is due to member not paying premiums
  • An employee obtains other coverage under a group policy
  • Becomes eligible for Medicare
  • Employer terminates group plan
226
Q

What is the purpose of HIPAA

A

Make group health insurance more accessible and portable, by allowing individuals who have changed jobs to obtain new group health coverage without having to satisfy a new pre-existing conditions provision and/or a new probationary period

227
Q

HIPAA does not apply to these 13 plans

A
  • Plans with fewer than two members
  • Government plans
  • LTC
  • Medicare supplement
  • Limited dental
  • Limited vision
  • Specific dread disease insurance
  • Disability income insurance
  • Hospital indemnity insurance
  • Accident insurance
  • Workers’ comp
  • Automobile medical payments insurance
  • Credit-only insurance
228
Q

Under HIPAA, a group health plan may not discriminate based upon: (6)

A
  • Health status
  • Health history
  • Genetic information
  • Disability
  • Mental illness
  • Claims experience
229
Q

Under HIPAA, define the pre-existing conditions limitation

A

Coverage must be guaranteed issue but may be subject to a maximum 12-month pre-existing conditions limitation after enrollment (18 months for late enrollees)

230
Q

Can you reduce the pre-existing conditions limitation

A

Yes, it can be reduced by showing the length of prior “creditable coverage” as long as the enrollee obtains new coverage within 63 days after termination

231
Q

When would a pre-existing limitation be applied

A

If the member should have received treatment within 6 months prior to the enrollment (you can just wait to get treatment under a new plan) - this excludes pregnant people

232
Q

What does the Patient Protection and Affordable Care Act (PPACA) do for dependents

A

It requires that dependent coverage must be available until a child reaches the age of 26.

233
Q

If I’m a rider on a the max, what type of insurance am I covered under

A

Blanket insurance

234
Q

Define reimbursement in commercial insurance

A

The insurer will reimburse the insured for all or a percentage of the actual medical expenses he has paid

235
Q

Define HMO

A

Provides health care services to participants on a prepaid basis

236
Q

Define closed panel HMO

A

Own doctors who treat only HMO members (staff model)

237
Q

Define open panel HMO

A

Contract doctors to provide services

238
Q

What must every participant in an HMO do

A

They must choose their PCP

239
Q

What is the purpose of a PCP in an HMO

A

Gatekeeper

240
Q

Do HMOs have deductibles and coinsurance

A

No

241
Q

What kind of payment does HMOs have

A

They have a copayment

242
Q

Define a point-of-service (POS) plan

A

Allows participant to seek treatment within an HMO or PPO network

243
Q

How does POS plan work

A

If you go to an HMO, then HMO rules take over (copayment), if you go to a PPO provider, then the PPO rules take over (deductibles, coinsurance, etc.)

244
Q

What are HMOs, PPO, and POS plans all an example of

A

Managed care

245
Q

What are three characteristics of managed care

A
  • Cost-control techniques
  • Sharing of financial risk between provider and consumer
  • Management of health care services
246
Q

What are 4 examples of cost control techniques

A
  • Sharing cost (deductibles, coinsurance, exclusions and limitations)
  • Requiring a PCP
  • Provide alternative benefits before providing the most costly benefits
  • Preventative care
247
Q

What is precertification also known as

A

Preauth

248
Q

Define concurrent review

A

Hospital stay review - monitoring length of stay and what alternatives may be used

249
Q

Is their a time limit for medical benefits under workers comp

A

No - it stays with you forever and there is no dollar limit

250
Q

What 4 things does workers comp usually cover

A
  • Medical
  • Disability
  • Death or survivor benefits
  • Rehab benefits
251
Q

What is a characteristic of uniform provisions

A

They have language that is word for word from the state statutes or the commissioner has approved other language that is at least as favorable as the statutory wording

252
Q

Define the entire contract and changes provision

A

The entire contract is made up of the policy and endorsements (only changes can be made from an executive officer of the insurer - the producer cannot make any changes)

253
Q

What can a policy owner do under a change of beneficiary provision

A
  • Surrender or assign the policy
  • Change the beneficiary
  • Make policy changes
254
Q

What is the time limit on certain defenses provision

A

Only fraudulent misstatements in the application may be used to void the policy or to deny a claim more than two years from the effective date (does not apply to the misstatement of age, occupation or other insurance)

255
Q

Define the incontestable provision

A

You cannot deny benefits after the policy has been effective for two years (i.e. you failed to disclose a pre-existing heart condition, and you have a heart attack 6 months later, your coverage would then be denied)

256
Q

How long is the grace period for health insurance

A

10 days

257
Q

How long is the grace period for LTM and Medicare supplement

A

31 days

258
Q

What are two options under reinstatement provision (lapse in paying premiums)

A
  • Reinstate automatically (no app needed)

- Upon approval of an application or 45 days after the receiving the application

259
Q

Under the reinstatement provision, when would coverage be effective

A

Coverage would be immediate for accidental injury and 10 day probationary period for a sickness

260
Q

Under notice of claim provision, when does a claim need to be submitted

A

Within 20 days

261
Q

Under disability income benefit, what is the requirement to show disability

A

The insured may be required to give notice of continuance of the disability every six months

262
Q

How many days does the insurer have after receiving the claim notice to give the insured proof of loss forms to file

A

15 days

263
Q

Can an insurer examine the insured as often as reasonably required while a claim is pending, and perform an autopsy? What provision is this called?

A

Physical examination and autopsy provision

264
Q

What are two types of payments under the time of payment of claims provision

A
  • Periodic payments (at least monthly)

- Immediately

265
Q

What happens under the facility of payments provision

A

The insurer may pay an amount to a relative of a beneficiary who is a minor or legally incapacitated

266
Q

What happens under the assignment of payments clause

A

The insurer pays the provider directly for services

267
Q

What happens under the legal actions provision

A

The insured may not sue the insurer for collection of a claim earlier than 60 days or later than 3 years from the time proof of loss was submitted

268
Q

What provisions protect the insurer

A

Uniform optional provisions

269
Q

What happens under a misstatement of age provision

A

If the insured’s age is misstated, the insurer may not void the policy or deny coverage, but if a claim is submitted, they may base payment on the amount of coverage the premium paid would have purchased has the correct age been given.

270
Q

What happens under a change of occupation provision

A

If the insured changes their job to either more hazardous or less hazardous, then the insurer can pay the claim based on what the higher premium should have been or return any excess premium

271
Q

What happens under the unpaid premium provision

A

The insurer can deduct from a claim payment any unpaid premium due

272
Q

Under cancellation provision, how many days notice must the insurer give

A

30 days notice, and they must state the reason(s) for the cancellation

273
Q

If the insurer cancels the policy, how are premiums returned

A

On a pro-rata basis

274
Q

If the insured cancels the policy, how are premiums returned

A

On a short-rate basis (less than a prorated amount)

275
Q

What happens under a relation of earnings to insurance clause

A

The insurer will prorate disability income benefits when the insured is covered by more than one policy so that total benefits do not exceed the insured’s lost monthly earnings

276
Q

What happens under the other insurance in this insurer provision

A

The insured will not be able to receive duplicate benefits by having more than one policy with the same insurer.

277
Q

What happens under the subrogation clause

A

The insurer can recover the cost of the insured’s medical care (make whoever hurt them pay the bills)

278
Q

Under a free-look provision, once an applicant receives a policy, how many days do they have to return it?

A

10 days (taking something back to the store that you didn’t like)

279
Q

What happens under the consideration clause

A

It indicates the policy is being issued on the basis of the insured’s premium and application

280
Q

What happens under an impairment rider (pre-existing conditions)

A

Excludes coverage for a loss from a specified disease or condition

281
Q

What happens under a noncancelable policy

A

The insured can renew the policy to a certain age without proof of insurability, and the insurer has not right to change any policy provisions or the premium rate

282
Q

What happens under a guaranteed renewable

A

Same thing as a noncancelable policy, however, the insurer is allowed to change the premium rate as long as they do it for an entire insured class and not just the member

283
Q

What happens under conditionally renewable

A

The insurer can refuse to renew the policy for certain reasons (class or geographical considerations)

284
Q

What happens under optionally renewable

A

The insured has the right to renew the policy but only with the insurer’s consent

285
Q

What happens under a cancelable policy

A

The insurer has the right to cancel the policy at any time

286
Q

What happens under a term policy

A

The policy expires at the end of a specified term, without the right of renewal

287
Q

Are disability premiums tax deductible

A

No

288
Q

A person deduct the amount of his medical premiums and his unreimbursed medical expenses if they are in excess of what percent of his adjusted gross income (only when premiums are paid by the insured - not group coverage)

A

7.5%

289
Q

For LTC policies, are premiums and other unreimbursed medical expenses deductible? What percentage does their totals have to exceed for adjusted gross

A

7.5% - also based on age

290
Q

Can sole proprietors and partners deduct 100% of premiums paid?

A

Yes, however, they may not deduct more than the amount of their earned income for the year and benefits are only taxable if they exceed expenses. Also, expenses and premiums that are in excess of 7.5% of their gross income is deductible

291
Q

Are medical expense benefits taxable

A

Only if they exceed the amount of medical expenses incurred

292
Q

Are benefits from group accidental death and dismemberment taxable

A

No, they are tax free

293
Q

Are benefits from buy-sell policy tax free

A

Yes, or they are made to the disabled party

294
Q

Are benefits from LTC policy tax free

A

Yes, indemnity benefits are only taxed if they exceed a daily limit set by the IRS

295
Q

Are HSA contributions taxed

A

No they are on a “pre-tax” basis

296
Q

Are HRA contributions taxed

A

No they are funded only through the employer and are not subject to tax

297
Q

Can an employer deduct HSA and HRA contributions

A

Yes

298
Q

Are withdrawals from an HSA or HRA to pay for medical expenses taxable

A

No

299
Q

If you withdrawal from your HSA/HRA to pay for non-medical expenses, what are the tax rules

A

The money is subject to ordinary income tax rates, and if you are under 65 you will also have to pay an additional 20% tax

300
Q

What are the taxes for disability income insurance fully paid by the employer

A

Benefits received would be taxable to the employee

301
Q

What are the taxes for disability income insurance fully paid by the employee

A

Benefits received would be tax-free to the employee

302
Q

What are the taxes for disability income insurance that is paid half by the employer and half by the employee

A

Only the benefits received from the employer portion would be taxable

303
Q

What are the taxes for key employee and disability buy-out where the employee is the beneficiary

A
  • Premiums are not tax deductible

- Benefits are not taxable

304
Q

What are the taxes for group benefits

A
  • Tax deduction for employer for premiums contributed
  • Employee not taxed on premium paid by the employer
  • Benefits not taxed unless they exceed expenses for treatment
305
Q

What does a health insurance application contain for underwriting to review

A
  • Medical history

- Agent’s report

306
Q

Define attending physician’s statement

A

A physician will complete the medical history section if there is a reason to investigate the history that was provided

307
Q

What does the agent’s report contain 5

A
  • How long and how well he has known the applicant and the insured
  • Details of any business arrangement connected with the insurance company
  • How premiums will be paid
  • What the insurance is to be used for
  • Opinion on the applicant and insured’s character and financial status
308
Q

Define a conditional receipt

A

Coverage will be effective either the day of the receipt or the day of any required medical exam, whichever is later. (only if the applicant is approved for standard rates)

309
Q

Define unconditional binding receipt

A

Provide immediate coverage whether the application is approved or rejected (if denied, coverage will end on the date of the denial)

310
Q

Define approval receipt

A

No coverage provided until the applicant is approved

311
Q

If a policy is written on a medical basis, what is required

A

A medical exam

312
Q

What is a great source of information that stores member medical information

A

The MIB (Medical Information Bureau) - you can use this to see what member’s have disclosed about their health to other insurers

313
Q

What can insurers use to determine claim costs and the premiums need to cover those costs

A

Morbidity tables (shows your probability of becoming disabled based on your age or sex)

314
Q

When setting a rate, what does the insurer want the rate to be

A
  • Adequate
  • Reasonable
  • Equitable
315
Q

What is a law called

A

Oregon Revised Statues (ORS)

316
Q

Who makes laws

A

Legislature

317
Q

What is a rule called

A

Oregon Administrative Rule (OAR)

318
Q

Who makes a rule

A

The department of Consumer and Business Services (the Insurance Commissioner)

319
Q

Who authorizes insurance producers to do business

A

The insurance commissioner

320
Q

How often must the Directed (commissioner) examine and audit every authorized insurer

A

At least once every five years

321
Q

After the examiner has completed his examination, when does he have to submit his report

A

Within 60 days of the exam

322
Q

After the examinee has reviewed the report, how many days do they have to request a hearing

A

30 days from the mailing date of the report

323
Q

Define a cease-and-desist order

A

A person can continue business, but they have to stop the violation

324
Q

How many days does a producer have to request a hearing on a cease-and-desist order

A

20 days

325
Q

When must the director schedule a hearing on a cease-and-desist order

A

Within 30 days of the alleged violator requesting a hearing

326
Q

How much notice must the director give for when and where the hearing will be held

A

7 days

327
Q

What are 5 major events that may cause the director to take disciplinary action

A
  • Forging another person’s name on an insurance application or related document
  • Using fraudulent, coercive or dishonest practices or demonstrating incompetence, untrustworthiness or financial irresponsibility while conducting business
  • Knowingly accepting insurance business from an individual who is not licensed
  • Violating any insurance law, rule, subpoena or order of the director or of the insurance commissioner of another state, Mexico or Canada.
  • Conviction of a felony or misdemeanor involving dishonesty or breach of trust or an offense punishable by death or imprisonment under the law
328
Q

What is the maximum for a civil penalty (fine) by a company

A

$10,000

329
Q

What is the maximum for a civil penalty (fine) by an individual agent

A

$1,000/fine

330
Q

Define a second penalty

A

It would be the amount that the violator profited from (i.e. they would have to pay back the money that they made illegally)

331
Q

Who are all civil penalties paid too

A

General fund of the State Treasury

332
Q

How many days does a person have to apply for a hearing on any civil penalty

A

20 days

333
Q

How many days does a person have to pay a penalty before the order is recorded with the county clerk

A

10 days

334
Q

What is the criminal penalty for an individual who files information that is false or misleading

A

Imprisonment in a county jail for up to 1 year or a fine of up to $1,000

335
Q

What is the criminal penalty for a corporation who files information that is false or misleading

A

$10,000

336
Q

What does the Oregon Life and Health Guaranty Association do

A

Pays claims for impaired and insolvent life and health insurers

337
Q

Who does the Oregon Life and Health Guaranty Association operate under

A

The Director

338
Q

Who are members of the Association

A

All life and health insurers must be members

339
Q

What is the max that the Association will pay for life insurance death benefits, disability insurance benefits and LTC benefits

A

$300,00

340
Q

What is the max that the Association will pay for cash surrender

A

$100,000

341
Q

What is the max that the Association will pay for health insurance

A

$500,000

342
Q

What is the max that the Association will pay for present value annuity benefits

A

$100,000

343
Q

What is the total amount payable for any one individual policies (except for health insurance)

A

$300,000

344
Q

What is the total amount payable for any one policyowner

A

$5,000,000 (Association is not going to pay more than this amount for claims)

345
Q

Each association may assess its members up to what percentage of premiums collected in a calendar year to cover expenses and pay claims

A

2%

346
Q

Members may offset what percentage of an annual assessment against their premium and/or corporate excise tax liabilities for each of the next 5 calendar years

A

20%

347
Q

What are 5 requirements for individual producer licensing

A
  • Have a residence or place of business in Oregon
  • Be 18 years or older
  • Submit an application to the Director on the Uniform Application produced by the National Association of Insurance Commissioners (NAIC)
  • Pay exam and license fees
  • Complete pre-licensing education and pass exam
348
Q

What are 3 requirements for an insurance agency producer license

A
  • Submit an application to the Director on the Uniform Application produced by the National Association of Insurance Commissioners (NAIC)
  • Pay all fees
  • Have a licensed producer
349
Q

Can a consultant receive commission

A

No, they are only there to offer advice - they are paid on an hourly fee

350
Q

Besides submitting an application and paying the fees, what other two things are required to become a licensed consultant

A
  • Have an errors and omissions insurance policy that provides at least $500,000 in coverage for claims
  • Have at least 5 years of experience
351
Q

When does an adjuster not need a license

A

When they are adjusting claims only for an insurer and is employed by that insurer.

352
Q

Define attorney in fact

A

The Director of a nonresident licensing state (oregon) will be the producer’s attorney of fact, effective on the date the nonresident producer license is issued, and any legal action can be taken against him.

353
Q

How many days does a nonresident producer who moves to another state or a resident producer who moves to another state have to file a change of address with the Director

A

30 days

354
Q

What are 4 reasons that a Director may issue a temporary producer license

A
  • To a surviving spouse or court-appointed representative of a licensed producer who dies or becomes mentally or physically disabled
  • To a member or employee of a licensed business when that business’s producer dies or is disabled
  • To the designee of a licensed producer entering active duty
  • At anytime that the public interest would be best served doing so
355
Q

How many days and/or months may a temporary license not exceed

A

180 days (you cannot exceed this - doesn’t matter the reason)

356
Q

How many years after a policy has been terminated (expired) must a producer keep a record of that policy

A

For 3 years (keep it at your place of business)

357
Q

What are reasons that a producer would need to notify a director before doing business (2)

A
  • If they are doing business under any name other than their legal name
  • If they are changing, deleting, or adding an assumed business name in connection with business under the license
358
Q

A producer has to notify the Director within 30 days after:

A
  • Change of address or telephone number for their business
  • Opening or closing of their business location
  • Change of residence if a resident producer
  • Ending your affiliation with a business
  • Administrative action taken against you
  • Criminal prosecution taken against you (notify the director of the pretrial hearing date)
359
Q

A licensed consultant or adjuster must notify the Director within 30 days after:

A
  • If they are changing, deleting, or adding an assumed business name in connection with business under the license (note this is different than producer - they have to notify before doing business)
  • Change of address or telephone number for their business
  • Opening or closing of their business location
360
Q

When does a producer license expire

A

Every two years on the last day of the licensee’s birth month

361
Q

An individual producer may reinstate his license within how many months after it has expired, also, what are the requirements

A

Within 12 months

  • Pay twice the unpaid renewal fee
  • Satisfy any continuing education requirements
362
Q

For each licensee renewal period, how many hours of coursework is required

A

24 hours

363
Q

How many hours and what specific type of coursework must you have

A
  • 3 credit hours in Oregon statutes and administrative rules

- 3 credit hours in professional ethics

364
Q

How many days after a producer completes a course must a continuing education provider issue a certificate of completion

A

Within 15 days

365
Q

Where does a producer put all of his premiums

A

In a trust account that is separate from all other business and personal funds (they cannot commingle)

366
Q

Where must these trust accounts be located

A

In Oregon (unless the Director gives written permission to the producer to keep the account in another state)

367
Q

What are three reasons that a producer may commingle premiums with other funds

A
  • Purpose of paying bank charges
  • Advancing premiums or establishing reserves for paying return premiums
  • Meeting contingencies that may arise in the course of receiving and transmitting premiums
368
Q

When must a producer make required deposits after funds are received

A

Within 7 days

369
Q

When must a producer pay premium funds owed to an insured after receipt

A

Within 30 days

370
Q

How long must a producer keep records available

A

Three years following the date of the policy expiration

371
Q

What is an agent of the insurer

A

A licensed insurance producer (never an agent of the insured)

372
Q

To act as an agent of an insurer, what must the producer be:

A
  • Appointed agent of the insurer
  • Affiliated with a producer who is an appointed agent of the insurer (works for the producer, who works for the insurance company)
373
Q

What is required for a notice of termination when an insurer terminates a producer

A
  • The notice must be given at least 90 days prior to the effective date of the termination
  • The notice must specify the termination date and the reason for the termination
374
Q

How many days does a producer have to terminate an appointment

A

A producer can terminate an appointment at any time - to do so, they need to give written notice to the Director and the insurer within 30 days after the effective date of termination. Example - terminate 1/1 notify Director and insurer by 1/30

375
Q

If an insurer terminates an appointment, employment, contract or other insurance business relationship due to a producer violating the Code, then when must that insurer notify the Director and the producer

A

Notify the Director within 30 days after the effective date of the termination, and then notify the producer within 15 days of notifying the Director (that same producer also has 30 days to provide written comments to the Director)

376
Q

When must an insurer respond or pay a claim after receipt

A

Within 30 days

377
Q

When must an insurer respond to the Director regarding a claim inquiry

A

Within 21 days

378
Q

When must an insurer respond to all other communications regarding a claim inquiry (basically anyone asking about a claim that is not the Director)

A

Within 30 days

379
Q

When receiving notification of claim from a first party claimant, when must an insurer provide necessary claim forms, instructions and assistance with the claim

A

Within 30 days

380
Q

When must an insurer investigate a claim when it is being questioned

A

Within 45 days

381
Q

When must an insurer affirm or deny coverage or notify the claimant of the need for more time after receiving the proof of loss statements from a first party claimant

A

Within 30 days

382
Q

When must the insurer give the claimant written notification of the reason more time is needed for investigation

A

Within 45 days from the date of the initial notification and every 45 days after

383
Q

If an insurer fails to acknowledge a notification of a claim or pay the claim within 30 days after receipt, they may be guilty of what

A

Unfair claim settlement practice

384
Q

An insurer must maintain required capitalization, define capitalization

A
  • The minimum combined paid-up capital (money raised through the sale of stock) and surplus (assets in excess of liabilities)
  • *or
  • the minimum surplus required of an insurer without capital stock
385
Q

How much capital/surplus do most insurers need

A

$2,500,000

386
Q

How much capital/surplus do most workers’ comp insurers need

A

$5,000,000

387
Q

What will the Director take into account when determining the amount that an insurer will need

A
  • Insurer’s size
  • Diversification of lines of business
  • Number and size of risks insured on each line
  • Geographical dispersion of risk
  • Reinsurance
  • Investment portfolio, reserves and earnings
388
Q

The size of risk an insurer may keep on any one subject of insurance (i.e. all the properties insured by an insurer that are subject to loss from the same occurrence) is generally limited to what percent of the insurer’s surplus to policyholders

A

10%

389
Q

Define actuarial principles

A

Those based on expectations of loss due to death, disability or other types of claims (how an insurer may discriminate in underwriting rates)

390
Q

Can an insurer discriminate between risks of essentially the same degree of hazard

A

No

391
Q

Except in the case of life and health insurance, an insurer cannot restrict availability of insurance based on:

A
  • Age, sex, marital status, race, color, creed, national origin, ancestry or occupation (unless occupation increases the hazard)
  • change of insurer, occupation or domicile (unless frequency increases the hazard)
  • Previous rejection, cancellation or non-renewal of a policy
  • Lack of previous insurance
392
Q

What should you apply underwriting rates based solely on what

A
  • Individual being over 65 years old
  • *or
  • Individual’s physical handicap (i.e. blindness)
393
Q

If an insured or prospective insured is a victim of domestic violence, it is prohibited for an insurer to: (6)

A
  • deny, cancel or refuse to issue or renew a policy
  • demand or require a greater premium
  • designate domestic violence as a pre-existing condition
  • Exclude or limit coverage for losses or deny a claim
  • Fix any lower rate for, or discriminate in the fees or commissions for the producer
  • Allow the fact that an insured or prospective insured is or has been a victim of domestic violence to be used as a factor in underwriting
394
Q

If the Director believes that an insurer is unfairly discriminating, how many days is the insurer given to correct the situation

A

10 days

395
Q

When must a licensee provide a consumer a clear and conspicuous notice of personal information practices

A
  • No later than the date on which the licensee provides one or more insurance products or services to the consumer for personal use (usually the date of application)
  • Within a reasonable time after the date the customer relationship has been established
396
Q

When must a licensee provide its privacy and practices notice

A

At least annually (every 12 months)

397
Q

Three things about the privacy notice

A
  • Must be in writing and clear and conspicuous
  • May be provided electronically if the recipient agrees
  • Must include personal information that applies to the licensee and to the individuals whom the licensee sends the notice, such as:
  • What kinds of personal information it collects
  • What kinds of information it discloses
    (basically has to tell you what it does with that information
398
Q

In determining whether the privacy notice is in compliance with the law, the Director will consider definitions and terms used in what (2)

A
  • Gramm-Leach-Bliley Act

- Privacy of Consumer Financial and Health Information Regulation

399
Q

When would a producer not have to send out privacy notices

A
  • If they already comply with the requirements
  • *and
  • They do not disclose any information that would warrant a privacy notice (basically they don’t give out any information)
400
Q

All inducements must be what

A

Plainly expressed in the policy

401
Q

What is considered an illegal inducement

A

A rebate (kickback to a purchaser - you can’t give a broker or client extra money or benefit for picking you)

402
Q

What are unlawful rebates

A

Commissions received by the producer on excessive personal or controlled insurance

403
Q

What are unlawful premiums for life or health insurance

A

If the premiums on controlled insurance are two times the amount of premiums collected on noncontrolled

404
Q

What are unlawful premiums for all other types of insurance (not health and life)

A

Controlled premiums may not be more than noncontrolled premiums

405
Q

What is considered controlled (personal) insurance

A
  • Covers someone related to the producer either by blood or by marriage to the second degree
  • A group of employees under a group policy under the producer’s employer (moda employee)
  • Person controlling a majority of the voting stock or interest in the producer’s employer
  • Person owning an interest in an association or partnership if the producer’s employer is the association or partnership
  • If the producer is a corporation, a person controlling the majority of voting stock or a controlling interest in the producer or a corporation making consolidated tax returns with the producer
406
Q

Define twisting and why it is illegal

A

Twisting is when a producer talks his client into replacing a policy without fully explaining all of the terms of the replacement policy

Disability Income Insurance (9 decks)

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