Health

Question 1

Which of the following services is generally included in an LHSO?

a) hospital
b) Pharmaceutical
c) Surgical
d) Emergency

Answer 1

b) Pharmaceutical
Limited health services include ambulance care services, dental care services, vision care services, pharmaceutical services, clinical laboratory services, and podiatric care services. Limited health care service does not include hospital, medical, surgical or emergency services except when those services are essential to the delivery of the limited health service.

Question 2

Each Medicare supplement policy must be

a) Guaranteed renewable and noncancellable
b) Guaranteed renewable
c) Extended term
d) Noncancellable

Answer 2

B) Guaranteed renewable

Each Medicare supplement policy must be at least guaranteed renewable.

Question 3

What consequences will occur if a producer acts without a bond that is required?

a) Producer will be required to fulfill extra CE requirements.
b) Producer’s license may be revoked.
c) Producer’s license will be maintained without fee.
d) Producer will be fined $350.

Answer 3

b) Producer’s license may be revoked.

The producer’s license may be revoked if the producer acts without a bond that is required.

Question 4

Which of the following is NOT true regarding a Premium Fund Trust Account?

a) It may be a depository for service fees and late charges.
b) It is established to maintain all the premiums.
c) It could be used as a claim payment account.
d) It is a fiduciary account.

Answer 4

c) It could be used as a claim payment account.
PFTA cannot be used as a general operation or a claim payment account. It is a fiduciary account into which later charges and inspection fees must be deposited.

Question 5

A group insurance policy was solicited by a limited insurance representative. Which of the following is true according to the disclosure regulation?

a) Disclosure regulation does not apply to group insurance
b) the name of the representative must be displayed on each certificate of insurance.
c) the representative’s name and signature must appear on the master policy.
d) Disclosure regulation does not apply to limited insurance representatives.

Answer 5

c) The representative’s name and signature must appear on the master policy.
Any policy solicitation which involves an insurance producer, limited insurance representative, or temporary insurance producer must identify the name of the producer, representative or firm on the policy.

Question 6

Which of the following entities keeps a file of all of an insurer’s advertisements?

a) State government
b) the insurer
c) State insurance board
d) director

Answer 6

B) the insurer
Insurers must maintain a file showing a copy of every advertisement, when, where and how each ad was used and the form number of the policy being advertised.

Question 7

All of the following are true regarding reinstatement of a lapsed producer license EXCEPT

a) A producer’s license may be reinstated within 24 months without having to pass a written exam.
b) A producer’s license may be reinstated within 12 months without having to pass a written exam.
c) To reinstate a lapsed license a penalty of double the unpaid renewal fee shall be required.
d) A licensed insurance producer who is unable to comply with license renewal procedures due to military service may request a waiver of those procedures.

Answer 7

a) A producer’s license may be reinstated within 24 months without having to pass a written exam.
A producer who allows their license to lapse may, within 12 months after the due date of the renewal fee, be issued a license without the necessity of passing a written examination. A penalty in the amount of double the unpaid renewal fee shall be required after the due date. A producer who is unable to comply with license renewal procedures due to military service may request a waiver.

Question 8

An insured purchased a health insurance policy with a renewability clause that states the policy is “Guaranteed Renewable”. This means that as long as the premiums are paid, the policy will continue until the insured

a) Becomes disabled
b) Reaches age 65
c) Dies
d) Reaches age 100

Answer 8

B) reaches age 65
A guaranteed renewable policy will be renewed, at the policyholder's option, until age 65 (when most insured become eligible for Medicare).  The insurer may adjust the premium rate by class during the time the policy is in force.

Question 9

Which of the following optional provisions allows insurers to limit benefits to an insured’s average income over the last 2 years?

a) Change of Occupation
b) Time limit on Certain Defenses
c) Conformity to State Statutes
d) Relation of Earnings to insurance.

Answer 9

D) Relation of earnings to insurance.
The relation of earnings to insurance provision allows an insurance company to limit an insured’s benefit to the insured’s average income over the last 24 months.

Question 10

An insured has an individual disability income policy with a 30-day elimination. He becomes disabled on June 1st for 15 days. When will he collect on his disability income payments?

a) He will collect 15 days of payment after 30 days.
b) He will begin collect on the 15th day.
c) He will begin collecting on June 1st.
d) He won’t collect anything.

Answer 10

d) He won’t collect anything.

The insured cannot collect anything because he did not satisfy the elimination period.

Question 11

A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT

a) the first 3 pints of blood
b) 20% of Part B coinsurance amounts for Medicare-approved services
c) Part A coinsurance
d) Part A deductible

Answer 11

D) Part A deductible

Plan A is the core benefits only and does not include coverage for Part A deductibles.

Question 12

An insured wants to cancel her health insurance policy. Which portion of the contract would explain cancellation rights?

a) consideration clause
b) Renewability provision
c) Exclusions
d) Insuring clause

Answer 12

B) Renewability provision
Renewability provisions are included in each health insurance contract and outlines both the insurer’s and insured’s right to cancel or renew coverage. This is considered to be a very important provision required by HIPAA, the federal health Insurance Portability and Accountability Act of 1996.

Question 13

An insured, who is 44 years old, falls while mountain climbing on vacation. He is left paralyzed. After a year, doctors feel he will never recover from his injuries. From which of the following programs will he be able to collect disability income?

a) Social security
b) Medicare
c) MediCal
d) Worker’s Compensation

Answer 13

a) Social Security

Social security has as one of its 4 main components, a disability income section for long-term disability.

Question 14

If an applicant submits the initial premium with an application, which action constitutes acceptance?

a) Producer delivers the policy.
b) The insurance company receives the application and initial premium.
c) The underwriters approve the application
d) The applicant submits a statement of good health.

Answer 14

c) The underwriters approve the application.

Acceptance takes place when an insurer’s underwriter approves the application and issues a policy.

Question 15

With respect to the entire contract clause in health policies, who has the authority to make changes to an existing policy?

a) Solely the policyowner
b) Changes cannot be made on the policy
c) Only an executive officer of the company
d) Solely the producer

Answer 15

c) Only the executive officer of the company
No changes may be made to the policy without the express written agreement of both parties, and any changes must also be made a part of the contract. Only an executive officer of the company, not an agent, has authority to make any changes to the policy.

Question 16

Under the mandatory uniform provision “Notice of Claim”, written notice of a claim must be submitted to the insurer within what time parameters?

a) Within 10 days
b) Within 20 days
c) within 30 days
d) Within 60 days

Answer 16

b) Within 20 days
This mandatory provision requires the insured to give the insurer, or its agent, written notice of a claim within 20 days of the loss or as soon as reasonably possible. if the nature of disability is such that the insured is legally incapacitated, this requirement is waived.

Question 17

Which act was introduced to reduce the cost of health care by utilizing preventative care?

a) HIPAA
b) HMO Act of 1973
c) Employee Retirement Income Security Act (ERISA)
d) Medical Freedom Act

Answer 17

b) HMO Act of 1973

main goal of the HMO Act of 1973 was to reduce the cost of Health care by utilizing preventative care.

Question 18

An applicant misstates his age on his application for a health insurance policy. He states that he is 39, but his actual age is 49. When he files a claim, what will most likely happen?

a) Policy will automatically be dropped.
b) If the mistake was found after incontestability period, the benefit will be paid in full.
c) Benefits paid will be those that would have been purchased at the correct age.
d) Benefits will not be paid.

Answer 18

C) Benefits paid will be those that would have been purchased at the correct age.
If the insured misstated his or her age at the time of the application, the benefits paid will be those that the premium would have purchased at the correct age. This provision is similar to the one found in life insurance policies.

Question 19

Which of the following statements is INCORRECT?

a) The insurer also has the right to conduct an autopsy, if not forbidden by state law.
b) The insurer does not have the right to conduct an autopsy.
c) The physical exam and autopsy provision gives the insurer the right to examine the insured, at its own expense.
d) The physical exam and autopsy provision gives the insurer the right to examine the insured as often as may be reasonably necessary while a claim is pending.

Answer 19

c) The insurer does not have the right to conduct an autopsy.

The physical exam and autopsy provision gives the insurer the right to examine the insured, at its own expense, as often as may be reasonably necessary while a claim is pending. The insurer also usually has the right to conduct an autopsy, if not forbidden by state law.

Question 20

Which of the following is NOT mandatory under the Uniform Provisions Law as applied to accident and health policies?

a) Time limit on certain defenses
b) Physical examination and autopsy
c) Entire contract
d) Probationary Period

Answer 20

d) Probationary Period

Probationary period is an optional provision.

Question 21

An employee has a Flexible Spending Account (FSA) with a $5,000 annual benefit. This year the employee used $3,000. What would be the amount of the benefit available to the employee next year?

a) $7,000
b) $5,000
c) $3,000
d) $2,000

Answer 21

b) $5,000

FSAs are subject to “use or lose” rule, unused benefits do not carry over to the next year.

Question 22

All of the following are excluded from coverage in an individual health insurance policy EXCEPT

a) Treatment received in a government hospital
b) mental Illness
c) Experimental procedures
d) Purely cosmetic surgery

Answer 22

b) mental illness

Mental illness is covered with some limitations.

Question 23

Under mandatory uniform provision Legal actions, an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to

a) 90 days after written proof of loss has been submitted.
b) One year after the occurrence of a disability
c) 30 days after the loss.
d) 60 days after written proof of loss has been submitted.

Answer 23

d) 60 days after written proof of loss has been submitted.
the insured must wait 60 days, but no later than 3 years after proof of loss, before legal action can be brought against the company.

Question 24

A agent delivers a life policy. He explains a policy change was made and asks the applicant to sign a statement acknowledging the changes were explained. The agent says the premium has not been paid and must be paid before the policy goes into effect. He collects a Statement of Good Health, relinquishes the policy, and leaves. What did he do wrong?

a) he should have created a new policy instead of changing the old one.
b) he didn’t need to collect a statement of good health.
c) nothing
d) he left the policy with the insured without collecting the premium.

Answer 24

d) he left the policy with the insured without collecting the premium.
If the agent delivers a policy, the premium must be collected at or before that point. If the premium is not paid, the policy cannot be issued. The other steps were done correctly. If the premium is not collected until the policy is delivered, the agent must receive a Statement of Good health, which acknowledges that the person’s health status has not changed since the policy was approved.

Question 25

Which of the following would NOT be considered a limited coverage policy?

a) Special risk policy
b) Accident - only insurance
c) Travel policy
d) Major medical expense insurance

Answer 25

d) Major medical expense insurance

Limited policies cover only expense incurred from specific diseases, or specific causes.

Question 26

Which of the following is NOT true regarding a noncancellable policy?

a) Insured has the unilateral right to renew the policy for the life of the contract, and may discontinue paying premiums to cancel it.
b) Insurer can increase the premium above what is stated in the policy if claims experience is greater than expected.
c) Insurer cannot cancel the policy.
d) The guarantee to renew coverage usually only applies until the insured reaches age 65.

Answer 26

b) Insurer can increase the premium above what is stated in the policy if claims experience is greater than expected.
The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the unilateral right to renew the policy for the life of the contract, but in effect, may cancel the policy at any time by discontinuing premium payments.

Question 27

What does Basic Medical Expense cover?

a) Surgery
b) Nonsurgical services a physician provides
c) X-ray charges
d) All office visits, under any circumstances

Answer 27

b) Nonsurgical services a physician provides
Basic Medical Expense Coverage is often referred to as Basic Physicians Nonsurgical Expense Coverage because it provides coverage for nonsurgical services a physician provides. The benefits, however, are usually limited to visits to patients confined in the hospital. Some policies will also pay for office visits. There is no deductible with benefits, but coverage is usually limited to a number of visits per day, limits per visit, or limits per hospital stay.

Question 28

What is the purpose of the impairment rider in a health insurance policy?

a) To provide disability coverage
b) To identify pre-existing conditions
c) To exclude coverage for a specific impairment
d) To cover impairments that otherwise could not be covered.

Answer 28

c) To exclude coverage for a specific impairment
The impairment rider may be attached to a contract for the purpose of eliminating coverage for a specifically defined condition.

Question 29

Insurance contracts are unilateral in nature. What does that mean?

a) All parties to the contract exchange something of value.
b) A promise is made only at the time of policy application.
c) Only one party makes a promise.
d) The insured must make a promise to pay the premium.

Answer 29

c) Only one party makes a promise
In a unilateral contract, only one of the parties to the contract is legally bound to do anything. The insured makes no legally binding promises. However, an insured is legally to pay losses covered by a policy in force.

Question 30

The benefits for group disability plans are based on

a) The employer’s net worth
b) The number of employees of the company
c) A percentage of the worker’s income
d) A flat amount

Answer 30

d) A percentage of the worker’s income.

Group disability plans usually specify the benefits based on a percentage of the worker’s income.

Question 31

On an Accidental Death and Dismemberment (AD&D) policy, the death benefit payable is known as the

a) Policy limit
b) Principal sum
c) Face amount
d) Capital sum

Answer 31

b) Principal sum

In Accidental Death and Dismemberment coverage, the principal sum is paid for accidental death.

Question 32

HMO members pay a small fee when they see their primary care physician. This fee is called a

a) Copay
b) coinsurance
c) deductible
d) stop-loss

Answer 32

a) Copay
A copay or copayment is a specific dollar amount or a percentage of the cost of care that must be paid by the member for example, the member may be required to pay $5 or $10 for each office visit.

Question 33

Partial disability usually pays what percent of the total disability benefit?

a) 10%
b) 25%
c) 50%
d) 65%

Answer 33

c) 50%

The partial disability benefit is typically 50% of the total disability benefit

Question 34

A Major Medical Expense policy would exclude coverage for all of the follow treatments EXCEPT

a) cosmetic surgery
b) drug addiction
c) eye refractions
d) Dental care

Answer 34

b) Drug addiction

Treatment for drug and alcohol addiction is provided on a limited basis.

Question 35

What is the maximum civil penalty that a producer can be charged if found guilty of violations in a court of law?

a) $100,000
b) $200,000
c) $20,000
d) $50,000

Answer 35

a) $100,000
In addition to or instead of any applicable denial, suspension, or revocation of a license, a person may, after a hearing be subject to a civil penalty of up to $10,000 for each cause for denial, suspension, or revocation; however, the civil penalty may total no more than $100,000.

Question 36

A portion of a patient’s open-heart surgery costs is paid by the organization that provided the surgery and post-operative care. Which type of organization is this?

a) contributing
b) shared risk
c) integrated
d) HMO

Answer 36

d) HMO
A Health maintenance organization (HMO) is any organization formed under the laws of Illinois to provide or arrange for one or more health care plans under a system that causes any part of the risk of health care delivery to be borne by the organization or its providers.

Question 37

What is the minimum penalty that may be imposed on an insurer found guilty of defamation?

a) $200
b) $500
c) $1,000
d) $10,000

Answer 37

a) $200
Any person or entity that violates the Insurance Code provision on defamation may receive a penalty of at least $200, but no more than $10,000.

Question 38

If an insurance policy is cancelled within 90 days following the inception date, in what manner will the fee be refunded?

a) Half of the fee
b) no refund
c) Entire fee
d) on a prorated basis

Answer 38

d) on a prorated basis
If an insurance policy is cancelled for any reason within 90 days following inception date, the licensee shall refund the fee on a prorated basis.

Question 39

If a Medicare supplement policyholder becomes eligible for Medicaid, what is the maximum time period for which the Medicare supplement policy premiums could be suspended?

a) 90 days
b) 6 months
c) 12 months
d) 24 months

Answer 39

d) 24 months
Benefits and premiums under a Medicare supplement policy may be suspended for up to 24 months at the request of the policyholder if he/she becomes eligible for Medicaid. The policyholder must notify the insurer within 90days of eligibility.

Question 40

If a Medicare supplement policyholder becomes eligible for Medicaid, within what time period must the insurer be notified?

a) 20 days
b) 30 days
c) 60 days
d) 90 days

Answer 40

d) 90 days
Benefits and premiums under a Medicare supplement policy may be suspended for up to 24 months at the request of the policyholder if he/she becomes eligible for Medicaid. The policyholder must notify the insurer within 90 days of eligibility.

Question 41

Under HIPAA portability, which of the following are NOT protected under required benefits?

a) Groups of one or more
b) Self-employed
c) Pregnant women
d) Mentally ill

Answer 41

Legislation that took effect in July 1997 ensures portability of group insurance coverage and includes various required benefits that affect small employers, the self-employed, pregnant women, and the mentally ill. HIPAA applies to groups of two or more.

Question 42

An insurance producer fails to meet the Director’s continuing education requirement. Which of the following will most likely occur?

a) The producer will have to be affliliated with another certified producer in order to be able to continue business.
b) Producer will have to pay a fine after the second failure. After five failures, the producer will be put on probation until the requirement is met.
c) the producer’s license will be suspended.
d) The producer’s license will be terminated.

Answer 42

D) The producer’s license will be terminated.
An insurance producer license automatically terminates when an insurance producer fails to successfully meet the continuing education requirement.

Question 43

Within how many days must a producer report his or her felony conviction to the Director?

a) 5
b) 7
c) 15
d) 30

Answer 43

d) 30

A producer who is convicted of a felony must report the conviction to the Director within 30 days.

Question 44

Limited health service organization contracts are renewed annually, unless the subscriber submits notice of termination how many days prior to the annual renewal date?

a) 15 days
b) 31 days
c) 45 days
d) 91 days

Answer 44

b) 31 days
Limited health service organizations issue group contracts that are renewed annually, unless the subscriber has submitted a 31-days written notice of termination prior to the annual renewal date.

Question 45

A trust officer of a bank wants to counsel people on their life insurance policies, for a small fee. What licensure must the officer receive in order to do this legally?

a) Producer’s license
b) Broker’s license
c) Insurance counselor’s license
d) none

Answer 45

D) None
No one may offer insurance advise, counsel or opinions for a fee unless that person is a licensed insurance producer, an attorney licensed to practice law, a trust officer of a bank or an actuary or certified public accountant employed in a consulting capacity. Therefore, licensure in this instance is not required.

Question 46

What is the maximum period of coverage under a short-term, limited-duration health insurance policy?

a) 3 months
b) 6 months
c) 1 year
d) 2 years

Answer 46

c) 1 year
Short-term, limited duration health insurance refers to any health insurance policy issued for less than one year from the effective date of coverage.

Question 47

Which of the following entities ultimately determines the extent of a temporary licensee’s authority?

a) Producer
b) state law
c) Director
d) Insurer

Answer 47

d) Director
The Director may by order, limit the authority of any temporary licensee in any way deemed necessary to protect the insureds and the public.

Question 48

All of the following are feature of a health insurance plan purchased on the health insurance marketplace EXCEPT

a) Coverage for emergency services
b) Coverage for pre-existing conditions
c) Dollar limits on essential benefits
d) Guaranteed renewability

Answer 48

C) Dollar limits on essential benefits.
Health plans are restricted from applying a dollar limit on essential benefits, nor can they establish a dollar limit on the amount of benefits paid during the course of an insured’s lifetime.

Question 49

What is the limit to the number of 90-day temporary licenses that a person may hold?

a) No more than one within a 6-month period
b) No more than one within a year
c) No more than 2 within 3 years
d) No more than 1 per lifetime

Answer 49

d) No more than 1 per lifetime

An individual applicant may not hold more than one temporary insurance producers license during his or her lifetime.

Question 50

All of the following would be covered under a Limited Health Service Organization (LHSO) plan EXCEPT

a) Prescription refills
b) Podiatrist visits
c) minor surgeries
d) Vision exams

Answer 50

c) Minor surgeries
Limited health services include ambulance, dental, vision, pharmaceutical, clinical laboratory, and podiatric care services. Limited health care service does not include hospital, medical, surgical or emergency services except when those services are essential to the delivery of the limited health service covered.

Question 51

Which of the following is true of a Medicare Supplement (Medigap) policy?

a) Expenses related to eye glasses or hearing aids must be covered.
b) They are sold by the federal government
c) They must have a 10-day free-look provision.
d) Pre-existing condition must be covered as soon as the policy is issued.

Answer 51

d) Pre-existing condition must be covered as soon as the policy is issued.
Medicare supplement policies have a maximum probationary period for pre-existing conditions of 6 months. These plans are sold by private insurers, include a 30-day free look look and do not cover eye glasses or hearing aids.

Question 52

An insured needs ongoing treatment for a diabetic condition. Under PPACA, which of the following is correct?

a) Treatment is subject to an annual dollar maximum
b) The condition must be covered under the insured’s plan.
c) The condition is covered if the insured’s plan specifies the condition.
d) Treatment is subject to pre-existing conditions exclusion.

Answer 52

b) The condition must be covered under the insured’s plan
Under PPACA, chronic conditions, like diabetes, must be covered as an essential service under the plan. Lifetime or annual treatment dollar limits are not allowed.

Question 53

For how many consecutive months must traditional long term care insurance policies provide LTC coverage?

a) 24
b) 9
c) 12
d) 18

Answer 53

c) 12
Traditional long-care insurance policies delivered or issued for delivery in Illinois are required to provide LTC coverage for at least 12 consecutive months.

Question 54

Which of the following is not strictly prohibited in advertising?

a) Not stating clearly and prominently if coverage is limited
b) Using terms such as “liberal” or “generous”
d) Wording limitations as if they were advantages, such as “even pre-existing conditions are covered after two years”
d) Use of statistics

Answer 54

d) Use of statistics

Statistics may be used if they are current and the sources are cited.

Question 55

If the Director wants to assess a complaint accusing an insurer of the false advertising last year, where would the Director need to go to access the details of the advertisement?

a) State insurance board
b) The insurer
c) MIB
d) Consumer Protection Agency

Answer 55

b) the Insurer
Insurer must maintain a file showing a copy of every advertisement, when, where and how each ad was used and the form number of the policy being advertised.

Question 56

Which of the following is NOT true regarding a limited lines producer?

a) Licensee must be appointed by an insurance company.
b) The appointing company must pay license renewal fees.
c) The license must be renewed every 2 years.
d) The producer may represent more than one insurer

Answer 56

c) The license must be renewed every 2 years.
An applicant for a limited lines producer license who has met the requirements is issued a perpetual limited lines producer license that remains in effect as long as the appointing insurance company pays the required fees.

Question 57

All of the following are true about the completion of prelicensing training EXCEPT

a) The requirement can be fulfilled by completing training through lecture course, home study, or online
b) A license must be renewed within one year of a lapse or the licensee will be required to retake prelicensing courses and the examination.
c) the completion is good for one year
d) a lecture class must be taken to complete a portion of the training

Answer 57

a) The requirement can be fulfilled by completing training through lecture course, home study or online.

Question 58

Under standard circumstances, if a change occurs to a Medicare supplement policy that increases benefits, which of the following must occur?

a) Approval by the Director
b) Signature of the policyholder
c) Benefit increased in similar policies
d) nothing

Answer 58

D) Nothing
All riders and endorsements issued after the date of issue, reinstatement, or renewal that reduce or eliminate benefits or coverage require signed acceptance by the policyholder. This doe snot apply if the change is made upon the policyholder’s request, if the insurer is exercising a specifically reserved right under the policy, or if the change is required to reduce or eliminate benefits to avoid duplication of Medicare coverage or benefits.

Question 59

Within what time period from the receipt must the insurer refund any premiums due to the insured?

a) 3 days
b) 10 days
c) 15 days
d) 30 days

Answer 59

c) 15 days

Return premiums must be paid or credited to the insured’s account within 15 days after receipt from the insurer.

Question 60

If a group health insurance plan discontinues its policy and a certificate holder is currently on total disability, what, if anything, must the insurer cover?

a) Transfer of coverage to an individual policy with the same benefits
b) Total extension of benefits
c) Reasonable extension of benefits
d) No extension of benefits

Answer 60

C) Reasonable extension of benefits
Group health insurance plans issued or renewed in Illinois must provide a reasonable extension of benefits in the event of total disability on the the policy discontinued for any reason

Question 61

Temporary licenses may be issued to surviving spouses under certain circumstances. These licenses are good for how many days?

a) 30 days
b) 60 days
c) 90 days
d) 180 days

Answer 61

d) 180 days
A temporary license may be issued to the surviving spouse of a deceased or disabled producer without exam for up to 180 days in order to allow for the sale of the producer’s business, the recovery of the producer or the training and licensing of new personnel. No solicitations or sales may be made on this type of temporary license.