Health Policy Provisions, Clauses, and Riders - 27%

Question 1

Ray has and individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray?

A. 90/10
B. 50/50
C. 75/25
D. 80/20

Answer 1

After the deductible has been paid, the insurance company will pay a specified amount for a physician’s visit, while the insured pays the remaining percentage. This is called “coinsurance”. Plans will often be listed in a fraction format, with the first number representing the amount that will be paid by the insurer. The less the insurer must pay with coinsurance payments, the lower the premiums will be. Therefore, Ray should choose the 50/50 plan.

Question 2

Which of the following will very the length of the grace period in health insurance policies?

A. The length of time the insured has been insured

B. The term of the policy

C. The mode of the premium payment

D. The length of any elimination period

Answer 2

The grace period is 7 days on a policy with a weekly premium mode; 10 days if a monthly premium mode; 31 days on other premium modes

Question 3

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company?

A. As soon as possible
B. Within 20 days
C. Within 60 days
D. Within 90 days or as soon as reasonably possible, but not to exceed 1 year.

Answer 3

The “proof of loss” provision states the claimant must submit a proof of loss within 90 days; however, if it is not possible to comply, the time parameter is extended to 1 year. The one year limit does not apply if the claimant is not legally competent to comply with this provision.

Question 4

The insuring clause of a disability policy usually states all of the following EXCEPT

A. The method of premium payment.

B. The identities of the insurance company and the insured

C. That insurance against loss is provided

D. The types of losses covered.

Answer 4

The insuring clause, usually on the first page of the policy, is the general statement that defines the insurance agreement and identifies the insured and the insurance company and states what ind of loss (peril) is covered.

Question 5

Items stipulated in the contract that the insurer will not provide coverage for are found in the

A. Consideration clause
B. Exclusions
C. Insuring Clause
D. Benefit Payment Clause

Answer 5

Exclusions are restrictions of coverage as stated in the policy

Question 6

Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses?

A. Out-of-pocket limit
B. First-dollar coverage
C. Corridor Deductible
D. Stop-loss limit

Answer 6

A “stop-loss limit” is specified dollar amount beyond which the insured no longer participates in the sharing of expenses.

Question 7

The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured’s

A. Assumed age
B. Average age
C. Issue age
D. Attained age

Answer 7

The premium charged for the increase will be based upon the attained age of the insured.

Question 8

A policy with a 31-day grace period implies

A. The policy benefits must be paid within 31 days after a claim is submitted

B. The policy will not lapse for 31 days if the premium is not paid when due

C. The policyholder may return the policy for a full refund within 31 days.

D. The policy is incontestable after 31 days of delivery.

Answer 8

A mandatory provision of life insurance policies requires that a grace period be provided. The grace period is the period of time after the premium due date in which premiums may still be paid before the policy lapses for nonpayment of the premium.

Question 9

Insurers may change which of the following on a guaranteed renewable health insurance policy?

A. Individual rates

B. No changes are permitted.

C. Rates by class

D. Coverage

Answer 9

On a guaranteed renewable health insurance policy, the insurer may increase premiums on a class basis only and not on an individual policy.

Question 10

Which of the following statements is most correct concerning the changing of an irrevocable beneficiary?

a. They may be changed only on the anniversary of date of the policy.

B. They can be changed only with the written consent of that beneficiary

C. They may be changed at any time.

D. They can never be changed.

Answer 10

Once an irrevocable beneficiary is shown for the policy, it requires his or her written consent to change.

Question 11

The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as

A. Time limit on certain defenses

B. Payment of claims

C. Proof of loss

D. Legal action

Answer 11

This mandatory provision requires that no legal action to collect benefits may be started sooner than 60 days after the proof of loss is filed with the insurer. This gives the insurer time to evaluate the claim.

Question 12

Under the Physical Exam and Autopsy provision, how many times can and insured examined, at its own expense will a claim is pending?

A. 2 examinations per week of the claim processing period

B. Unlimited

C. None at all

D. 1 examination per week of the claim processing period

Answer 12

The physical Exam and Autopsy provision allows the insurer to examine the insured as much as reasonably necessary while the claim is being processed, provided that the insurer pays the expenses.

Question 13

An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy?

A. The insured reaches the maximum age limit specified in the policy

B. Within two years of the application, the insurer discovers a misrepresentation

C. The insured is in an accident and incurs a large claim

D. The insured does not pay the premium.

Answer 13

The company may not cancel coverage due to covered claims. All the rest are allowable reasons for an insurer to terminate the contract.

Question 14

According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT

A. Unearned premiums are retained by the insurance company

B. The insurer must provide the insured a written notice of cancellation

C. Claims incurred before cancellation must be honored.

D. An insurance company may cancel the policy at any time

Answer 14

This rider allows the insurer to cancel the policy at any time, or at the end of the policy period. Any unearned premium must be returned to the policyholder. If the insurer cancels, the unearned premium will be returned on a pro rata basis

Question 15

Which of the following provisions is mandatory for health insurance policies?

A. Intoxicants and narcotics

B. Physical examination and autopsy

C. Recurrent disability

D. Unpaid premiums

Answer 15

Physical examination and autopsy is a mandatory provision required by law. The other answer choices are optional provisions.

Question 16

An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period has expired. The insurance company will take which of the following actions regarding any claim that has been issued?

A. Pay the full amount of claim because the contestable period has ended.

B. Adjust the claim benefit to reflect the insured’s true age

C. Deny any claims and cancel the policy

D. Deny paying a claim based on misrepresentation

Answer 16

The Misstatement of Age provision says that if a client has misstated her age, whether intentional or unintentional, they will adjust the benefit being paid. It doesn’t matter when the mistake was found.

Question 17

Under an individual disability policy, the MINIMUM schedule of time in which the claim payments must be made to and insured is .

A. Biweekly
B. Monthly
C. Within 45 days
D. Weekly

Answer 17

If a claim involves disability income benefits, the policy must pay those benefits not less frequently than a monthly. In all other cases, the company may specify the time period of 45 or 60 days for payment of claims

Question 18

Which of the following does the Insurance Clause NOT Specify?

A. The insurance company
B. The name of the insured
C. A list of available doctors
D. Covered Perils

Answer 18

The Insuring Clause lists the insured, the insurance company, what kind of losses are covered, and for how much the losses would be compensated.

Question 19

What type of policy allows the insurance company to cancel a policy at any time?

A. Noncancellable
B. Cancellable
C. Renewable
D. Guaranteed renewable

Answer 19

A cancellable policy may be canceled at any time with proper written notice from the insurer and a refund of any unearned premium. (The insurer must continue to honor any claims submitted before the cancellation date.)

Question 20

A Health insurance policy lapses but is reinstated within an acceptable time frame. How soon form the reinstatement date will coverage for accidents become effective?

A. Immediately
B. After 14 days
C. After 21 days
D. After 31 days

Answer 20

Coverage for accidents is immediate when reinstatement occurs, but coverage for sickness may have a waiting period of about 10 days.

Question 21

Which of the following statements is true regarding coinsurance?

A. The smaller the percentage that is paid by the insured, the lower the required premium will be.

B. The smaller the percentage that is paid by the insured, the more consistent the required premium will be.

C. The larger the percentage that is paid by the insured, the lower the required premium will be.

D. The larger the percentage that is paid by the insured, the higher the required premium will be.

Answer 21

C. The larger the percentage that is paid by the insured, the lower the required premium will be.

After all insured satisfies the policy deductible, the insurance company will usually pay the majority of the expenses—typically 80%– with the insured paying the remaining 20%. Other coinsurance arrangements exist, such as 90%/10%; 75%/25%; or 50%/50%. When the insured retains a larger share of the risk, they will lower the premium.

Question 22

An insured has endured multiple surgeries and hospitalizations for an illness during the summer months. Her insurer no longer bills her for medical expenses. What term best describes the condition she has met?

A. Maximum Loss Threshold
B. Maximum Loss
C. Stop-Loss Limit
D. Out of Pocket Limit

Answer 22

A “stop-loss limit” is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses.

Question 23

In group health policy, a probationary period is intended for people who

A. Have a pre-existing condition at the time they join the group.

B. Have additional coverage through a spouse.

C. Want lower premiums

D. Join the group after the effective date

Answer 23

The probationary period is the waiting period new employees must satisfy before becoming eligible for benefits.

Question 24

Which provision concerns the insured’s duty to provide the insurer with reasonable notice in the event of a loss?

A. Claims Initiation
B. Consideration
C. Notice of Claim
D. Loss Notification

Answer 24

The Notice of Claim Provision spells out the insured’s duty to provide the insurer with reasonable notice in the event of a loss.

Question 25

An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary?

A. Revocable
B. Primary
C. Contingent
D. Irrevocable

Answer 25

If her husband is named as the revocable beneficiary, the insured would be the policyowner and could make changes to the contract. Her husband would receive any death benefit.

Question 26

With respect to the Consideration clause, Which of the following would be consideration on the part of the applicant for insurance?

A. Promise to renew the policy at the end of the policy period.

B. Providing warranties on the application

C. Notice of policy cancellation

D. Payment of premuim

Answer 26

The two types of consideration on the part of and insurance applicant are payment of premiums and representations on the application

Question 27

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to

A. Creditors
B. Beneficiary of the death benefit
C. The spouse of the insured
D. The insured

Answer 27

Payments for loss of life benefits are to be made to the designated beneficiary. If no beneficiary has been named, payment proceeds are to be paid to the deceased insured’s estate. Claims other than death benefits are to be paid to the insured or the insured’s estate, unless otherwise assigned by the insured.

Question 28

Which of the following is NOT a feature of a guaranteed renewable provision?

A. Coverage is not renewable beyond the insured’s age 65

B. The insured’s benefits cannot be reduced

C. The insurer can increase the policy premium on and individual basis

D. The insured has a unilateral right to renew the policy of the life of the contract

Answer 28

Guaranteed renewable provisions has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.

Question 29

Which of the following will vary the length of the grace period in health insurance policies?

A. The length of time the insured has been insured
B. The term of the policy
C. The mode of the premium payment
D. The length of any elimination period

Answer 29

The grace period is 7 days on a policy with a weekly premium mode; 10 days if a monthly premium mode; 31 days on other premium modes.

Question 30

Which of the following is NOT an exclusion in medical expense insurance policies?

A. Military duty
B. Self-inflicted injuries
C. Routine dental care
D. Coverage for dependants

Answer 30

Most medical expense policies will not cover expenses for dental care, self-inflicted injuries, or injuries incurred as result of military service (among other exclusions). Most policies include coverage for dependents.

Question 31

Which of the following is true regarding elimination periods and the cost of coverage?

A. The shorter the elimination period, the lower the cost of coverage

B. The longer the elimination period, the higher the cost of coverage

C. Elimination periods have no effect on the cost of coverage.

D. The longer the elimination period, the lower the cost of coverage

Answer 31

The “elimination period” is a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable. The longer the elimination period is the lower the cost of coverage will be.

Question 32

Items stipulated in the contract that the insurer will not provide coverage for are found in the

A. Exclusions
B. Insuring Clause
C. Benefit Payment Clause
D. Consideration Clause

Answer 32

Exclusions are restrictions of coverage as stated in the policy

Question 33

When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. Which of the following statements correctly explains how this claim would be handled?

A. The insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner.

B. The insurer may deny the claim since it was not notified within the required 20-day time frame

C. The insurer is considered to be notified since the notification to agent equals notification to the insurer

D. The insurer may delay the payment of this claim for up to 6 months

Answer 33

Notice to the agent equals notice to the insurer. The agent is the insurer’s representative

Question 34

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain

A. An estimate of the total amount of medical and hospital expense for the loss

B. A complete physician’s statement

C. A statement that is sufficiently clear to identify the insured and the nature of the claim.

D. A statement from the insured’s employer showing that the insured was unable to work.

Answer 34

The insurance code requires that each policy must include, “Written notice of claim must be given to the insurer with in 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible”