Insurance MCQ

"Life insurance creates an immediate estate". This phrase means:  A) cash value has accumulated in the policy B) the insured's estate receives the death benefit C) when the insured dies, a death benefit is paid D) premiums are payable by the insured's estate Answer: C) when the insured dies, a death benefit is paid

Key person insurance is intended to A) allow a key person to purchase the business B) help retain key employees by offering added benefits C) give premium-grade benefits to key employees D) cover business losses due to the death of a key employee Answer: D) cover business losses due to the death of a key employee

Which of these is a method of determining the level of funds required for ongoing support in the event of the breadwinner's death? A) Financial loss value B) Human life value C) Assessment value D) Replacement value Answer: B) Human life value

All of the following are considered appropriate uses of life insurance for business purposes EXCEPT A) Attracting quality employees by offering a group life plan B) Funding an entity buy-sell agreement C) Protecting the business by covering key employees with life insurance D) Protecting the business by covering entry level employees with life insurance Answer: D) Protecting the business by covering entry level employees with life insurance

Which of these factors is NOT taken into account when determining an applicant's life insurance needs? A) Social Security B) automobile C) savings D) pension Answer: B) automobile

All of the following are examples of a Business Continuation Plan EXCEPT A) Key person insurance B) Cross-purchase agreement C) Stock Redemption Plan D) Deferred Compensation Answer: D) Deferred Compensation

Craig purchased a life insurance policy for enabling his heirs to pay estate taxes. What is this called? A) Estate conservation B) Liquidity maintenance C) Survivor fund D) Human value protection Answer: A) Estate conservation

The Human Life Value concept is based on A) education level B) age C) income D) occupation Answer: C) income

When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach? A) The income earner's future projected income B) The family's financial objectives if the income earner were to die or become disabled C) The insurance company's financial rating D) The income earner's credit score Answer: B) The family's financial objectives if the income earner were to die or become disabled

Which approach predicts a person's earning potential and determines how much of that amount would be devoted to dependents? A) Future value approach B) Earnings approach C) Needs approach D) Human life value approach Answer: D) Human life value approach

All of these are common personal uses of life insurance EXCEPT A) Pay final expenses B) Fund a child's education C) Replace an insured's income D) Fund a Buy-Sell agreement Answer: D) Fund a Buy-Sell agreement

Buy-sell agreements are typically funded by which two insurance products? A) Decreasing term insurance and Workers' Compensation B) Life insurance and disability insurance C) Endowments and Medicare D) AD&D and Social Security Answer: B) Life insurance and disability insurance

Which of the following pieces of information is NOT gathered during the personal financial planning process? A) An individual's assets B) An individual's expenses C) An individual's income D) An individual's civic organization memberships Answer: D) An individual's civic organization memberships

Bob and Tom are partners in a business. If one of them were to die, which of the following would guarantee a market for each of their share of the business? A) Split Dollar plan B) Buy-Sell agreement C) Deferred compensation plan D) Key person insurance Answer: B) Buy-Sell agreement

An example of a primary care physician would be a(n) A) internist B) psychologist C) endocrinologist D) chiropractor Answer: A) internist

Bill the producer is collecting the initial premium on a health policy. Which of the following statements is true? A) The contract is not in force without the initial premium being paid B) A partial initial premium is acceptable C) The insured has no advantage to pay the initial premium at the time of application D) A claim must be honored by the insurer even if an initial premium is not paid Answer: A) The contract is not in force without the initial premium being paid

How does rising morbidity rates affect health insurance? A) Increased premiums B) Decreased premiums C) Fewer claims D) Lower deductibles Answer: A) Increased premiums

The gatekeeper's role when used by an HMO is A) establishing out-of-network providers B) obtaining referrals to specialists from primary care physicians C) taking applications for enrollment into an HMO D) processing the subscriber's payments Answer: B) obtaining referrals to specialists from primary care physicians

In which of the following processes will the insurer oversee the insured's hospital stay to confirm everything is going according to schedule and that the insured will be released as planned?  A) Pre-certification review B) Pretense review C) Congruent review D) Concurrent review Answer: D) Concurrent review

Pierre is covered by his employer's group major medical plan. His employer pays for 75% of the premium and he pays for 25%. How much would a $10,000 benefit be taxable as income under this plan?  A) $10,000 B) $7,500 C) $2,500 D) $0 Answer: D) $0

XYZ Corp pays the tax-deductible insurance premiums for a key employee disability policy. Which of the following would be the appropriate tax consequence?  A) Premiums are paid with tax credits B) Benefits are partially taxable C) Benefits are fully taxable D) Premiums are paid with after-tax dollars Answer: C) Benefits are fully taxable

Which of these characteristics of an applicant is NOT taken into consideration when assessing risk for Disability coverage? A) health of applicant B) gender of applicant C) number of children D) occupation of applicant Answer: C) number of children

Premium mode is a term used to describe the  A) premium past due B) method of payment C) frequency of the premium payment D) premium paid Answer: C) frequency of the premium payment

Which of the following factors is NOT used in underwriting health insurance policies? A) Sex B) Intelligence C) Age D) Income Answer: B) Intelligence

A 10% excise tax is normally applied to an early withdrawal from an IRA. According to HIPAA, this tax will not be applied if the withdrawal is used for medical expenses that exceed ____ of the individual's adjusted gross income. A) 5% B) 6.5% C) 7.5% D) 8% Answer: C) 7.5%

Which of the following typically does NOT provide a form of managed care? A) Preferred Provider Organization (PPO) B) Point-of-Service (POS) plan C) Major medical indemnity plan D) Health Maintenance Organization (HMO) Answer: C) Major medical indemnity plan

Which of these factors do NOT affect the rates of medical insurance? A) Health B) Race C) Occupation D) Gender Answer: B) Race

Which of the following is NOT considered to be insurer expenses? A) Maintenance costs B) Policy premiums C) Employees' salaries D) Utilities Answer: B) Policy premiums

Which of the following is NOT a factor in determining the morbidity of a group of individuals?  A)Health B) Occupation C) Age D) Race Answer: D) Race

Lorenzo is self employed with an S corporation. He is unmarried and had a net profit for the tax year. What are the tax ramifications of his health insurance premiums paid for the year?  A) 50% of his health insurance costs can be deducted from his gross income B) 75% of his health care costs can be paid with pre-tax income C) 100% of his health insurance costs can be deducted from his gross income D) 100% of his health insurance costs can be paid with tax credits Answer: C) 100% of his health insurance costs can be deducted from his gross income

What is the term used to describe the frequency and severity of certain illnesses and accidents?  A) Morbidity B) Mortality C) Malaise D) Insurability Answer: A) Morbidity

Tara the producer is delivering a specified disease insurance policy to a new policyowner. Upon delivery, she may be expected to collect all of the following EXCEPT a(n) A) initial premium B) signed impairment rider acknowledgement C) modified application with a new signature D) good health statement Answer: C) modified application with a new signature

An insured was injured as an innocent bystander when someone committed a felony. The insurer is A) likely to void the policy B) partially liable for the loss C) not liable for the loss D) liable for the loss Answer: D) liable for the loss

XYZ Company has applied for group health insurance for its employees. What information would the insurer's underwriters likely use to determine the appropriate coverage and final premium rate given to the group?  A) Experience rating B) Credit reports C) Arrest reports D) AM Best rating Answer: A) Experience rating

What happens when an insurance policy is backdated? A) The policy's elimination period is waived B) The time frame for reinstating a lapsed policy is extended C) The policy's probation period is earlier than the present D) The policy's effective date is earlier than the present Answer: D) The policy's effective date is earlier than the present

Which of the following is a requirement for ANY change in an insurance application? A) Change must be initiated by the agent B) Change must be initialed by the applicant C) Change must be approved by the insurer D) Change must be notarized Answer: B) Change must be initialed by the applicant

Jim is the insured on a health insurance policy and holds two jobs. If "occupation" is used to classify the risk, the insurer will most likely classify Jim according to the occupation that A) is most hazardous B) pays the lowest wage C) pays the highest wage D) he has worked at the longest Answer: A) is most hazardous

Jim is the insured on a health insurance policy and holds two jobs. If "occupation" is used to classify the risk, the insurer will most likely classify Jim according to the occupation that A) is most hazardous B) pays the lowest wage C) pays the highest wage D) he has worked at the longest Answer: A) is most hazardous

Which of these is NOT a relevant factor in the health insurance principle of morbidity? A) Age B) Intelligence C) Occupation D) Health Answer: B) Intelligence

The difference between pre-certification and concurrent review is that pre-certification A) costs more to the patient B) costs less to the patient C) is considered a cost containment measure D) occurs before the treatment is provided Answer: D) occurs before the treatment is provided

Which of the following is considered to be a point of service (POS) plan? A) Preferred provider organization B) Managed care plan C) Protected care provider D) Restricted provider organization Answer: B) Managed care plan

Which of the following is NOT an example of utilization review?  A) monitoring length of hospital stay B) ongoing inspection of accident prone individuals C) monitoring the appropriateness of care D) setting a hospital release date for a patient Answer: B) ongoing inspection of accident prone individuals

How are premiums paid by the insured for personally owned disability income insurance treated for tax purposes? A) partially tax deductible B) not tax deductible C) fully tax deductible D) tax deferred Answer: B) not tax deductible

The IRS allows a taxpayer to deduct medical expenses that exceed 7.5% of their adjusted gross income. Which of the following is considered a tax deductible medical expense under this rule?  A) Long Term Care insurance premiums B) Dread Disease insurance premiums C) Travel accidental insurance premiums D) Individual disability income insurance premiums Answer: A) Long Term Care insurance premiums

One of the most important considerations when replacing health insurance would be the  A) Age of the insured B) Exclusions on a new policy C) Occupation of the insured D) Cost Answer: B) Exclusions on a new policy

According to life insurance contract law, insurable interest exists A) when any business relationship exists B) at the time of application C) at the time of death D) only when determined by a judge Answer: B) at the time of application

In an insurance contract, the applicant's "consideration" is the A) offer and acceptance B) premium only C) statements made in the application and the premium D) statements made in the application only Answer: C) statements made in the application and the premium

A contract requires  A) implied authority B) only an offer C) negotiation between the involved parties D) an offer and acceptance of the contract terms Answer: D) an offer and acceptance of the contract terms

Which of the following is NOT a requirement of a contract?  A) Parties involved must be competent B) Equal consideration is required between the involved parties C) Contract must have a legal purpose D) Offer and acceptance must be involved Answer: B) Equal consideration is required between the involved parties

The deeds and actions of a producer indicate what kind of authority? A) Express B) Apparent C) Implied D) Conditional Answer: B) Apparent

Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds? A) Tom's spouse B) Bob's estate C) Bob's spouse D) Tom Answer: D) Tom

What makes an insurance policy a unilateral contract? A) Only the insured pays the premium B) Only the insured can change the provisions C) Only the insurer is legally bound D) Only the insured is legally bound Answer: C) Only the insurer is legally bound

When the principal gives the agent authority in writing, it's referred to as A) express authority B) implied authority C) apparent authority D) imposed authority Answer: A) express authority

The importance of a representation is demonstrated in what rule?  A) Insurable interest B) Law of adhesion C) Materiality of concealment D) Consideration clause Answer: C) Materiality of concealment

Which of the following contracts is defined as "one that restores an injured party to the condition that was present before the loss"?  A) Unilateral contract B) Contract of adhesion C) Indemnity contract D) Personal contract Answer: C) Indemnity contract

Express power given to an agent in an agency agreement is  A) the appearance of authority an insurer gives to its agent B) the unwritten authority that the agent is assumed to have C) the authority to represent the insurer D) the authority to add provisions to a contract Answer: C) the authority to represent the insurer

What are an applicant's statements concerning occupation, hobbies, and personal health history regarded as? A) warranty B) guarantee C) representation D) collateral Answer: C) representation

Which of the following is present when an applicant stands to lose value if the insured dies? A) Insurability B) Offer and acceptance C) Insurable interest D) Consideration Answer: C) Insurable interest

Which contract element is insurable interest a component of? A) Competent parties B) Offer and acceptance C) Consideration D) Legal Purpose Answer: D) Legal purpose

Which of the following is an example of the insured's consideration? A) Insurer's promise to pay benefits B) A paid premium C) Legal purpose D) Intent Answer: B) A paid premium

Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agent's A) Express authority B) Implied authority C) Apparent authority D) Evident authority Answer: B) Implied authority

Ambiguities in an insurance policy are always resolved in favor of the  A) insured B) producer C) insurer D) underwriter Answer: A) insured

Legal purpose is a term used in contract law meaning A) there must be an offer and acceptance B) the contract must be aleatory C) there must be legal reasons for entering into the contract D) the contract must be a contract of adhesion Answer: C) there must be legal reasons for entering into the contract

What is implied authority defined as? A) Authority given in writing to an agent in the agency agreement B) Authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties C) Authority given to handle claims and process payments D) Authority given to an agent to act outside the scope of the agency agreement Answer: B) Authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties

Under a contract of adhesion, A) there is the potential for an unequal exchange of value B) the insurer's obligations are dependent upon certain acts of the insured individual C) the terms must be accepted or rejected in full D) only one party makes any kind of enforceable promise Answer: C) the terms must be accepted or rejected in full

Insurable interest does NOT occur in which of the following relationships? A) Sister and brother B) Parent and children C) Business partners D) Business owner and business client Answer: D) Business owner and business client

If a material warranty violation on the part of the insured is found, what recourse does an insurer have? A) Sue the insured B) Rescind the policy C) Charge more premium D) Terminate the agent Answer: B) Rescind the policy

Who is responsible for assembling the policy forms for insureds? A) State Insurance Departments B) NAIC C) Insurance carriers D) Insurance producers Answer: C) Insurance carriers

In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered A) voidable B) conditional C) aleatory D) unilateral Answer: D) unilateral

A professional liability for which producers can be sued for mistakes of putting a policy into effect is called A) fiduciary bond B) errors and omissions C) fiduciary trust D) errors and oversights Answer: B) errors and omissions

Which of the following is NOT required in the content of a policy?  A) Parties involved in the contract B) Period to which the coverage exists C) Probability of loss D) Risk insured against Answer: C) Probability of loss

Intentional withholding of material facts that would affect an insurance policy's validity is called a(n) A) estoppel B) concealment C) adhesion D) misrepresentation Answer: B) concealment

A unilateral contract is one in which A) there is an element of chance and potential for unequal exchange of value or consideration for both parties B) only one party (the insurer) makes any kind of legally enforceable promise C) the contract has been prepared by one party (the insurance company) with no negotiation between the applicant and the insurer D) both the policyowner and the insurer must know all material facts and relevant information Answer: B) only one party (the insurer) makes any kind of legally enforceable promise

The authority granted to a licensed producer is provided via the  A) producer's apparent authority B) written contract C) Law of Agency D) Principal Capacity Answer: C) Law of Agency

All of the following are elements of an insurance policy EXCEPT A) definitions B) other insurance C) claim forms D) conditions Answer: C) claim forms

Which of the following BEST describes a conditional insurance contract? A) A contract that requires certain conditions or acts by the insured individual B) A contract that has the potential for the unequal exchange of consideration for both parties C) A contract where one party "adheres" to the terms of the contract D) A contract where only one party makes any kind of enforceable contract Answer: A) A contract that requires certain conditions or acts by the insured individual

What does the insurance term "indemnity" refer to? A) Make whole B) Unequal consideration C) Law of large numbers D) Competent parties Answer: A) Make whole

Which principle is accurately described with the statement "Insureds are entitled to recover an amount NOT greater than the amount of their loss"?  A) Unilateral B) Indemnity C) Aleatory D) Utmost good faith B) Indemnity

In an insurance contract, the element that shows each party is giving something of value is called A) offer B) acceptance C) consideration D) purpose Answer: C) consideration

According to the principle of Utmost Good Faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and it's A) underwriting B) issuance of the policy C) promises made D) legal reserve C) promises made

______ is NOT an element of a valid contract. A) Legal B) Consideration C) Competent parties D) Countersignature Answer: D) Countersignature

When handling premiums for an insured, an agent is acting in which capacity? A) Adhesion B) Fiduciary C) Conditional D) Aleatory Answer: B) Fiduciary

The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as A) Apparent B) Estoppel C) Aleatory D) Unilateral Answer: C) Aleatory

Which statement is CORRECT when describing a contract of adhesion?  A) Contract may be accepted or rejected by the insured B) Contract involves negotiation between insurer and insured C) Any confusing language in the contract would be interpreted in favor of the insurer D) Contract cannot be modified by the insurer Answer: A) Contract may be accepted or rejected by the insured

Which of the following statements about aleatory contracts is NOT true? A) Insurance contracts are considered aleatory B) The insured and the insurer have the potential for unequal contributions C) The insured and the insurer contribute equally to the contract D) Aleatory contracts are conditioned upon the occurrence of an event Answer: C) The insured and the insurer contribute equally to the contract

Restoring an insured to the same condition as before a loss is an example of the principle of A) Utmost good faith B) Adhesion C) Legal purpose D) Indemnity Answer: D) Indemnity

Which type of clause describes the following statement: "We have issued the policy in consideration of the representations in your applications and payment of the first-term premium". A) Premium clause B) Consideration clause C) Adhesion clause D) Contestability clause Answer: B) Consideration clause

In order for a contract to be valid, it must A) be filed with the state B) be signed and witnessed by an attorney C) be in writing D) contain an offer and acceptance Answer: D) contain an offer and acceptance

The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority? A) discreet B) apparent C) implied D) express Answer: C) implied

Which course of action is the insurer entitled to when deliberate concealment is committed by the insured?  A) Rescinding the contract B) Charge a higher premium C) Charge a penalty D) Nothing Answer: A) Rescinding the contract

Which of the following statements correctly describes a contract of indemnity?  A) One party is restored to the same financial position the party was in before the loss occurred B) The unequal exchange of value or consideration for both parties C) One party(the insurance company) prepares the contract with no negotiation between the applicant and insurer D) Only one party(the insurer) makes any kind of enforceable promise Answer: A) One party is restored to the same financial position the party was in before the loss occurred

When can a group health policy renewal be denied according to the Health Insurance Portability and Accountability Act (HIPAA)? A) When a change of management has occurred within the group B) When the annual number of claims has increased by 25% C) When contribution or participation rules have been violated D) When group participation has increased by 25% Answer: C) When contribution or participation rules have been violated

The limited period of time given to all members to sign up for a group health plan is called the A) enlistment period B) sign-up period C) probationary period D) enrollment period Answer: D) enrollment period

Health insurance will typically cover which of the following perils?  A) Death due to illness B) Injury due to accident C) Death due to accident D) Dismemberment Answer: B) Injury due to accident

Which type of business insurance is meant to cover the costs of continuing to do business while the owner is disabled? A) Disability overhead policy B) Business continuation policy C) Disability buy-sell policy D) Business overhead expense policy Answer: D) Business overhead expense policy

Coverage is limited for vision and dental insurance in all of the following ways, EXCEPT A) Number of teeth cleanings per year B) Dollar amount for eyeglass frames C) Number of X-rays performed per year D) Specific dollar amount for examinations Answer: D) Specific dollar amount for examinations

Which of the following is NOT typically covered under vision care insurance? A) Eye surgery B) Eyeglasses C) Examinations D) Contacts Answer: A) Eye surgery

What is the contract called that is issued to an employer for a Group Medical Insurance plan? A) Master policy B) Certificate of coverage C) Provisional policy D) Document of coverage Answer: A) Master policy

Sonya applied for a health insurance policy on April 1. Her agent submitted the information to the insurance company on April 6. She paid the premium on May 15 with the policy indicating the effective date being May 30. On which date would Sonya have coverage? A) April 1 B) April 6 C) May 15 D) May 30 Answer: D) May 30

Justin is receiving disability income benefits from a group policy paid for by his employer. How are these benefits treated for tax purposes? A) Partially taxable income B) Non-taxable income C) Taxable income D) Conditionally taxable income Answer: C) Taxable income

Which of the following would evidence ownership in a participating health insurance contract?  A) Stock ownership B) Irrevocable beneficiary status C) Policy ownership D) Collateral assignment Answer: C) Policy ownership

Minimum participation standards exist for group health insurance plans in order to A) cover the agent's commission B) prevent adverse selection C) avoid treating benefits as taxable income D) meet state requirements Answer: B) prevent adverse selection

If an employee contributes 50% toward the disability plan premium provided by an employer, what would be considered the taxable income of a $1,000 monthly disability benefit? A) $100 B) $250 C) $500 D) $1,000 Answer: C) $500

According to HIPAA, when an insured individual leaves an employer and immediately begins working for a new company that offers group health insurance, the individual A) is eligible for coverage upon hire B) must wait 360 days to be eligible for coverage C) must continue coverage with the previous employer D) is eligible for only health insurance, not life or dental insurance Answer: A) is eligible for coverage upon hire

In an employer-sponsored group accident and health plan, a master contract is issued to the A) TPA B) employees C) Administrative Services Organization D) employer Answer: D) employer

What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect? A) 0% B) 25% C) 50% D) 100% Answer: D) 100%

Health insurance involves two perils, accident and ____. A) death B) sickness C) disability D) liability Answer: B) sickness

When a claimant has coverage under more than one health plan, which group medical plan provision applies? A) Legal actions B) Notice of claim C) Time of payment of claims D) Coordination of benefits Answer: D) Coordination of benefits

An eligible individual who would like to obtain group health insurance without providing evidence of insurability must  A) enroll within a specified eligibility period B) sign an affidavit that they are in good health C) pay a higher premium than those providing evidence of insurability D) agree to an individual policy instead of group coverage Answer: A) enroll within a specified eligibility period

HIPAA considers which of the following as "individually identifiable health information"? A) A person's employment history B) A person's net income C) A person's hire date D) A person's health claim information Answer: D) A person's health claim information

Which of the following does Coordination of Benefits allow? A) Allows the secondary payor to reduce their benefit payments so no more than 100% of the claim is paid B) Allows both a group health plan and individual health plan to coordinate their benefit payments C) Allows the deductible to be spread out between all the health providers D) Allows each health provider to pay 100% of the claim Answer: A) Allows the secondary payor to reduce their benefit payments so no more than 100% of the claim is paid

Under group health insurance, a certificate of coverage is issued to the  A) employer B) employee C) producer D) sponsor Answer: B) employee

Under the Health Insurance Portability and Accountability Act (HIPAA), the employee's new Group Health Plan will verify Creditable Coverage so that the A) employee's benefits still owed can be claimed B) employee cannot be excluded from the new employer's health plan C) employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan D) new health insurance carrier will have a clear record of any chronic conditions that exist Answer: C) employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan

Business Overhead Expense Insurance pays for A) business expenses when a business owner becomes disabled B) a business owner's salary in the event of the owner's disability C) any loss in value of a business if the owner becomes disabled D) business expenses during an economic downturn Answer: A) business expenses when a business owner becomes disabled

During the underwriting process for a group health policy, it was discovered that 15 out of 50 members of the group have major health issues. How would the insurer handle this? A) Accept or reject the whole group B) Accept the 35 insurable individuals while rejecting the remaining 15 C) Charge a higher premium to the 15 unhealthy individuals D) Assign the group to a re-insurer Answer: A) Accept or reject the whole group

Which of the following would be considered a possible applicant and contract policyholder for group health benefits? A) Human resource department B) Employer C) Insured employee D) Insurance company Answer: B) Employer

Group health plans may deny participation based upon the A) member's claims history B) member's current age C) member's pre-existing condition D) member' part-time employment status Answer: D) member's part-time employment status

Credit Accident and Health plans are designed to A) permit creditors the ability to require that coverage be purchased through insurers of their choice B) provide permanent protection C) help pay off existing loans during periods of disability D) not permit free choice of coverage selection Answer: C) help pay off existing loans during periods of disability

A common exclusion with Vision plans is  A) eyeglass frames B) the examination C) contact lenses D) lasik surgery Answer: D) lasik surgery

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a terminated employee's benefits must A) be less extensive and premium cannot exceed 102% B) be the same and the premium cannot exceed 102% C) be more extensive and the premium cannot exceed 102% D) be the same as well as the premium Answer: C) be the same and the premium cannot exceed 102%

In an employer-sponsored contributory group Disability Income plan, the employer pays 60% of the premium and each employee pays 40% of the premium. Any income benefits paid are taxed to the employee at A) Employee has no tax liability B) 40% of the benefit C) 60% of the benefit D) 100% of benefit Answer: C) 60% of the benefit

Ron has a new employer and wishes to enroll in the company's group health plan. In determining whether his pre-existing health condition applies, Ron cannot have more than a ___ day gap without previous health insurance.  A) 45 B) 63 C) 75 D) 90 Answer: B) 63

Coordination of Benefits regulation applies to all of the following plans EXCEPT A) Group vision plan B) Preferred Provider Organization plan C) Self-funded group health plan D) Group health plan Answer: B) Preferred Provider Organization plan

Which of the following decisions would a Health Savings Account (HSA) owner NOT be able to make? A) The amount contributed by the employer B) The amount contributed by the owner C) The underlying account investments used D) The medical expenses paid for by the HSA Answer: A) The amount contributed by the employer

When are group disability benefits considered to be tax-free to the insured? A) When the recipient pays the premiums B) When the employer pays the premiums C) When both the employer and recipient pay the premiums D) When benefits paid are equal to or lower than the recipient's salary Answer: A) When the recipient pays the premiums

Which of the following is typically NOT eligible for coverage in a group health policy? A) Full-time employee B) Temporary employee C) Business owner D) Partner in a partnership Answer: B) Temporary employee

A person covered with an individual health plan A) is issued a policy B) is issued a certificate of medical costs C) does not contract directly with the insurance company D) is not subject to medical underwriting Answer: A) is issued a policy

Who is financially liable for the payment of covered claims in a fully insured group health plan? A) Insurer B) Group member C) Health provider D) Guaranty Association Answer: A) Insurer

Key Person Disability Insurance pays benefits to the A) hospital B) employee C) employer D) employee's creditors Answer: C) employer

Sole proprietors are permitted tax deductions for health costs paid from their earnings in the amount of A) costs that exceed 7 1/2 % of AGI B) costs that exceed 10% of AGI C) 100% of costs D) no deduction permitted Answer: C) 100% of costs

The problem of overinsurance is addressed in which health insurance provision? A) Entire contract B) Suitability C) Reinstatement D) Coordination of benefits Answer: D) Coordination of benefits

Under the subrogation clause, legal action can be taken by the insurer against the A) responsible third party B) beneficiary C) policyowner D) State Answer: A) responsible third party

In regards to a group health insurance plan, which statement is CORRECT? A) A contributory group health plan must cover at least 50% of all eligible members B) A non-contributory group health plan must cover all eligible members C) A minimum of 75% of eligible members is required for a non-contributory group health plan D) A contributory group health plan only requires participation of key employees Answer: B) A non-contributory group health plan must cover all eligible members

The policyholder for a group health benefit plan is considered to be the A) Employee B) Employer C) Liaison D) Insurer Answer: B) Employer

What does the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allow an employee to do? A) In the event of employment termination, group health insurance can be kept if the employee pays the premiums B) Receive a tax credit to help offset the cost of health insurance C) Remain on their current coverage for 30 months D) In the event of employment termination, group health insurance can be kept if the employer pays the premiums Answer: D) In the event of employment termination, group health insurance can be kept if the employee pays the premiums

Under a disability income policy, which provision would be payable if the cause of an injury is unexpected and accidental? A) Presumptive disability provision B) Absolute accidental provision C) Accidental death benefit provision D) Accidental bodily injury provision Answer: D) Accidental bodily injury provision

Which of the following is INELIGIBLE to participate in a Section 125 Plan? A) Key Employee in a C-Corp B) Highly Compensated Employee in an S-Corp C) A C-Corp Owner with a greater than 2% share D) An S-Corp Owner with a greater than 2% share Answer: D) An S-Corp Owner with a greater than 2% share