Insurance MCQ

Which of the following is the legal name of a corporation or partnership under which a licensee conducts insurance business? A. Name of reference B. Business name C. Assumed name D. Legal name Answer: B. Business name

All of the following would be different between qualified and nonqualified retirement plans EXCEPT A. Taxation of withdrawals B. Taxation of contributions C. IRS approval requirements D. Taxation on accumulation Answer: D. Taxation on accumulation

Additional penalty for violation a Commissioner's cease and desist order. Answer: $5,000

Violations of workers' compensation laws and regulations may result in a fine of $_____ for each initial violation, or $15,000 for subsequent violations. Answer: $1,500

To be eligible to establish a self insurance program and employer must: :have a tangible net worth of at least $____ and :post a bond of not less than $_____ or 105% of the employer's expected annual cost of claims Answer: $2.5M $100,000

Automobile insurance issued to insureds who are age _____ or older must offer a premium discount for three year periods if in the previous three year period the insured: :has no moving violations or at fault accidents and :successfully completes after turning _____ years old (and every three years thereafter), an approved traffic safety course Answer: Age 55

$____ for damage to the property of other. Answer: $10,000

The following are legitimate uses of insurance in a business setting EXCEPT a. Funding business continuation agreements b. Funding against general company financial loss c. compensating executives d. funding against financial loss caused by the death of a key employee Answer: b

An insured purchases a policy in 2000 and dies and 2005. The insurance company discovers at the time that the insured concealed information during the application process. What can they do? a. Sue for the right to not pay the death benefit b. Pay the death benefit c. Refuse to pay the death benefit because of the fraud d. Pay a decreased death benefit Answer: b

The paid-up addition option uses the dividend a. to accumulate additional savings for retirement b. to purchase a smaller amount of the same type of insurance as the original policy c. to purchase a one-year term insurance in the amount of the cash value d. to reduce the next year's premium Answer: b

If Tom's policy allows him to make periodic additions to the face amount at standard rates, without proving instability, his policy includes a a. Conversion option b. Non forfeiture option c. Guaranteed insurability option d. Guaranteed renewable option Answer: c

An insurer has filed a new rate with the Commissioner, and is waiting for a reply. The Commissioner hasn't responded yet. After how many days can the insurer apply the new rate? a. 5 days b. 10 days c. 60 days d. 45 days Answer: b. 10 days

If a consumer requests additional information concerning an Investigative Consumer Report, how long does the insurer or reporting agency have to comply? a. 5 days b. 7 days c. 10 days d. 3 days Answer: a. 5 days

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the a. total contract b. aleatory contract c. complete contract d. entire contract Answer: d

An agent is acting ethically in all the of following situations EXCEPT a. working within the conditions of his/her contract b. representing the insurer, not the insured c. keeping customers' best interests in mind d. always representing the insured Answer: d

The rider that allows the company to forgo collecting the premium if the insured is disabled is called a. waiver of premium b. guaranteed insurability c. waiver of cost of insurance d. payor benefit Answer: a

Who has the legal title of the property in a trust? a. guardian b. trustee c. grantor d. beneficiary Answer: b

Who can make changes to the policy once it is in effect? a. the insured b. the policyowner c. the agent d. an executive officer of the insurer Answer: d

All other factors being equal, the least expensive first-year premium payment is found in a. level term b. annually renewable term c. increasing term d. decreasing term Answer: b

The policyowner of an Adjustable Life policy can increase premium payments and a. have a lower non forfeiture option b. have a higher cash value interest rate c. have a higher face amount without proof of insurability d. have a limited pay policy Answer: d

With a Straight Life policy, what happens if the insured lives to age 100? a. the policy matures and the face value is paid to the beneficiary b. the policy matures and the cash value is used to purchase a single premium policy c. the policy will stay in force until the insured's death d. the policy matures and the cash value is paid to the insured. Answer: d

Which of the following are generally not considered when underwriting group insurance? a. the size of the group b. the group's medical history c. the nature of the group d. the group's past claim experience Answer: b

Kayla's husband died in a plane crash. She needs a new source of funding that will help put her child through daycare. Which of the following would be the best source? a. estate conservation b. life insurance proceeds c. state education waiver d. viatical settlement Answer: b

Bonnie wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of the ownership Bonnie should have her husband named as the Answer: Revocable beneficiary-she can make changes to the contract, and she would be the policy owner while her husband would receive the death benefit

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? a. assignment b. automatic premium loans c. waiver of premium d. incontestability period Answer: b

Which option provides a single beneficiary with income for the rest of his/her life? a. joint life option b. single beneficiary option c. single life option d. one beneficiary option Answer: c

Which non forfeiture option has the highest amount of insurance protection? a. extended term b. conversion c. decreasing term d. reduced paid-up Answer: a. extended term

If a life insurance policy has an irrevocable beneficiary designation, a. the owner can always change the beneficiary at will b. the beneficiary cannot be changed c. the beneficiary can only be changed with written permission of the beneficiary d. the beneficiary cannot be changed for at least 2 years Answer: c. the beneficiary can only be changed with written permission of the beneficiary

All of the following statements concerning dividends are true EXCEPT: a. lower insurance company costs generate higher dividends b. they stem from favorable underwriting experience c. Favorable investment results generate higher dividends d. dividend amounts are guaranteed in the policy Answer: d

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option? Answer: Fixed amount settlement

Unlike the dividend itself, the interest earned on dividends is a. 40% taxable, similar to a capital gain b. taxable c. nontaxable d. tax deductible Answer: b

Which of the following riders provides for a waiver of premium when the policy owner and the insured are NOT the same person? a. waiver of the cost of insurance b. conditions for payment c. payor benefit d. waiver of premium Answer: c

When a reduced-paid up non-forfeiture option is chosen, what happens to the face amount of the policy? a. it decreases over the term of the policy b. it remains the same as the original policy, regardless of any discrepancies in value c. it is reduced to the amount of what the cash value would buy as a single premium d. it is increased when extra premiums are paid Answer: c

Which of the following statements best describes the effect the Accelerated benefit provision would have on the benefits paid to the beneficiary? a. it will not affect the benefits paid to the beneficiary b. it will reduce the benefits by 70% c. it will increase the benefits paid to the beneficiary d. it will decrease the benefits paid to the beneficiary Answer: d

Grace is the primary beneficiary of her grandfather's life insurance policy. Upon his death, she wants some income from the death benefit, but wants the face amount to be conserved. Which settlement option should she choose? a. delayed income option b. fixed amount option c. interest only option d. life income with period certain Answer: c

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a. term life b. limited access c. universal life d. controlled Answer: c

What is the term that most accurately describes the provision designed to relieve life insurance premium payment for minors whose parents have died or become disabled? a. Waiver of Premium b. Payor Benefit c. Jumping Juvenile d. Juvenile Premium Provision Answer: b

Earl borrowed money at the bank to send his daughter to college. Instead of purchasing Credit Life insurance, he used an existing life insurance policy to secure the debt. This would be called a a. assignment of ownership b. collateral assignment c. temporary assignment d. change of beneficiary Answer: b

Which of the following determines the length of time that benefits will be received under the Fixed Amount settlement option? a. size of each installment b. predetermined length of time stipulated in the contract c. length of income period d. amount of interest Answer: a

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen? a. the policy will be reduced to an extended term option. b. the policy will terminate when the loan amount with interest equals or exceeds the cash value c. the insurer will increase the interest rate on the loan and charge a penalty d. the insurer will not permit the policyowner to take out any more loans Answer: b

Which of the following is correct concerning the taxation of a Key Person Life Insurance Policy premiums and death benefit? a. Premiums are tax deductible as a business expense and the death benefit is taxable to the company b. Premiums are tax deductible as a business expense and the death benefit is not taxable to the company c. Premiums are not deductible as a business expense and the death benefit is taxable to the company d. Premiums are not deductible as a business expense and the death benefit is not taxable to the company Answer: d

What are the members of the Medical Information Bureau required to report? a. any claims an individual has made b. information about unpaid hospital bills c. information about an individual's intentional injuries d. adverse medical information about individuals Answer: d

Rod wants to pay his initial life insurance premium in advance. Which of the following best describes his situation? a. Rod cannot pay his policy is advance; it is payable either when the agent delivers the policy or anytime during the first initial month b. Rod can pay his premium as early as he wants, even with his application c. Rod can pay his premium only after the policy has been issued, regardless of its delivery status d. Rod cannot pay his policy in advance; it is payable only when the agent delivers the policy Answer: b

What is the purpose of key person insurance? a. to provide health insurance to the families of key employees b. to insure retirement benefits are available to all key employees c. to maintain an account that insures the owner of a company remains solvent d. to lessen the risk of financial loss because of the death of a key employee Answer: d

Which of the following entities regulates variable life policies? a. the Federal Government only b. Securities and Exchange Commission (SEC) and the Insurance Department c. Financial Industry Regulatory Authority and the State Guarantee Association d. the Insurance Department only Answer: b

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? a. insurance index b. policy summary c. illustrations d. buyer's guide Answer: d

Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy? a. the employer is the owner and the Key Person is the beneficiary b. The Key Person is the owner and beneficiary c. The Key Person is the owner and the employer is the beneficiary d. the employer is the owner and beneficiary Answer: d

The factor added to the net premium to cover the costs of the insurer in obtaining and maintaining the business is called: a. legal reserve b. dividend accumulation c. premium tax d. expenses Answer: d

The insurance company underwriter could find information concerning the personal activities and character of an applicant from which of the following reports? a. attending physician b. insurance company who provided the prior coverage c. Medical Information Bureau d. agent's report Answer: d. agent's report- the agent communicates his/her observations concerning an applicant in the agent's report

Which of the following individuals must have insurable interest in the insured? a. producer b. policy owner c. beneficiary d. actuary Answer: b. policy owner-the policy owner must have an insurable interest in the insured, i.e. his/her own life if the policy owner and the insured is the same person, or in the life of a family member or a business partner.

What are the three ratings of classification that denotes the risk level of insureds? Answer: Standard, substandard, and preferred

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles? a. standard risk pays a higher premium than a substandard risk b. standard risk requires extra rating c. standard risk is also known as high exposure risk d. standard risk is representative of the majority of people Answer: d. standard risk is representative of the majority of people-average risk

Key person life insurance does NOT reimburse a company for which of the following? a. for a loss of previous business resulting from a key person's death b. for a reduction of profits resulting from a key person's death c. for increased pension liability resulting from a key person's death d. for a loss of leadership resulting from a key person's death Answer: c

Which of the following is NOT true of life settlements? a. the seller must be terminally ill b. they could be used for a key person coverage c. they could be sold for an amount grater than the current cash value d. they involve insurance policies with large face amounts Answer: a

Which of the following would be least likely to be considered a legitimate need that would be paid by insurance proceeds? a. vacation travel expenses b. travel expenses for family to come to the funeral c. debt cancellation d. day care Answer: a. vacation travel expenses

Attempting to determine how much insurance an individual would require base upon their financial objectives is known as: a. viatical approach b. needs approach c. human life value approach d. estate planning Answer: b

An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require? a. statement of continued good health b. attending physician statement c. a complete medical record d. sworn health affidavit from the applicant Answer: b

Replacing insurers are permitted to use electronically completed notice of replacement. However, when this method is used a printed copy of the notice must be sent to the applicant within a. 10 days b. 30 days c. 60 days d. 5 days Answer: d. 5 days

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? Answer: When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

Which of the following is NOT true? a. the Life and Health Guaranty Association is comprised of representatives from the DOIs of every state b. the Association's liability is generally limited to that of the impaired instance company c. the Life and Health Guaranty Association's maximum coverage is $500,000 d. the Life and Health Guaranty Association was created to protect policy owners financially if their insurers become insolvent Answer: a

A man wants to buy a life insurance policy in which he can count on guaranteed minimum benefits. Which type should he buy? a. level b. variable c. solid d. fixed Answer: d

Which of the following may NOT be included in an insurance company's advertisement? a. their policies' limitation or exclusions b. the name of the specific agent c. an identification of a limited policy as a limited policy d. that its policies are covered by a state Guaranty Association Answer: d

What qualifications must an agent hold in order to sell variable life insurance policies? a. National Association of Insurance Commissioners (NAIC) registration b. state licensing to sell life insurance and variable products c. both state and federal licensing d. same certification as fixed life policies Answer: c

A key person insurance policy can pay for which of the following? a. workers compensation b. hospital bills of the key employee c. costs of training a replacement d. loss of personal income Answer: c

Which of the following types of risk will result in the highest premium? a. substandard risk b. standard risk c. preferred risk d. all risks pay equal premiums Answer: a

Which of the following best details the underwriting process for life insurance? a. reporting and rejection of risks b. selection, classification, and rating of risks c. solicitation, negotiation and sale of policies d. issuance of policies Answer: b

What are the personal uses of life insurance? a. insured protection, estate creation and cash accumulation b. cash accumulation, estate depletion and liquidity c. beneficiary protection, liquidity, estate creation and cash accumulation d. survivor protection, estate creation and conservation, cash accumulation and liquidity Answer: d. survivor protection, estate creation and conservation, cash accumulation and liquidity

An applicant wants to buy a policy that has cash value element. Which type should she buy? a. term b. permanent c. stock d. investment Answer: b. permanent- death protection and savings/cash value option

Which of the following is NOT an example of insurable interest? a. child in parent b. debtor in creditor c. business partners in each other d. employer in employee Answer: b

Which of the following best describes the MIB? a. it's a member organization that protects insured against insolvent insurers. b. it's a rating organization for health insurance c. it's a non profit organization that maintains underwriting information on applicants for life and health insurance d. it's a government agency that collects medical information on the insured from the insurance companies Answer: c. it's a non profit organization that maintains underwriting information on applicants for life and health insurance-Medical Information Bureau (MIB) also maintains confidential medical impairment information on individuals

If an applicant for a lief insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about a. which individual will pay the premium b. whether an insurable interest exists between the individuals c. the gender of the applicant d. the type of policy requested Answer: b. whether an insurable interest exists between the individuals

Which government program allows a blackout period? Answer: Social Security

What is the name of the insured who enters into a viatical settlement? a. contingent b. viatical broker c. viator d. third party Answer: c

Two equal partners in a business worth $150,000 are using a Cross Purchase plan to protect against the death of each other. Which of the following statements would be correct? a. partner B buys a policy on partner A in the amount of $75,000 naming Partner A as beneficiary. b. partner A buys a policy on partner B in the amount of $150,000 naming Partner A as beneficiary. c. partner B buys a policy on partner A in the amount of $150,000 naming Partner A as beneficiary. d. partner A buys a policy on partner B in the amount of $75,000 naming Partner A as beneficiary. Answer: d. partner A buys a policy on partner B in the amount of $75,000 naming Partner A as beneficiary.

Which is the primary source of information used for insurance underwriting? a. applicant interview b. medical records c. private investigations d. application Answer: d. application

An applicant is seeking an insurance policy. In the underwriting process, it was determined that the applicant has some dangerous habits, a risky occupation, and poor health. Which of the following is TRUE concerning the policy premium? a. it will likely be higher because the applicant is a substandard risk b. it will likely be the average premium issued to standard risks c. the applicant's habits, occupation and health do not affect the premiums d. it will likely be lower because the applicant is preferred risk Answer: a. it will likely be higher because the applicant is a substandard risk

An insured has been diagnosed with a life-threatening disease, and is given approximately six months to live. The insured is in a hard financial situation which will worsen with the upcoming medical expenses. Which of the following options could he utilize right now? a. liquidity b. surrender c. change of beneficiary d. viatical settlement Answer: d. viatical settlement

What is the purpose of the buyer's guide? Answer: To allow the consumer to compare the costs of different policies

What is the major difference between a Stock Redemption Plan and a Cross Purchase Plan? Answer: In a Stock Redemption Plan, the policies are owned by an entity, and in a Cross Purchase Plan, the policies are owned by individuals- If the business owns the policies, pays the premiums, and is the beneficiary, the agreement is called Stock Redemption Plan. If the policies are owned by individual business partners who pay the premiums and are the beneficiaries, the plan is called a Cross Purchase Plan

Who is the owner of the policy and who pays the premium in and Executive Bonus plan? a. company is the owner, but the executive pays the premium b. board of directors is the owner, and the board of directors pays the premium c. company is the owner, and the company pays the premium d. executive is the owner, and the executive pays the premium Answer: d. executive is the owner, and the executive pays the premium- the employer reimburses the executive for cost (or pays a bonus in the amount of the premium). Since the executive is receiving compensation, the amount paid by the employer would be considered taxable income.

Amy's insurance premium has decreased slightly, despite the fact that her level of health has remained the same. Which of the following most likely caused the premium decrease? a. she has a Steadily Decreasing Premium policy b. the insurer's customer base is expanding, which allows for lower premiums c. her insurer used interest earned on premiums to lower premium amounts d. her increased age allows for lower premiums Answer: c. her insurer used interest earned on premiums to lower premium amounts

Upon policy delivery, the agent may be required to obtain any of the following EXCEPT a. payment of premium b. corrected and resigned application c. signed waiver of premium d. statement of good health Answer: c. signed waiver of premium

Who makes up the Medical Information Bureau? Answer: Insurers

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? a. effect of inflation on income over time b. predicted needs of the family after the insured's death c. insured's current and future income d. insured's annual expenses. Answer: b. predicted needs of the family after the insured's death- are used in the needs approach. The Human Life Value Approach requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money.

Which of the following would NOT fall into the category of costs associated with death? a. final medical expenses of the insured b. day to day expenses of maintaining the family c. the expense of a vacation for surviving family members d. funeral expenses Answer: c. the expense of a vacation for surviving family members

An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds a. $10,000 b. $15,000 c. $25,000 d. $50,000 Answer: d. $50,000

Which of the following is NOT a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach? a. mortgages b. expenses c. estimated longevity d. outstanding debt Answer: c. estimated longevity

Partner A in a business buys a life insurance policy on Partner B to protect herself against a financial loss if he should die. Two years after the partnership is dissolved Partner B dies. Who will receive the death benefit? Answer: Partner A

Which of the following applicants could the insurer charge a higher rate and not be charge with unfair discrimination? a. an applicant that was born in another country b. an applicant who is legally blind c. an applicant who has been a victim of domestic abuse d. an applicant that smokes cigarettes as opposed to one that does not Answer: d. an applicant that smokes cigarettes as opposed to one that does not

Life insurance may be used to pay state inheritance taxes and federal estate taxes so that it is not necessary to sell off assets from the estate to pay these costs. This is called a. estate conservation b. estate creation c. survivor protection d. survivorship insurnce Answer: a. estate conservation- life insurance may be used to pay state inheritance taxes and federal estate taxes so that it is not necessary to sell off assets from the estate to pay these costs. This is called estate conservation.

In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse may receive retirement benefits? Answer: Blackout period- begins when the youngest child reaches the age of 16, and ends when the surviving spouse qualifies for retirement benefits, as early as age 60. No benefits are paid during this time.

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a. aleatory contract b. executive bonus c. key person d. a fraternal association Answer: b. executive bonus

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have? a. variable b. term c. securities d. stock Answer: a. variable- life policies vary in value, as the name suggests, because the value is based on the stocks that support the policy. If a policyholder wants a more stable, reliable value, he/she should invest in a fixed policy.

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT: a. the employer pays a bonus to a selected employee to fund to policy b. it is considered a non qualified employee benefit. c. the policy is owned by the company d. any type of insurance policy may be used. Answer: c. the policy is owned by the company.

Which is generally true regarding insureds who have earned preferred status? a. they keep a higher percentage of any interest earned on their policies b. their premiums are lower c. they can barrow higher amounts off of their policies d. they can decide when to pay their monthly premiums Answer: b. their premiums are lower- the insured is in excellent physical condition and employs healthy lifestyles and habits

Stranger-oriented life insurance policies are in direct opposition to the principle of a. law of large numbers b. good faith c. indemnity d. insurable interest Answer: d. insurable interest-STOLI purchaser doesn't know the insured, or have any interest in the insured's longevity, so it violates the principle of insurable interest

If a loss occurs, insurance policies pay the proceeds to a. Insurer b. Agent c. Beneficiary d. Applicant Answer: C

Which of the following is an example of an agent's fiduciary responsibilities? a. Promptly forwarding premiums to the insurance company b. Helping clients to file claims c. Performing a review of the agent's client's coverage d. Offering additional coverage to his client Answer: (A)

Contracts that are prepared by one party and submitted to the other party on a "take it or leave it" basis are classified as a. Binding contracts. b. Contracts of adhesion. c. Unilateral contracts. d. Aleatory contracts. Answer: (B)

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a. Consideration b. Legal purpose c. Contract of adhesion d. Acceptance Answer: (A)

The causes of loss insured against in an insurance policy are known as a. Losses b. Risks c. Hazards d. Perils Answer: (D)

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? a. Unilateral b. Unidirectional c. Aleatory d. Conditional Answer: (A)

Which of the following is NOT a goal of risk retention? a. To fund losses that cannot be insured b. To minimize the insured's level of liability in the event of loss c. To reduce expenses and improve cash flow d. To increase control of claim reserving and claims settlements Answer: (B)

An insurer incorporated in which of the following locations would be considered a foreign insurer in Washington D.C.? a. Mexico b. Canada c. Washington D.C. d. Maryland Answer: ( D )

Units with the same or similar exposure to loss are referred to as a. Homogeneous. b. Catastrophic loss exposure. c. Insurable risks. d. Law of large numbers. Answer: (A)

Which of the following is an example of apparent authority of an agent appointed by an insurer? a. The agent has business cards and stationery printed. b. The agent puts up a sign with the insurer's logo without express permission. c. The agent accepts a premium payment after the end of the grace period. d. The agent accepts a premium payment during the grace period. Answer: ( C )

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be a. Qualified. b. Approved. c. Authorized. d. Certified. Answer: ( C )

When transacting business in this state an insurer formed under the laws of another country is known as a/an a. Alien insurer. b. Domestic insurer. c. Foreign insurer. d. Admitted insurer. Answer: (A)

Taking a defensive driving course or installing deadbolt locks on the doors of a home are examples of which of the following? a. Loss avoidance b. Risk transfer c. Self-insurance d. Risk reduction Answer: (D)

What is a material misrepresentation? a. Any misstatement by the producer b. Concealment c. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company d. Any misstatement made by an applicant for insurance Answer: ( C )

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? a. Warranty b. Aleatory c. Adhesion d. Subrogation Answer: (B)

Which of the following insurance providers would be considered a risk sharing arrangement? a. Reciprocal b. Stock c. Mutual d. Surplus Lines Answer: (A)

Which of the following individuals will be eligible for coverage on the Health Insurance Marketplace? A. A US citizen who is incarcerated B. A US citizen living abroad C. A permanent resident lawfully present in the US D. Someone who has Medicare coverage Answer: C. A permanent resident lawfully present in the US

According to the provisions of the Patient Protection and Affordable Care Act, all of the following are required preventive care services EXCEPT A. Cervical cancer exams for all women starting at age 40 B. Diet counseling for adults C. Well-woman visits and counseling D. Screenings for autism and behavioral disorders for children Answer: A. Cervical cancer exams for all women starting at age 40

Which of the following are responsible for making premium payments in an HMO plan? A. Payors B. Subscribers C. Producers D. Insureds Answer: B. Subscribers

Maximum benefits for a major medical plan are usually lifetime A. Closed panel B. Minimums C. Maximums D. Open panel Answer: C. Maximumsd

On a major medical insurance policy, the amount that an insured must pay on a claim before the insurer will pay is known as A. Inside limit B. Coinsurance C. Deductible D. Copayment Answer: C. Deductibel

How are HMO territories typically divided? A. By where the HMO can find the least expensive physicians B. Geographic areas C. Type of physician services available D. Community rating system Answer: B. Geographic areas

An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement? A. Selective Coverage B. Limited Coverage C. Claims Saving D. Cost-containment Answer: D. Cost-containment

A man's physician submits claim information to his insurer before she actually performs a medical procedure on him. She is doing this to see if the procedure is covered under the patient's insurance plan and for how much. This is an example of A. Concurrent review B. Claims-delayed treatment C. Suspended treatment D. Prospective review Answer: D. Prospective review

A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have? A. Broker B. Subscriber only C. Insured only D. Both subscriber and insured Answer: D. Both subscriber and insured

In a defined contribution plan, A. The benefit is known and the contribution is unknown B. The contribution and the benefit are unknown C. The contribution and the benefit are known D. The contribution is known and the benefit is unknown Answer: D. The contribution is known and the benefit is unknown

Which of the following is NOT the purpose of HIPAA? A. To prohibit discrimination against employees based on their health status B. To limit exclusions for pre-existing conditions C. To provide immediate coverage to new employees who had been previously covered for 18 months D. To guarantee the right to buy individual policies to eligible individuals Answer: C. To provide immediate coverage to new employees who had been previously covered for 18 months

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? A. An individual who was previously covered by group health insurance for 6 months is eligible B. An individual who has used up COBRA continuation coverage is eligible C. An individual who doesn't qualify for Medicare may be eligible D. The gap of coverage for eligibility is a period of 63 or less day Answer: A. An individual who was previously covered by group health insurance for 6 months is eligible

An insured's health claim internal appeal was denied. The insurer must do all of the following EXCEPT A. Notify the insured how to obtain an outside review B. Offer a payment plan C. Notify the insured about the decision in writing D. Complete the appeal in 60 days after service was received Answer: B. Offer a payment plan

A health insurance plan which involves financing, managing, and delivery of health care services and involves a group of providers who share in the financial risk of the plan or who have an incentive to deliver cost effective service, is called A. Managed care plan B. Preferred care plan C. Limited care plan D. Self-insurer Answer: A. Managed care plan

What term is used to describe when a medical caregiver contracts with a health organization to provide services to its members or subscribers, but retains the right to treat patients who are not members or subscribers? A. Indemnity contract B. Open panel C. Closed panel D. Restrictive rights Answer: B. Open panel

Which of the following health care plans would most likely provide the insured/subscriber with comprehensive health care coverage? A. Basic medical expense plan B. Health Maintenance Organization plan C. Group dental insurance plan D. Medical-surgical expense plan Answer: B. Health Maintenance Organization plan

Which of the following is true of a PPO? A. Claim forms are completed by members on each claim B. No copayment fees are involved C. Its goal is to channel patients to providers that discount services D. The most common type of PPO is the staff model Answer: C. Its goal is to channel patients to providers that discount services

Which of the following is NOT a cost-saving service in a medical plan? A. Denial of coverage B. Preventative care C. Second surgical opinions D. Risk sharing Answer: A. Denial of coverage

Under which of the following organizations are the practicing providers compensated on a fee-for-service basis? A. Open panel B. PPO C. HMO D. Blue Cross/Blue Shield Answer: D. PPO

According to the PPACA metal levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that? A. Platinum B. Bronze C. Silver D. Gold Answer: A. Platinum

Combination plans are comprised of two types of plan features: basic and A. Expanded B. Limited C. Comprehensive D. Scheduled Answer: C. Comprehensive

Which of the following is excluded in a dental insurance plan? A. Cosmetic treatment due to an accident B. Replacement of a stolen prosthetic device C. Lost dentures D. Treatment for the surrounding and supporting tissue of the teeth such as for gum disease Answer: C. Lost dentures

Julie must have orthodontic work performed on her incisors. Which type of service would this be called, under a nonscheduled plan? A. Major service B. Basic service C. Minor service D. Repair service Answer: A. Major service

Which of the following would be considered a routine procedure? A. Prosthodontics B. Annual check-up C. Endodontics D. Orthodontics Answer: B. Annual check-up

Which type of dental treatment involves the replacement of natural teeth with artificial devices? A. Restorative B. Orthodontics C. Prosthodontics D. Replacement Answer: C. Prosthodontics