Insurance MCQ

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax? Answer: $0

Pre-hospitalization authorization is considered an example of Answer: managed care

T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable? Answer: Benefits are taxable to T

Which of the following statements about the classification of applicants is INCORRECT? Substandard applicants are never declined by underwriters Substandard applicants are occasionally declined by underwriters Preferred risk applicants typically have better premium rates than standard risk applicants An applicant can be classified as substandard risk because of a hazardous job Answer: Substandard applicants are never declined by underwriters

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take? Send the initial premium back to the applicant Send a notice to the applicant that the coverage was declined Send a notice to the MIB that the applicant was declined Send a notice to the agent that the applicant was declined Answer: Send a notice to the MIB that the applicant was declined

Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy? Issue the policy with a diabetes exclusion Issue the policy with an altered Time of Payment of Claims provision Issue the policy with a rating Decline the applicant Answer: Issue the policy with an altered Time of Payment of Claims provision

Which of the following BEST describes how pre-admission certifications are used? Answer: Used to prevent nonessential medical costs

Which type of plan normally includes hospice benefits? Answer: managed care plans

Which of the following are NOT managed care organizations? Point-of-Service plan (POS) Preferred Provider Organization (PPO) Medical Information Bureau (MIB) Health Maintenance Organization (HMO) Answer: Medical Information Bureau (MIB)

An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to Answer: determine if the applicant is an acceptable risk by completing standard underwriting procedures