Term
| 1.What are the four elements of an insurance contract? |
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Definition
| Agreement — offer and acceptance, consideration, competent parties, and legal purpose. |
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Term
| 2.What does representation mean and how does it differ from a warranty? |
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Definition
Representations are statements believed to be true to the best of one's knowledge. A warranty
is an absolutely true statement upon which the validity of the insurance policy depends. |
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Term
| 3.What must the producer do if the premium does not accompany the application? |
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Definition
The agent must collect the premium and obtain a statement of continued good health from
the applicant before releasing the policy. |
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Term
| • How can an insurance company use the information it obtains from the MIB? |
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Definition
| o It can use MIB information to conduct further investigation into an applicant's current insurability. |
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Term
| • What is the purpose of the Fair Credit Reporting Act? |
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Definition
| o The act established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. It also protects consumers against the circulation of inaccurate or obsolete information. |
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Term
| • What is the difference between a consumer report and an investigative consumer report? |
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Definition
| o Investigative Consumer Reports are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. The primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer. |
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Term
| • Who is responsible for delivering the policy to the insured and collecting the premium? |
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Definition
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Term
| • Explain the concept of coverage on a first-dollar basis |
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Definition
| First-dollar coverage does not require the insured to pay a deductible. |
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Term
| • What coverages are provided by a Major Medical Expense policy? |
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Definition
| o After the basic policy pays, the supplemental major medical will provide coverage for expenses that were not covered by the basic policy, and expenses that exceed the maximum. If the time limitation is used up in the basic policy, the supplemental coverage will provide coverage thereafter. |
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Term
| • Why do HMOs encourage members to get regular checkups? |
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Definition
| o In this way the HMO hopes to catch disease in its earliest stages when treatment has the greatest chance for success. |
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Term
| • Explain the gatekeeper concept. |
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Definition
o The member's primary care physician serves as a gatekeeper, who helps keep the member
o away from the higher priced specialists unless it is truly necessary. |
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Term
| • How does a POS plan differ from a traditional HMO? |
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Definition
o With the Point-Of-Service plan the employees do not have to be locked into one plan or
o make a choice between the two plans. |
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Term
| • What is the purpose of a Health Savings Account? |
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Definition
o Health Savings Accounts are designed to help individuals save for qualified health expenses
o that they, their spouse, or their dependents incur. |
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Term
| • Once a disability policy is paying a claim, how long will it pay? |
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Definition
| o Disability income insurance is designed to provide a reasonable and predetermined income to a disabled party for a set period of time subject to a "time deductible" termed an elimination period. |
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Term
| How long does an elimination period usually last? |
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Definition
| o The elimination periods found in most policies range from 30 days to 180 days. |
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Term
| • What is a probationary period? How is it different from an elimination period? |
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Definition
| The probationary period is a waiting period. |
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Term
| • What is the purpose of a buy-sell agreement? |
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Definition
o The buy-sell agreement specifies how the business will pass between owners when one of the
o owners dies or becomes disabled. |
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Term
| • Describe the taxation of premiums and benefits in a disability buyout agreement. |
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Definition
| o The premiums paid by the business are not tax deductible and the benefits are received tax- free. |
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Term
| • What is the purpose of key person disability insurance? |
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Definition
o The key person's economic value to the business is determined in terms of the potential loss
o of business income which could occur as well as the expense of hiring and training a replacement for the key person. |
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Term
| • With key person insurance, who pays the premium, who is the beneficiary and the insured? |
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Definition
| o The contract is owned by the business, so the premium is paid by the business, and the business is the beneficiary. The key employee would be the insured. |
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Term
| • In what ways can accidental death and dismemberment coverage be written? |
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Definition
| o Accidental Death and Dismemberment (AD&D) coverage can be written as a rider or as a separate policy. |
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Term
| • Under Accidental Death and Dismemberment coverage, when would the capital amount be paid? When would the principal amount be paid? |
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Definition
| o The principal sum is paid for accidental death. In case of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as the capital sum. |
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Term
| • How do Limited Risk and Special Risk policies differ from each other? |
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Definition
| The Limited Risk Policy defines the specific risk in which accidental death or dismemberment benefits will be paid. The Special Risk Policy, on the other hand, will cover unusual types of risks that are not normally covered under AD&D policies. |
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Term
| Where is skilled nursing care generally provided? |
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Definition
| • Skilled care is almost always provided in an institutional setting. |
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Term
•
• Describe an individual who would be a candidate for custodial care. Who would
o provide it? |
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Definition
| o Custodial care is care for meeting personal needs, and must be given under a doctor's orders. |
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Term
•
• Who would be eligible for adult day care? What services would be provided? |
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Definition
| o Adult day care is care provided for functionally impaired adults on less than a 24-hour basis. Care includes transportation to and from the day care center, and a variety of health, social and related activities. Meals are usually included as a part of the service. |
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Term
| • What types of groups are eligible for group insurance? |
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Definition
o There are generally 2 types of groups eligible for group insurance: employers sponsored, and
o association sponsored. |
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Term
| • How many members must an association have to qualify for group insurance? |
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Definition
| • The group must have at least 100 members. |
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Term
| • How is underwriting unique for group policies, as opposed to individual policies? |
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Definition
| • Underwriting of group policies is unique in that when a group policy is written every eligible member of the group must be covered regardless of physical condition, age, sex or occupation. |
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Term
| • How is the cost of a group policy determined? |
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Definition
| o Cost of the policy will vary by ratio of males to females and the average age of the group. |
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Term
| • What is required for eligibility in a group policy? |
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Definition
| o Employees are usually full-time only and meet minimum service requirements. |
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Term
| • When is the group policy cost reevaluated, and for what purpose? |
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Definition
o Evidence of insurability normally is not required since an annual reevaluation makes
o adjusting of the premium possible based upon the group claim experience |
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Term
| • Under COBRA, when are dependents covered and for how long? |
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Definition
| o The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event. For any of these qualifying events, coverage is extended up to 18 months. |
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Term
| • What is included in the "entire contract"? |
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Definition
o The entire contract provision states that the health insurance policy, together with a copy of
o the signed application and any attached endorsements, constitutes the entire contract. |
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Term
| • Who has the authority to change a policy provision? |
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Definition
o Only an executive officer of the company, not an agent, has authority to make any changes to
o the policy. |
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Term
| • What are the grace periods for an individual policy? |
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Definition
o In most cases the grace period can be not less than 7 days for weekly pay policies (industrial
o policies), 10 days for monthly pay policies, and 31 days for all other modes. |
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Term
| • If a premium has not been paid by the end of the grace period, what will happen to the policy? |
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Definition
| o 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. |
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Term
• When an individual needs to file a health insurance claim, what are his/her
o responsibilities? |
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Definition
| o Notice is required within 20 days of the loss, or as soon as reasonably possible. |
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Term
| • Which provision states to whom the claims are to be paid? |
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Definition
| o The payment of claims provision specifies to whom claims payments are to be made. |
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Term
| • If the insured misstates his/her age, how will benefits be paid? |
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Definition
o If the insured misstated his or her age at the time of the application, the benefits paid will be
o those, which the premium paid, that would have been purchased at the correct age. |
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Term
| • In what way could changing to a more dangerous occupation affect a person's insurance policy? |
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Definition
| o If the insured makes a change to a more hazardous occupation, upon claim, benefits will be reduced to that which premiums paid would have purchased assuming the more hazardous occupation. |
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Term
• What provision can reduce the disability benefit based upon the insured's current
o income? |
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Definition
| o Relation of Earnings to Insurance |
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Term
| • What is identified in the insuring clause? |
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Definition
| It identifies the insured and the insurance company. |
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Term
| • Where is the consideration clause usually located in the policy? |
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Definition
| It is usually located on the first page of the policy. |
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Term
| What are usual, reasonable and customary charges based on? |
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Definition
| o Usual/Reasonable and Customary means that the insurance company will pay an amount for a given procedure based upon the average charge for that procedure in that specific geographic area. |
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Term
• Which rider will allow the insured to purchase additional amounts of disability income
o coverage without evidence of insurability? |
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Definition
| o Guaranteed Insurability Rider |
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Term
| • What is the difference between a guaranteed renewable and noncancellable policy? |
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Definition
| The guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. |
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Term
• Which renewal provision gives the insured the right to renew the policy for the life of
o the contract but allows the insurer to alter premiums? |
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Definition
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Term
| • To whom is Medicare available? |
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Definition
o Medicare is a federal medical expense insurance program for people age 65 and older even if
o the individual continues to work. |
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Term
| • What does Medicare Part A cover? |
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Definition
o Medicare Part A helps pay for inpatient hospital care, inpatient care in a skilled nursing
o facility, home health care, and hospice care. |
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Term
| • What is the initial enrollment period for Medicare Part A? |
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Definition
o Initial enrollment period is when an individual first becomes eligible for Medicare (3 months
o before turning age 65 to 3 months after the month of birth). |
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Term
| • How is Part B of Medicare funded? |
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Definition
o Part B is funded by monthly premiums and from the general revenues of the federal
o government. |
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Term
| • Who is eligible for Part B of Medicare? |
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Definition
| o Part B is optional and offered to everyone who enrolls in Part A. |
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Term
| • When is the general enrollment period for Medicare Part B? |
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Definition
| January 1 through March 31 of each year |
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Term
| • What is excluded from coverage under Medicare Part B? |
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Definition
| o Medicare Part B does not cover private duty nursing, skilled nursing home care costs over 100 days per benefit period, or intermediate nursing home care. Please review complete list of exclusions above. |
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Term
| • What are the advantages of an HMO or PPO for a Medicare recipient? |
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Definition
| o The advantages of an HMO or PPO for a Medicare recipient may be that there are no claims forms required, almost any medical problem is covered for a set fee so health care costs can be budgeted, and the HMO or PPO may pay for services not usually covered by Medicare or Medicare supplement policies, such as prescriptions, eye exams, hearing aids, or dental care. |
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Term
• Who provides primary coverage if an individual who is eligible for Medicare is still
o active under an employer plan? |
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Definition
| o Employer plans continue to be primary coverage, and Medicare is secondary coverage. |
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Term
| • What is the purpose of Medicare Supplement Plans? |
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Definition
o Medicare supplement plans, referred to as Medigap, are policies issued by private insurance
o companies that are designed to fill in some of the gaps in Medicare. |
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Term
| • Which Medicare supplement plan must be offered in all plans? |
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Definition
| o Plan A must be offered by any insurer marketing Medigap plans, while plans B - N are optional. |
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Term
| • What is the purpose of Medicaid? |
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Definition
o Medicaid is a federal and state funded program for those whose income and resources are
o insufficient to meet the cost of necessary medical care. |
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Term
| • How does someone qualify for Social Security disability income benefits? |
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Definition
o The individual must have the proper insured status, meet the definition of disability, and
o satisfy the waiting period. |
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Term
| • How is someone determined to be totally disabled according to Social Security? |
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Definition
| "Total disability" is the inability to engage in any gainful work that exists in the national economy. The disability must result from a medically determinable physical or mental impairment that is expected to result in early death or last for a continuous period of 12 months. |
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Term
| • Which benefit is based on a primary insurance amount, PIA? |
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Definition
o The amount of the Social Security disability benefit will be based on the person's Primary
o Insurance Amount (PIA). The PIA is based on the person's average indexed earnings on which Social Security taxes have been paid. |
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Term
| • According to the Coordination of Benefits (COB) provision, if both parents have coverage where they are employed, under whom will the children be covered? |
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Definition
| If both parents name their children as dependents under their group policies, the order of payment will usually be determined by the birthday rule: the coverage of the parent whose birthday is earliest in the year will be considered primary. |
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Term
| • What is the difference between occupational and nonoccupational coverage? |
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Definition
| Occupational coverage provides benefits for disabilities resulting from accidents or sicknesses that occur on or off the job. Nonoccupational coverage, on the other hand, only covers disabilities that result from accidents or sicknesses occurring off the job. |
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Term
| • Describe residual disability. |
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Definition
| o Residual disability is the type of disability income policy that provides benefits for loss of income when a person returns to work after a total disability, but is still not able to work as long or at the same level he/she worked before becoming disabled. |
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Term
| • How is the taxation of insurance benefits determined? |
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Definition
o Taxation of insurance benefits is often determined by whether or not the premiums were
o taxed. |
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Term
| • How are personally-owned disability benefits received by the individual taxed? |
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Definition
| Disability income benefits are received income tax free by the individual. |
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Term
| • Under what circumstances are medical expenses paid by the individual policyholder tax deductible? |
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Definition
| o The benefits are deductible as a medical expense if the expenses exceed a certain percentage of the insured's adjusted gross income, and if the insured itemizes these deductions on his/her tax return. |
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Term
| • In group health insurance, how are premiums paid by the employer for disability income insurance taxed? |
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Definition
| o Premiums paid by the employer for disability income insurance for its employees are deductible as a business expense and are not considered as taxable income to the employee. |
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Term
• For sole proprietors and partners, what percentage of the cost of a medical expense
o plan is deductible? |
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Definition
| o Sole proprietors and partners may deduct 100% of the cost of a medical expense plan. |
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Term
| • Are key person disability premiums deductible to the business? How are the benefits received? |
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Definition
| o Key person disability income premiums are not deductible to the business, but the benefits are received income tax free by the business. |
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Term
| • Are the premiums paid for business overhead expense insurance tax deductible? Are the benefits received taxable? |
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Definition
| o The premiums paid for BOE insurance is tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received. |
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Term
• What are the eligibility requirements for coverage through the Health Insurance
o Marketplace? |
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Definition
| o Be a U.S. citizen or lawful resident, live in the United states, and not be incarcerated |
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Term
| • Under the PPACA, what is the limiting age for coverage of children of the insured? |
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Definition
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Term
| • What is included in preventive care benefits? |
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Definition
o Preventive care includes routine checkups, screenings, and counseling to prevent health
o problems. |
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Term
| • What do the metal levels mean in the Marketplace plans? |
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Definition
o The metal-level plans pay different amounts of the total costs of an average person's care:
o from bronze paying the lowest to platinum paying the highest amount. |
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Term
| • Name and explain at least 3 policy provisions required in accident and health insurance policies issued in this state. |
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Definition
| o Entire contract, grace period, reinstatement, claims provisions, etc. Please review the text for a full list and explanations. |
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Term
| • Who is responsible for the content of advertisements for health insurance policies? |
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Definition
| The insurance company, regardless of who wrote, created, designed or presented the advertisements. |
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Term
| • What is the required right to return provision for long-term care policies? |
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Definition
| Insureds have 30 days after the policy delivery to return it for a full refund. |
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Term
| • When must HMOs issue evidence of coverage to subscribers? |
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Definition
| Within 30 days from the effective date of coverage |
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Term
| • What are the reasons an HMO may cancel a group or individual contract? |
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Definition
o HMO contracts may be canceled for the following reasons: failure to pay the amount due under the contract, fraud or misrepresentation, material violation of the terms of the contract,
o or any other good cause agreed upon in the contract and approved by the Commission |
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Term
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Definition
| enacted or regulated by a statute |
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Term
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Definition
| ability to meet financial obligations (e.g. an insurance company maintains enough assets |
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Term
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Definition
| — an offer that attempts to influence the other party |
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Term
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Definition
| — not subject to an obligation |
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Term
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Definition
| forceful act or threat aimed to influence a person to act against his or her will |
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Term
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Definition
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