Which of the following situations constitutes an insurable interest?
A) The policyowner must expect to benefit from the insured's death.
B) The beneficiary, by definition, has an insurable interest in the insured.
C) The insured must have a personal or bu
Answer: D
Insurable interest requires that the policyowner be expected to benefit from the insured's continuing to live or enjoying good health or to suffer a loss when the insured dies or is disabled. An insurable interest must exist between the applican
With regard to life insurance, all of the following statements are correct EXCEPT:
A) all individuals are considered to have insurable interest in themselves.
B) spouses are automatically considered to have insurable interest in each other.
C) a creditor
Answer: D
For life and health insurance policies, insurable interest is required only when the contract is issued. It does not have to be maintained throughout the life of the contract nor is it necessary at the time of a claim.
The phrase "the applicant for insurance has more to gain if the insured continues to live than if the insured dies" is the rule defining:
A) a legal wagering contract.
B) the aleatory nature of an insurance contract.
C) insurable interest.
D) one's legal
Answer: C
A person acquiring a life insurance contract must be subject to loss upon the death of the individual to be insured. This is known as insurable interest and it is required before a life insurance policy will be issued.
Alan, age 39, is married and has a small son. He is employed as a sales manager by R.J. Links, a sole proprietorship that owes much of its success to Alan's efforts. He recently borrowed $50,000 from his brother-in-law, Pete, to finance a vacation home. O
Answer: C
Generally, a person has an insurable interest in another if they are related by blood or marriage or if their relationship is such that the insured's continuing to live will benefit that individual or the insured's death will cause that individu
With a life insurance contract, an insurable interest must exist:
A) when the proceeds are paid out.
B) at the inception of the contract.
C) as long as the insured lives.
D) at the insured's death.
Answer: B
With life insurance, an insurable interest is only required upon policy application and inception. It does not have to continue through the duration of the contract, nor does it have to exist at the insured's death in order to claim the policy's
Arthur incurs total hospital expenses of $8,300. His major medical policy includes a $500 deductible and an 80%/20% coinsurance feature. Assuming this is the first covered expense he incurs this year, how much will Arthur have to pay toward his hospital b
Answer: C
Because this is the first covered expense Arthur has this year, he is responsible for the $500 deductible and 20% of the remaining costs. His share of the bill is computed as follows: $8,300 - $500 = $7,800 x .20 = $1,560 + $500 = $2,060.
Major medical policies may include any of the following types of deductibles EXCEPT:
A) per cause.
B) flat.
C) corridor.
D) decreasing.
Answer: D
Major medical deductibles may be integrated, flat or corridor, but not decreasing. Decreasing deductibles are related to life insurance.
Alice has a major medical policy with a $500 deductible and an 80%/20% coinsurance provision. If she receives a hospital bill for $7,500 of covered expenses, how much of that bill will she have to pay?
A) $1,900.00
B) $1,400.00
C) $2,000.00
D) $2,400.00
Answer: A
Of the $7,500 total expenses, Alice pays a $500 deductible. The basis for the insurer's payment is therefore $7,000. The insurer pays 80% of that amount, or $5,600. The coinsurance amount Alice pays is $1,400 plus the $500 deductible. Alice pays
The calendar year deductible provision of a major medical policy means that:
A) the deductible is applied only once during the calendar year.
B) the deductible is applied against each claim during the first calendar year the policy is in effect.
C) all cl
Answer: A
A major medical policy's calendar year deductible means that when the deductible amount is met during the calendar year, all claims submitted will be treated for the balance of the year without meeting any new deductibles. Dividing the costs of
Leonard owns a major medical health policy which requires him to pay the first $200 of covered expenses each year before the policy pays its benefits. The $200 is the policy's:
A) coinsurance amount.
B) stop-loss amount.
C) annual premium.
D) deductible.
Answer: D
A deductible is a stated initial dollar amount that the individual insured is required to pay before insurance benefits are paid.
In major medical and comprehensive medical expense policies, a coinsurance provision:
A) does not apply until benefit amounts exceed $2,000.
B) provides for percentage participation by the insured.
C) helps to satisfy the deductible amount.
D) has no effe
Answer: B
In major medical and comprehensive medical expense policies, a coinsurance provision provides for percentage participation by the insured. For example, a 75/25 coinsurance provision means the insurance company will cover 75% of the allowable med
Major medical policies that pay 100% of covered expenses above a specified amount and after the insured's deductible contain what kind of a provision?
A) Stop-loss.
B) Blue sky.
C) Maximum benefit.
D) Umbrella.
Answer: A
Some major medical policies contain a stop-loss provision, meaning that the insurer pays 100% of covered expenses after the insured's out-of-pocket payments for eligible expenses reach a specified level, such as $1,000 or $2,000. The definition
A stop-loss feature in a major medical policy specifies the maximum:
A) amount the insured must pay toward covered expenses.
B) benefit amount the policy provides each year.
C) benefit amount the policy provides in a lifetime.
D) amount the insured must p
Answer: A
To provide a safeguard for insureds, many major medical policies contain a stop-loss feature that limits the insured's out-of-pocket expenses. This means that once the insured has paid a specified amount toward his or her covered expenses-usuall
Which of the following types of plans integrates its coverage with a basic medical expense coverage, providing benefits in excess of those specified in the basic plan?
A) Hospital indemnity.
B) Basic umbrella.
C) Supplementary major medical.
D) Comprehens
Answer: C
A supplementary major medical plan is coordinated with a basic plan and is designed to pick up coverage where the basic plan leaves off. It covers expenses not included under a basic plan and provides coverage for expenses that exceed the basic
Comprehensive medical expense insurance covers all of the following EXCEPT:
A) surgical fees.
B) hospital miscellaneous expenses.
C) loss of income resulting from sickness.
D) hospital room and board.
Answer: C
Comprehensive medical expense insurance covers room and board, surgical fees and hospital miscellaneous expenses up to a dollar limit. Disability income insurance covers loss of income resulting from accident or illness.
When separate deductibles are required for each illness or accident, what kind of deductible is in effect?
A) Revolving.
B) Per cause.
C) Flat.
D) Per benefit.
Answer: B
If a policy defines causes of loss on the basis of each sickness or injury, separate (per cause) deductibles must be satisfied every time a claim is submitted to the insurer.
All of the following statements regarding preexisting conditions are correct EXCEPT:
A) disability income policies commonly include a probationary period to help control the risk of preexisting conditions.
B) by most policy definitions, a preexisting cond
Answer: B
A preexisting condition is one that first manifested or was treated within a stipulated period before the insured applied for the policy. This period is not necessarily limited to one year.
Fees for all of the following items typically are covered under a medical expense policy's miscellaneous expense benefit EXCEPT:
A) laboratory fees.
B) use of the operating room.
C) surgeon's fees.
D) x-rays.
Answer: C
The miscellaneous expense benefit covers hospital "extras," such as x-rays, laboratory fees, and use of the operating room. It does not cover a surgeon's fees, which would be covered under a surgical expense policy.
Prescription drug coverage can be offered as an optional benefit under which of the following arrangements?
A) PPOs.
B) COBRAs.
C) Group medical expense plans.
D) HMOs.
Answer: C
While HMOs and PPOs include coverage for prescription drugs, insureds in a group medical expense plan must buy the coverage as an optional benefit. COBRA is federal legislation that protects the benefits of insureds who have lost coverage becaus
Benefits paid for customary charges incurred during examination by an ophthalmologist or optometrist are included in:
A) vision care insurance.
B) disability income insurance.
C) surgical expense insurance.
D) basic physician's expense insurance.
Answer: A
Vision care coverage, normally found in a group health insurance policy, usually pays for reasonable and customary charges incurred during eye examinations by ophthalmologists and optometrists.
When a policy covers chemotherapy, cancer hormone treatments and other approved cancer treatments, benefits are available when treatment is received at all of the following EXCEPT:
A) through outpatient treatment at a hospital.
B) through a federally fund
Answer: B
When an individual or group health insurance policy covers cancer chemotherapy and FDA-approved cancer hormone treatments and services, the covered individual must be entitled to benefits in any medically appropriate treatment setting.
Which of the following is the most valid reason for a person to purchase a specified (dread) disease health insurance policy?
A) He wants to make sure that he and his family are protected against a major illness.
B) He has been diagnosed with heart diseas
Answer: D
Dread disease policies provide benefits only if the insured contracts the specific disease listed in the policy. It does not provide comprehensive coverage, nor does it cover multiple diseases. A person cannot obtain coverage if he is already di
Mark's medical expense policy states that it will pay a flat $75 per day for room and board for each day of hospitalization. The policy pays benefits on which basis?
A) Service.
B) Invoice.
C) Indemnity.
D) Reimbursement.
Answer: C
Medical expense policies written on an indemnity basis pay a daily benefit for each day of hospitalization, regardless of the actual expenses.
Bill's medical expense policy states that it will pay him a flat $50 a day for each day he is hospitalized. The policy pays benefits on which basis?
A) Indemnity.
B) Reimbursement.
C) Service.
D) Partial.
Answer: A
Indemnity medical expense policies do not pay expenses or bills. They merely provide the insured with a stated benefit amount for each day he or she is confined to a hospital as an inpatient. The money may be used by the insured for any purpose.
Debbie is concerned that her health insurance coverage is inadequate. Which of the following is the best reason for her to purchase an indemnity-type medical expense policy?
A) It will pay all or part of her deductible.
B) It will pay a specified per-day
Answer: B
Indemnity-type medical expense policies pay a flat, per-day benefit for each day the insured is hospitalized. This will help Debbie meet the noncovered expenses of her confinement.
A hospital indemnity insurance policy may be recommended to a client for all the following reasons EXCEPT:
A) benefits are paid directly to the insured and may be used for any purpose.
B) the policy can be an ideal supplement to other health insurance.
C)
Answer: C
Benefits with a hospital indemnity policy are a fixed dollar-amount benefit, payable by the day for the time the insured is in the hospital. The benefit is based on actual expenses. As a rule, premiums are lower than those for other insurance an
Which of the following falls under the definition of a limited policy?
A) Accidental death & dismemberment (AD&D) insurance.
B) A flat-benefit disability policy.
C) Prescription drug plan.
D) Long-term care insurance.
Answer: C
Prescription drug policies may be sold as supplements to individual policies or as stand-alone limited plans. LTC insurance covers a broad range of expenses involving long-term care. AD&D insurance generally also covers numerous perils related t
When compared to the premiums for major medical expense coverage policies, the premiums for dread disease policies are typically:
A) identical.
B) lower.
C) higher.
D) about the same.
Answer: B
Since dread disease policies only cover the specific disease stated in the policy, the coverage provided by these types of policies is very limited. As a result, the premiums for dread disease policies are often fairly inexpensive as compared to
The types of diseases generally covered by dread disease policies are ones which:
A) do not occur that frequently, with the costs involved when they do being rather insignificant.
B) do not occur that frequently, but involve significant costs when they do
Answer: B
Dread disease policies are generally designed to cover the types of diseases the do not occur that frequently, but involve significant costs when they do occur.
For group health insurance, employees may be classified in all of the following ways EXCEPT by:
A) length of service.
B) age.
C) type of payroll.
D) duties.
Answer: B
Group health insurance participants may be classified by type of payroll, duties and length of service, but not by age.
What happens if a person insured under a group accident and sickness insurance policy dies?
A) Death proceeds must be paid to the group policyholder.
B) Death proceeds are never paid under accident and health insurance policies.
C) The proceeds revert to
Answer: D
Benefits payable for the insured's death are paid to the designated beneficiary or assignee of the insured. If none exist, the benefits are paid to the insured's estate. Death benefits are never paid to the group policyholder or to the insurer.
Which of the following statements regarding coverage of a spouse under an employer-sponsored group health insurance plan is CORRECT?
A) The spouse becomes eligible at the time the employee is covered, with proof of insurability.
B) The spouse becomes elig
Answer: B
If the spouse declines coverage after 31 days of becoming eligible, future coverage is available only during open enrollment periods or when proof of insurability is provided. Otherwise, dependents become eligible at the same time coverage is pr
Jasmine is covered under her employer's health plan. She is called to active military duty. Upon her return, which of the following statements regarding her coverage is CORRECT?
A) She will be conditionally covered for up to 2 years.
B) She must reapply f
Answer: D
Upon her release from military service, she can be readmitted to the group upon her return to work without the need to provide proof of insurability. However, as long as she is on active military duty, she is not covered under her group plan.
Which of the following statements regarding the conversion privilege in group health insurance is CORRECT?
A) To obtain a conversion policy, an insured employee must show evidence of insurability.
B) An insured employee who resigns or is terminated has up
Answer: D
An insured employee who resigns or is terminated has 31 days in which to take out a conversion policy without having to show evidence of insurability. The insurer has the right to adjust the premium rate for the new policy. The insurance continu
All of the following statements pertaining to the conversion privilege in group health insurance policies are correct EXCEPT:
A) some states specify minimum benefits for conversion policies.
B) a conversion privilege applies when a group health policy is
Answer: D
Concerning the conversion privilege in group health insurance, an insured employee who resigns or is terminated has 31 days in which to take out a conversion policy without having to show evidence of insurability.
Which of the following is a common feature of group major medical insurance?
A) Double indemnity.
B) Dismemberment benefits.
C) Triple indemnity.
D) Conversion privilege.
Answer: D
The double and triple indemnity and dismemberment provisions apply to accidental death and dismemberment (AD&D) policies, not to group major medical insurance policies. Group health plans allow insureds to convert to an individual medical expens
An insurer providing group health coverage may NOT be required to issue a converted policy to anyone covered by:
A) surgical policy.
B) Medicare.
C) a major medical expense policy.
D) medical expense policy.
Answer: B
Conversion privileges do not apply to those persons covered by Medicare, but do apply to anyone covered by a hospital, surgical, medical, or major medical expense policy.
Under a group health insurance plan, a terminated employee may have which of the following options?
A) To convert the coverage to an individual plan at an adjusted premium.
B) To continue the identical coverage at the same premium.
C) To convert the cover
Answer: A
A terminated employee can convert group coverage to an individual plan based on the new plan's own premium rate, or he may continue the identical coverage as that provided under the group plan, but at an adjusted rate.
Which of the following statements regarding an employee's conversion privilege under a group health insurance policy is CORRECT?
A) He can be denied coverage if he is uninsurable at the time of conversion.
B) He can convert his coverage while still an emp
Answer: D
An employee is guaranteed the right to convert coverage to an individual policy through the same insurer that underwrites the group. He cannot be denied the right to conversion even if he has become uninsurable. He can no longer be part of the g
All of the following group health coverages include a conversion privilege EXCEPT:
A) Disability income.
B) Comprehensive medical expense.
C) Basic medical expense.
D) Accidental death and dismemberment.
Answer: D
Group basic medical expense, comprehensive medical expense, and disability income insurance typically include a conversion privilege. This allows the insureds to convert their group certificates to individual policies when they leave an employer
Children of the insured are eligible for health insurance coverage under a family policy until they attain age 19 or, if they remain in school, until:
A) 22 years old.
B) 25 years old.
C) 20 years old.
D) 21 years old.
Answer: B
Children of the insured are eligible for health insurance coverage until they attain age of 19 or, if the remain in school, age 25. Coverage also ends upon a child's marriage
Maria is covered as a dependent under her mother's employer-sponsored group health insurance plan. Which of the following events will NOT end her participation in the plan?
A) She moves out on her own and gets a full-time job.
B) She reaches the specified
Answer: C
Under an employee's conversion rights, eligible dependents are also covered under the new, individual policy. Her eligibility will cease, however, if Maria gets married, is no longer a dependent, or no longer qualifies as a dependent due to age.
Herb has a family health insurance policy under which his dependent children, Suzie and Stan, are covered. Suzie is 18 and Stan is 22 years old. Suzie marries and begins college. Stan enrolls in law school. What becomes of their eligibility for continued
Answer: C
Children of an insured are eligible for health insurance coverage under a family health policy until they reach 19 years of age or, if they remain in school, 25 years of age. Marriage will also terminate coverage of a child regardless of age. Th
Angela's fiance gets a job with an architectural firm of 20 employees. He obtains medical expense coverage through his employer's group plan. Angela and her fiance marry, and he lists Angela as a dependent under his plan. She becomes pregnant. What covera
Answer: D
Although individual health plans commonly exclude routine maternity care from coverage, group medical expense plans must provide maternity benefits. This is the result of a 1979 amendment to the Civil Rights Act, which requires plans covering 15
Jim and Nancy are married and have a growing family. They are covered by Jim's employer's group health insurance plan. Nancy gives birth to their fifth child, Joseph. Joseph will be covered by his father's group plan:
A) when Jim notifies the insurer of h
Answer: C
Individual and group health insurance policies and contracts that provide coverage for a family member of the insured must also provide coverage for newborn children from the moment of birth.
Which of the following statements concerning a coordination of benefits provision is CORRECT?
A) The provision allows all policies that cover an individual to divide equally all health care costs.
B) Coordination of benefits provisions is found most often
Answer: C
The coordination of benefits provision is most appropriate for married couples, when both are covered by their employer group plan. This provision is found only in group plans. (Individual plans have a similar provision called a nonduplication o
Mary is covered by two group health policies: one provided by her employer and the other provided by her husband's employer. The coverage provided by her husband's policy is called the:
A) primary coverage.
B) surplus coverage.
C) related coverage.
D) sec
Answer: D
Group health policies often include a coordination of benefits (COB) provision that avoids duplicate coverage. Under a COB provision, when a person is covered by more than one group health policy, the insurer who covers the person as an employee
Which of the following statements BEST describes the coordination of benefits provision of group medical expense policies?
A) It permits insurers covering a given insured to coordinate benefits so that, among all of them, no more than 100% of a claim is p
Answer: A
When a person covered under two separate plans has a loss, the coordination of benefits provision coordinates the coverages of the policies in such a manner so that no more than 100% of the medical expenses are paid.
What is the purpose of a coordination of benefits provision in a health care plan?
A) It describes the type of benefits that the plan covers.
B) It lists the maximum amount payable under the plan.
C) It states that dependents cannot be covered by more tha
Answer: D
When an employee has health care coverage under more than one plan, the coordination of benefits provision determines the order in which benefits are paid. If a plan is the primary plan, its benefits are determined before those of any other plan
All of the following statements regarding the coordination of benefits provision of a health insurance policy are correct EXCEPT:
A) the client can purchase multiple policies to assure maximum protection.
B) each carrier pays benefits in a specified order
Answer: D
Even though requiring deductibles is one way to avoid overinsurance, the primary way for insurers to protect themselves is through the coordination of benefits provision. The client has the right to purchase as much insurance as desired, though
Under Liz's group employer health insurance, she is eligible to receive $1,500 every month. When she becomes disabled, she is also eligible to receive $850 each month from Social Security. How much will she receive each month?
A) $2,350.00
B) $1,500.00
C)
Answer: B
Under the coordination of benefits provision of most group insurance policies, benefits paid by the group plan are reduced by any benefits received from social insurance plans, such as Social Security. Liz will receive $850 from Social Security
Dan participates in his employer's group health insurance plan. The plan stipulates that, in the event he is eligible for benefits under another policy, his group plan will serve as the primary plan. This provision is for:
A) coordination of benefits.
B)
Answer: A
A coordination of benefits (COB) provision specifies which plan is the primary plan when the insured is covered by another health insurance plan.
All of the following statements regarding an insured's right to continue health insurance coverage under a group plan after leaving the plan are true EXCEPT:
A) converted coverage is automatically put into effect unless the insured rejects it in writing.
Answer: A
The insured must apply in writing for the converted policy and pay the first premium within 31 days of termination of the first plan.
After working 2 years with a competitor, Bob immediately goes to work for ABC Company. Having been fully covered under his employer's group disability income plan, Bob enrolls in his new employer's plan at his first opportunity to do so. As a new employee
Answer: B
Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), exclusion periods for preexisting conditions must be reduced by one month for every month an employee had creditable coverage at a previous job. Since Bob enrolled as
Which of the following was the primary purpose of the Health Insurance Portability and Accountability Act of 1996 (HIPAA)?
A) To expand coverage eligibility to many uninsureds.
B) To require employers to provide medical coverage for all employees.
C) To p
Answer: A
HIPAA was sweeping legislation that expanded eligibility for coverage among many Americans. It also allowed individuals to continue their group health care coverage when leaving an employer.
As a result of the Health Insurance Portability and Accountability Act (HIPAA), which of the following is NOT guaranteed medical coverage?
A) Individuals who are not eligible for coverage under Medicare or Medicaid.
B) Individuals who have had their cover
Answer: B
The primary purpose of HIPAA was to expand health insurance protection for individuals. Coverage cannot be denied for a number of reasons, including health condition and insurability. Coverage can be denied, however, for individuals who have had
Under the Health Insurance Portability and Accountability Act's rules for group medical plans, a new employee who attempts to enroll in the company plan can be denied coverage for which of the following reasons?
A) Physical disability.
B) Mental illness.
Answer: D
HIPAA's broad rules provide sweeping coverage for individuals with less than perfect health, including those with physical disabilities, mental illness, and poor medical history. However, it limits access to group health plans by denying coverag
Scott is an employee who recently joined the business and, because of a preexisting health problem, did not realize he could enroll in the company's health plan. He now wishes to join. Which of the following statements about his eligibility under HIPAA ru
Answer: D
Under HIPAA rules, Scott can be denied coverage for up to 18 months as a late enrollee. Coverage cannot be denied beyond that point based on his preexisting health condition.
Brian, who has a preexisting medical condition, had been covered under his previous employer's group medical plan for the last five years and is now changing jobs. Under his new employer's insurance plan, which of the following is CORRECT?
A) Based on his
Answer: A
Under HIPAA rules, Brian's coverage from his previous employer is fully portable. His previous employer must provide a creditable coverage certificate stating that he has been fully covered for the last five years. Since he would receive one mon
Which of the following statements about creditable coverage in group health insurance plans under HIPAA rules is NOT correct?
A) To receive creditable coverage, there must be no significant break in coverage of 63 days or more.
B) One month of creditable
Answer: C
Under HIPAA, a group plan can deny coverage for preexisting conditions for no longer than 12 months (18 months for late enrollees). One month of creditable coverage reduces waiting periods with the new plan by one month.
In regards to HIPAA, which of the following statements is NOT correct?
A) This law makes it easier for individuals to change jobs and still maintain continuous health coverage.
B) If the new employee has gone without health insurance for more than 63 days
Answer: D
Under HIPAA, group plans CANNOT impose more than a 12-month preexisting condition exclusion for a person who sought medical advice, diagnosis, or treatment within the previous 6 months. This 12-month preexisting condition exclusion cannot be app
Under HIPAA regulations, a health insurer can refuse to renew coverage for all of the following reasons EXCEPT:
A) the employer excluded certain group members in a contributory plan.
B) the employer denied an employee's entry into the plan based on eviden
Answer: D
Reducing the maximum waiting period for eligibility for new hires from 12 to six months is not a violation of HIPAA rules. An insurer can refuse to renew coverage for violation of participation or contribution rules, for discriminating based on
What was the effect of the 1985 Consolidated Omnibus Budget Reconciliation Act (COBRA) on group health insurance plans?
A) It mandates that group health insurance coverage be extended for terminated employees for up to a specified period.
B) It requires a
Answer: A
COBRA, which became law in 1985, requires employers with 20 or more employees to continue group medical expense coverage for terminated employees (as well as their spouses, ex-spouses, and dependent children) for up to 18 to 36 months, depending
When an employee's coverage terminates under a group health policy, the employee must be offered continuation coverage for:
A) 365 days.
B) 18 months.
C) 60 days.
D) 180 days
Answer: B
All group health policies issued or renewed must offer eligible employees the opportunity to continue coverage under the health policy for 18 months after termination of employment or until the employee is eligible for other group coverage, whic
As it pertains to group health insurance, COBRA stipulates that:
A) retiring employees must be allowed to convert their group coverage to individual policies.
B) terminated employees must be allowed to convert their group coverage to individual policies.
Answer: D
COBRA requires employers with 20 or more employees to continue group medical expense coverage for terminated workers (as well as their spouses, divorced spouses and dependent children) for up to 18 months (or 36 months, in some situations) follo
Suppose an employee recently has been divorced. His 56-year-old spouse wants to know if she can maintain coverage under the employee's group medical insurance plan. Which of the following statements best describes how this situation might be treated?
A) S
Answer: D
If the employee's spouse becomes ineligible for coverage under the medical policy because of divorce, the employer must offer coverage to the ex-spouse for up to three years, provided she notifies the employer within 30 days of her intent to con
Which one of the following statements about the Consolidated Omnibus Budget Reconciliation Act of 1985 is NOT correct?
A) The terminated employee must pay the group premium to the insurer within a 60-day grace period.
B) The employer must provide the term
Answer: A
COBRA requires that upon death, divorce, or employment termination, an employer must provide a 60-day period during which the employee and his dependents may continue group health insurance coverage at the participant's own expense. However, COB
Under COBRA, an employee who is laid off from work may be entitled to continue his group health insurance coverage. Which of the following statements regarding COBRA and the continuation of coverage is NOT correct?
A) Continuation is permitted in all case
Answer: A
To be protected under COBRA, and thus able to continue health insurance coverage, the event that caused the employee and/or qualified family members to become ineligible for group coverage must be a qualifying event. While most reasons for this
Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), all of the following individuals must be allowed to continue coverage EXCEPT:
A) employees who are laid off.
B) employees fired for gross misconduct.
C) divorced spouses.
D) termina
Answer: B
Employees fired for cause may be denied the right to continue their coverage. However, previously covered divorced spouses, employees of companies with 20 or more employees, and employees who are laid off for reasons other than termination for c
Under COBRA regulations, which of the following statements regarding coverage of a spouse after divorce from an insured employee is CORRECT?
A) The divorced spouse's coverage can be converted to an individual policy.
B) The divorced spouse's coverage can
Answer: C
Under COBRA, divorce is a qualifying event, and the divorced spouse can continue coverage identical to that provided before the divorce, for up to 36 months. It may be possible for the spouse to convert the policy, but that is not a COBRA requir
An employee is eligible to continue his health insurance under COBRA rules. Which of the following statements is CORRECT?
A) He can continue the coverage for up to 36 months, even if he obtains new coverage elsewhere.
B) He can increase the benefits he wi
Answer: D
An eligible employee is entitled to coverage that is identical to his previous plan. Under COBRA rules, his coverage will be terminated if he obtains insurance elsewhere. To be insured under 2 policies will violate the prohibition on gain withou
Why are insureds who have converted from a terminated group plan to another group plan prohibited from continuing the coverage after they enroll in the new employer group plan?
A) Duplicate coverage could result in overinsurance.
B) The duplicate coverage
Answer: A
Insureds are prohibited from profiting from an insurance loss. Overinsurance results in the payment of more than the actual loss.
Under COBRA regulations, group health coverage of terminated employees must be continued up to:
A) 18 months.
B) 6 months.
C) 8 months.
D) 12 months.
A) 18 months.
Under COBRA regulations, a qualified beneficiary (such as a spouse) may be able to continue receiving benefits for up to:
A) 12 months.
B) 18 months.
C) 36 months.
D) 6 months.
Answer: C
COBRA beneficiaries generally are eligible for group coverage during a maximum of 18 months for qualifying events due to employment termination or reduction of hours of work. However, certain qualifying events, or a second qualifying event durin
Under the COBRA rules for employer group health insurance, which of the following statements is CORRECT?
A) Coverage may be continued for up to 36 months for a qualified beneficiary and 18 months for a terminated employee.
B) Coverage may be continued for
Answer: A
Continued coverage differs for the primary insured and beneficiaries. A qualified beneficiary such as a spouse may continue benefits under COBRA for no more than 36 months, whereas a terminated employee may continue coverage for no more than 18
Underwriting for group health plans requires:
A) a lengthy probationary period when no benefits will be provided.
B) no medical examination.
C) a credit report on each insured.
D) a medical examination on each insured.
Answer: B
For group insurance, no medical examination or statement about an individual's health is required for underwriting purposes. Underwriting is done on the group, not the individual.
Individual health insurance policies are typically written on which basis?
A) Claims rated.
B) Nonparticipating.
C) Participating.
D) Experience rated.
Answer: B
Health insurance policies may be written on either a participating or nonparticipating basis. Most individual health insurance is issued on a nonparticipating basis. Group health insurance, however, is generally participating and provides for di
All of the following are characteristics of group health insurance plans EXCEPT:
A) the parties to a group health contract are the employer and the employees.
B) their benefits are more extensive than those under individual plans.
C) employers may require
Answer: A
The contract for coverage is between the insurance company and the employer, and a master policy is issued to the employer.
Medicare is an example of:
A) social insurance.
B) commercial insurance.
C) casualty insurance.
D) debt insurance.
Answer: A
Medicare is an example of a social insurance program, instituted by the federal government.
Which of these statements regarding Medicare is CORRECT?
A) Medicare recipients are billed for their Medicare Part A premiums on a semiannual basis.
B) Medicare Part A Hospital Insurance (HI) carries no deductible.
C) Medicare Part B Supplement Medicare I
Answer: C
Medicare coverage has two distinct parts: Hospital Insurance (Part A) and Medical Insurance (Part B). Medicare Part A is automatically available to persons who have turned 65 and have applied for Social Security benefits. Part B is voluntary and
Charles signs up for Medicare Part B on March 21 during the open enrollment period. His coverage will become effective:
A) June 30.
B) July 1.
C) March 21.
D) April 1.
Answer: B
Medicare Part B coverage for those who sign on during the open enrollment period always becomes effective the following July 1.
Which of the following statements pertaining to Medicare is CORRECT?
A) Bob is covered under Medicare Part B. He submitted a total of $1,100 of approved medical charges to Medicare after paying the required deductible. Of that total, Bob must pay $880.
B)
Answer: D
Medicare Part A is available when an individual turns 65 and is automatically provided when he or she applies for Social Security benefits. Medicare Part B pays 80% of medical expenses after the insured pays the deductible.
People age 65 or older who enroll in Medicare Part B may also select Medigap coverage during a(n):
A) free-look period.
B) grace period.
C) free-enrollment period.
D) open enrollment period.
Answer: D
People age 65 or older who enroll in Medicare Part B are afforded a 6-month open enrollment period for purchasing Medigap insurance coverage. The coverage becomes effective the following July 1.
Those who choose not to enroll in Part B when first applying for Medicare may do so:
A) on the anniversary of his Part A enrollment date.
B) between July and September of each year.
C) during an annual open enrollment period.
D) at any time after enrollin
Answer: C
Applicants can choose to enroll in Part B of Medicare during the open enrollment period each year from January 1 through March 31. Coverage then begins the following July 1
Under Medicare Part A, the participant must pay his or her deductible:
A) monthly.
B) twice per benefit period.
C) once per benefit period.
D) annually.
Answer: C
For Medicare Part A, the participant must pay his or her deductible once per benefit period. A benefit period starts when a patient enters the hospital and ends when the patient has been out of the hospital for 60 consecutive days. Once 60 days
Lynn is insured under Medicare Part A and enters the hospital for surgery. Assuming that Lynn has not yet tapped into her lifetime reserve, what is the maximum number of days that Medicare will pay for her hospital bills?
A) 60 days.
B) 90 days.
C) 120 da
Answer: D
After an initial deductible is met, Medicare pays for all covered hospital charges for the first 60 days of hospitalization. The next 30 days are also covered, but the patient will be required to contribute a certain daily amount. If, after thes
Which of the following statements regarding the lifetime reserve of hospital coverage for Medicare patients is CORRECT?
A) If a patient exhausts the reserve, he or she must pay a higher copayment.
B) The reserve does not renew with a new benefit period.
C
Answer: B
The lifetime reserve is an additional 60 days of coverage on top of the 90-day benefit period Medicare provides for hospitalization. A patient who is hospitalized for longer than 90 days can tap into the 60-day reserve. This reserve is a one-tim
Tom is covered under Medicare Part A. He spends 1 week in the hospital for some minor surgery and returns home on July 10. It was his first hospital stay in years. Which of the following statements is CORRECT regarding his Medicare coverage?
A) After Tom
Answer: B
Medicare pays 100% of covered services for the first 60 days of hospitalization after the deductible is paid.
Tom is covered under Medicare Part A. He spends 1 week in the hospital for some minor surgery and returns home on July 10. It was his first hospital stay in years. He pays his deductible and Medicare pays the balance. He is then admitted to the hospital a
Answer: B
The second hospitalization is part of a new benefit period, since it begins more than 60 days after the first hospitalization started. The new benefit period will require payment of the deductible again, but another hospitalization period of 60
What is the MAXIMUM number of days of skilled nursing facility care for which Medicare will pay benefits?
A) 100 days.
B) 25 days.
C) 60 days.
D) 75 days.
Answer: A
Part A covers the costs of care in a skilled nursing facility as long as the patient was first hospitalized for three consecutive days. Medicare will cover treatment in a skilled nursing facility in full for the first 20 days. From the 21st to t
Skilled nursing care differs from intermediate care in which of the following ways?
A) Skilled nursing care must be available 24 hours a day, whereas intermediate care is daily, but not 24-hour, care.
B) Skilled nursing care must be performed by skilled m
Answer: A
Unlike intermediate care, skilled nursing care is continuous, around-the-clock care provided by licensed medical professionals under the direct supervision of a physician. It is usually administered in nursing homes. Intermediate care is provide
What benefits does Medicare provide for treatment in a skilled nursing care facility after 100 days?
A) Coverage for diagnostic services and medical supplies only.
B) Reduced coverage with a higher copayment from the insured.
C) Coverage for physical and
Answer: D
Medicare does not pay benefits for treatment in a skilled nursing care facility beyond 100 days.
For how many days of care in a skilled nursing facility will Medicare pay benefits?
A) 100 days.
B) 20 days.
C) 60 days.
D) 75 days.
Answer: A
Medicare Part A covers the cost of care in a skilled nursing facility as long as the patient was first hospitalized for three consecutive days. Treatment in a skilled nursing facility is covered in full for the first 20 days. From the 21st to th
An individual who requires 24-hour-a-day supervision by skilled medical professionals in a nursing home receives what kind of care?
A) custodial care.
B) intermediate nursing care.
C) respite care.
D) skilled nursing care.
Answer: D
Skilled nursing care is daily nursing care performed by, or under the supervision of, skilled medical professionals and is available 24 hours a day. It is typically administered in nursing homes.
Under Medicare Part B, the participant must pay:
A) 20% of covered charges above the deductible.
B) a per benefit deductible.
C) 80% of covered charges above the deductible.
D) a yearly premium.
Answer: A
Part B participants are required to pay a monthly premium and are responsible for an annual deductible. After the deductible, Part B will pay 80% of covered expenses, subject to Medicare's standards for reasonable charges.
To be eligible for Medicare's nursing facility care benefit, the claimant must first do all of the following EXCEPT:
A) enter a Medicare-certified skilled nursing facility.
B) have a physician certify that skilled care is required.
C) meet acceptable inco
Answer: C
Medicare nursing facility care benefits are available only if the following conditions are met: The patient must have been hospitalized for at least three days before entering the nursing care facility and admittance to the facility must be with
Medicare Part B covers which of the following?
A) X-rays.
B) Eyeglasses.
C) Hearing aids.
D) Foot care.
Answer: A
Medicare Part B covers physician services, diagnostic tests (such as x-rays), physical and occupational therapy, medical supplies, mammograms, and flu shots. It does not cover routine physical exams, eyeglasses, dental care, hearing aids, most p
The core policy (Plan A) developed by NAIC as a standard Medicare supplement policy includes all of the following EXCEPT:
A) coverage for the Medicare Part A deductible.
B) coverage for the Part A coinsurance amounts.
C) coverage for the first 3 pints of
Answer: A
The Medicare Plan A supplement policy does not provide coverage for the Medicare Part A deductible. All the other answer choices are included in the core benefits that all medicare supplement policies must provide, including Medicare Plan A supp
An agent sells a Medicare supplement policy to a 78-year-old person knowing that the person already has a Medicare supplement. This sale is:
A) prohibited, because agents cannot sell Medicare supplement coverage which will provide more than 100% of actual
Answer: A
Agents cannot knowingly sell Medicare supplement coverage which will provide more than 100% of actual covered medical expenses.
Suppose that an insurance producer urges an elderly applicant to buy a second Medicare supplement policy just to be sure all potential medical expenses are covered. This sale is:
A) advisable, since medical costs for the elderly can drain a fixed income.
Answer: C
Any sale of Medicare supplement coverage that means the buyer will have more than 1 Medicare supplement policy is illegal.
A contract that is designed primarily to augment reimbursement under Medicare for hospital, medical, or surgical expenses is known as a(n):
A) alternative health care plan.
B) Medicare supplement plan.
C) home health care plan.
D) alternative benefits pla
Answer: B
Medicare supplement policies cover significant gaps in Medicare health insurance coverage
Which of the following is a contract designed primarily to augment reimbursements under Medicare for hospital, medical, or surgical expenses?
A) Medicare alternative benefits plan.
B) Golden-age health care plan.
C) Medicare supplement plan.
D) Home healt
Answer: C
A Medicare supplement plan augments the medical care reimbursements made by Medicare for hospital, medical, or surgical expenses. As such, it cannot duplicate benefits that Medicare provides
The purpose of Medicare supplement insurance is to provide:
A) coverage for certain medical expenses before the insured becomes eligible for Medicare.
B) coverage to elderly people who are not covered under a corporate plan for retired employees.
C) cover
Answer: C
The primary purpose of a Medicare supplement insurance policy is to augment Medicare with payment of hospital, medical, or surgical expenses that Medicare does not cover.
The purpose of Medicare supplement insurance is to provide:
A) coverage for certain expenses not fully covered by Medicare.
B) an alternative insurance plan for people who do not want to use Medicare.
C) coverage for certain medical expenses before the in
Answer: A
A Medicare supplement insurance policy is an individual or group accident and sickness insurance policy, certificate, or HMO subscription contract. It supplements Medicare by providing benefits for the payment of hospital, medical, or surgical e
Medicare supplement insurance is designed for persons who have reached the age of:
A) 50 to 65.
B) 60 or older.
C) 70 to 80.
D) 65 or older.
Answer: D
Medicare supplement insurance fills the gaps in coverage left by Medicare, which provides hospital and medical expense benefits for persons aged 65 and older.
All of the following statements about Medicare supplement (Medigap) policies are correct EXCEPT:
A) Medigap policies supplement Medicare benefits.
B) Medigap policies pay most, if not all, Medicare deductibles and copayments.
C) Medigap policies pay for s
Answer: D
Medigap policies are designed to supplement Medicare's benefits by paying most deductibles and copayments as well as some health services not covered by Medicare. Medigap policies do not cover the cost of extended nursing home care.
The purpose of Medicare supplement policies is to provide:
A) an alternative insurance plan for people who do not want to use Medicare.
B) coverage for certain medical expenses before the insured becomes eligible for Medicare.
C) coverage to elderly peopl
Answer: D
The primary purpose of a Medicare supplement insurance policy is to augment Medicare with payment of hospital, medical or surgical expenses that Medicare does not cover.
The purpose of Medicare supplement insurance is to provide:
A) coverage to elderly people who are not covered under a corporate plan for retired employees.
B) coverage for certain expenses not fully covered by Medicare.
C) an alternative insurance plan fo
Answer: B
The primary purpose of a Medicare supplement insurance policy is to augment Medicare by paying hospital, medical, or surgical expenses that Medicare does not cover.
A contract designed primarily to supplement reimbursement under Medicare for the hospital, medical or surgical expenses is known as a(n):
A) alternative benefits plan.
B) alternative health care plan.
C) Medicare supplement plan.
D) home health care plan.
Answer: C
Because of the significant gaps in coverage provided by Medicare, many insurers offer Medicare supplement policies that supplement Medicare, paying much of what Medicare does not. To protect consumers, the law narrowly defines what must be inclu
The purpose of Medicare supplement insurance is to provide:
A) coverage for certain expenses not fully covered by Medicare.
B) an alternative insurance plan for people who do not want to use Medicare.
C) coverage for certain medical expenses before the in
Answer: A
The primary purpose of Medicare supplement insurance is to augment Medicare by paying hospital, medical, or surgical expenses that Medicare does not cover because of the deductibles, coinsurance amounts, or other limitations. Medicare supplement
The purpose of Medicare supplement insurance is to provide:
A) coverage for certain medical expenses before the insured becomes eligible for Medicare.
B) coverage to elderly people who are not covered under a corporate plan for retired employees.
C) cover
Answer: C
The primary purpose of Medicare supplement insurance is to augment Medicare by covering medical expenses not covered by Medicare. Medicare supplement policies cannot duplicate benefits provided by Medicare.
The purpose of Medicare supplement insurance is to provide:
A) coverage for certain medical expenses before the insured becomes eligible for Medicare.
B) coverage to elderly people who are not covered under a corporate plan for retired employees.
C) cover
Answer: C
The primary purpose of Medicare supplement insurance is to augment Medicare by paying hospital, medical, or surgical expenses that Medicare does not cover because of the deductibles, coinsurance amounts, or other limitations. Medicare supplement
Many insurance policies contain a preexisting limitation that excludes coverage for unspecified conditions for how long?
A) Nine months.
B) One year.
C) Six months.
D) Three months.
Answer: C
In most cases a policy will contain a preexisting condition limitation that excludes coverage for a certain period of time. The period is usually 6 months but would always be spelled out in the policy. This is especially common in LTC policies.
Medicare supplement (Medigap) policies do NOT:
A) Pay for some health care services not covered by Medicare.
B) Pay for most or all Medicare deductibles and copayments.
C) Supplement Medicare benefits.
D) Pay for extended nursing home care.
Answer: D
Medicare supplement or Medigap policies supplement Medicare's benefits by paying most deductibles and copayments as well as some health care services that Medicare does not cover. They do not cover the cost of extended nursing home care.
Medicare supplement (Medigap) policies are designed to pay:
A) most or all of Medicare's deductibles.
B) medical costs associated with extended custodial (nursing home) care.
C) benefits provided under Medicare Part A.
D) benefits to those who cannot affo
Answer: A
Medicare supplement insurance or Medigap policies are designed to pick up coverage where Medicare leaves off. The purpose of these policies is to supplement Medicare's benefits by paying most, if not all, coinsurance amounts and deductibles and
In the standardized Medicare supplement policy, Plan A is characterized by:
A) offering the widest coverage.
B) duplicating Medicare benefits for maximum security.
C) availability only to Medicare recipients younger than age 75.
D) providing the least com
Answer: D
In the 12 standardized Medicare supplement plans, Plan A provides the least coverage and is referred to as the core plan. Plan J has the most comprehensive coverage. Plans K and L provide basic benefits similar to plans A-J, but cost-sharing is
Which of the following statements about Medicare supplement (Medigap) policies is NOT correct?
A) Medigap policies supplement Medicare benefits.
B) Medigap policies pay most, if not all, Medicare deductibles and copayments.
C) Medigap policies pay for som
Answer: D
Medigap policies do not cover the cost of extended nursing home care
Which of the following does NOT have to be included in all Medicare supplement policies?
A) Medicare Part A eligible hospital expenses not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period.
B) Medicare Part A eligib
Answer: C
Under Plan A, the core Medicare plan must include coverage for the first three pints of blood, eligible hospital expenses not covered by Medicare for days 61 through 90, and eligible expenses for daily hospital charges covered by Medicare for ea
According to the National Association of Insurance Commissioners' standardized model Medicare supplement policy, insurers must offer coverage for all of the following core benefits EXCEPT:
A) coverage under Medicare Parts A and B for the first 3 pints of
Answer: B
All Medicare supplement policies must provide certain core benefits, including coverage for Medicare Part A-eligible hospital expenses not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period, the coinsurance
A Medicare supplement policy must offer coverage of Part A Medicare eligible expenses for hospitalization:
A) for the length of the illness.
B) from days 61 through 90.
C) for the first year.
D) from days 1 through 90.
Answer: B
Medicare supplement policies must offer certain minimum benefits. For example, they must offer coverage of Part A Medicare-eligible expenses for hospitalization not covered by Medicare from days 61 through 90 in any Medicare benefit period.
A Medicare supplement policy must offer coverage of Part A Medicare eligible expenses for hospitalization:
A) for the first year.
B) from the 1st through the 90th day.
C) for the length of the illness.
D) from the 61st through the 90th day.
Answer: D
Medicare supplement policies must offer certain minimum benefits. For example, they must offer coverage of Part A Medicare-eligible expenses for hospitalization not covered by Medicare from the 61st through the 90th day in any Medicare benefit p
Which of the following statements about Medicare supplement insurance choices available for retirees under an employer group insurance plan is NOT correct?
A) Participants must be enrolled in Medicare Part A.
B) Plans A through J are essentially identical
Answer: B
Plans A through L offer increasingly comprehensive coverage, at additional premiums.
Which of the following statements about Medicare supplement policies is CORRECT?
A) Medicare Supplement Plan A provides coverage for skilled nursing facility care.
B) Medicare Supplement Plan B provides coverage for skilled nursing facility care and at-ho
Answer: D
Each standardized Medicare supplement policy must cover the basic benefits. Medicare Supplement Plan A is the basic core plan. Medicare Supplement Plan B covers the basic benefits plus the Medicare Part A deductible for hospitalization. Neither
Marilyn is enrolled in Medicare Parts A and B. She lacks prescription drug coverage. Her insurance agent recommends that she purchase Medicare supplement Plan J as a comprehensive means of covering her prescription drug costs. What should Marilyn do?
A) C
Answer: D
Three of the standard Medicare supplement plans-H, I, and J-include coverage for prescription drugs. However, as of January 1, 2006, they cannot be sold with coverage for prescription drugs. Instead, Medicare beneficiaries who do not already hav
Medicare Plans K and L are characterized by which of the following features?
A) No annual deductible.
B) Higher coinsurance contributions.
C) No annual limit on annual out-of-pocket expenditures.
D) Lower co-payments.
Answer: B
Medicare supplement Plans K and L require a higher co-payment and coinsurance contribution from Medicare beneficiaries. They also have a limit on annual out-of-pocket expenditures incurred by the policyholders. However, once the out-of-pocket li
The "core policy" (Plan A) developed by the NAIC as a standard Medicare supplement policy includes all of the following EXCEPT:
A) coverage for Part A copayment amounts.
B) the first three pints of blood each year.
C) the 20% Part B coinsurance amounts fo
Answer: D
This plan includes coverage for Part A copayment amounts; 365 additional (lifetime) days of Medicare-eligible expenses once the Medicare lifetime reserve days are exhausted; the 20% Part B copayment amounts (for Medicare-approved services); and
Which of the following coverages must be included in all Medicare supplement policies?
A) Emergency care in a foreign country.
B) Daily coinsurance amount for skilled nursing facility care.
C) At-home recovery services.
D) Cost of the first 3 pints of blo
Answer: D
Coverage for the reasonable cost of the first 3 pints of blood is part of the minimum benefits required for Medicare supplements.
Which of the following is a mandatory minimum benefit for Medicare supplement policies?
A) Coverage of Medicare Part A eligible hospital expenses to the extent not covered by Medicare from the 61st through the 90th day in any Medicare benefit period.
B) S
Answer: A
The benefits in Plan A, which is known as the core plan, must be contained in all other plans sold. Among the core benefits this plan provides is coverage of Medicare Part A eligible expenses for hospitalization, to the extent not covered by Med
Which of the following coverages must be included in all Medicare supplement policies?
A) Daily coinsurance amount for skilled nursing facility care.
B) "At-home" recovery services.
C) Reasonable cost of the first 3 pints of blood.
D) Emergency care in a
Answer: C
Minimum benefits standards for Medicare supplement policies include benefits covering the first 3 pints of blood each year.
All Medicare supplement policies must cover 100% of the Part A hospital coinsurance amount for each day used from:
A) the 30th through the 90th day in any Medicare benefit period.
B) the 45th through the 90th day in any Medicare benefit period.
C) the 61s
Answer: C
All Medicare supplement policies must cover the core basic benefits that Plan A cover. This includes covering 100% of the Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period and
Which of the following is a mandatory minimum benefit for Medicare supplement policies?
A) A $1,000 death benefit.
B) Coverage of Part A Medicare eligible hospital expenses to the extent not covered by Medicare from the 61st through the 90th day in any Me
Answer: B
The benefits in Plan A, which is known as the core plan, must be contained in all other plans sold. Among the core benefits this plan provides is coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medi
Medicare supplement (or Medigap) policies pay:
A) Benefits provided under Medicare Part A.
B) Medical costs arising from extended custodial (nursing home) care.
C) All or most of Medicare's deductibles.
D) Benefits to those who cannot afford Medicare Part
Answer: C
Medicare supplement insurance or Medigap policies pick up coverage where Medicare leaves off. These policies supplement Medicare's benefits by paying most, if not all, coinsurance amounts and deductibles and paying for some health care services
A Medicare supplement policy that contains restricted network provisions is known as a:
A) long-term care policy.
B) individual health policy.
C) HMO.
D) Medicare SELECT policy.
Answer: D
A Medicare select policy or Medicare select certificate mean respectively a Medicare supplement policy or certificate that contains restricted network provisions.
A Medicare Select policy is a Medicare supplement policy or certificate that contains:
A) provisions limiting benefits because of the applicant's current health status.
B) unlimited access to health service providers.
C) provisions limiting benefits for p
Answer: D
A Medicare Select policy contains restricted network provisions (i.e., the payment of benefits is conditioned on the use of network providers who have entered into written agreements with the insurer to provide benefits under a Medicare Select p
What is the main difference between Medicare SELECT and standard Medigap insurance?
A) SELECT insurers operate on a managed care system while standard Medigap insurers do not.
B) SELECT insurers have specific hospitals, and sometimes specific doctors, tha
Answer: B
Medicare SELECT is the same as standard Medigap insurance in nearly all respects. The main difference between the two types of insurance is that each SELECT insurer has specific hospitals, and in some cases, specific doctors, that must be used (
The Medicare Advantage Program offers all of the following to Medicare beneficiaries EXCEPT:
A) preferred provider organizations (PPOs).
B) provider-sponsored organizations (PSOs).
C) Medicaid.
D) health maintenance organizations (HMOs).
Answer: C
The Medicare Advantage Program (Medicare Part C) gives Medicare beneficiaries a variety of alternatives from which to obtain Medicare-covered services. Medicare participants are also able to take advantage of tax-free health savings accounts (HS
A main goal of Medicare Part C is to:
A) eliminate the traditional fee-for-service Medicare program.
B) encourage Medicare enrollees to purchase Medicare supplement insurance.
C) encourage individuals aged 65 and over to enroll in the Medicare program.
D)
Answer: D
A major goal of Medicare Part C is to encourage beneficiaries to join private health plans as an alternative to the traditional fee-for-service Medicare program. The intent is to reduce the financial strain on Medicare funds and to provide Medic
Which of the following is NOT available to Medicare beneficiaries through the Medicare Advantage Program?
A) HMOs.
B) Medicaid.
C) PSOs.
D) PPOs.
Answer: B
The Medicare Advantage Program gives Medicare beneficiaries a number of alternatives from which to obtain Medicare-covered services. Medicare participants are also able to take advantage of tax-free medical savings accounts (MSAs) for routine me
Which of the following statements about Medicare Part D is CORRECT?
A) It is available to anyone enrolled in Medicare Part A or B.
B) It helps cover the costs of hospitalization.
C) Benefits are available only through Medicare Advantage plans.
D) Some pla
Answer: A
Medicare Part D helps cover the cost of prescription drugs. It is available to anyone enrolled in Medicare Part A or B. Benefits are available through private prescription drugs plans or Medicare Advantage plans. All plans must offer basic drug
After paying the monthly premium and annual deductible under Medicare Part D, the proportion of prescription drug costs that Medicare beneficiaries pay is:
A) 25%.
B) 10%.
C) 15%.
D) 20%.
Answer: A
Under the standard benefit, Medicare beneficiaries pay a projected monthly premium of $21 and a $265 annual deductible. Then they pay 25% of the first $2,400 of prescription drug costs, and Medicare pays the other 75%. Coverage then stops comple
A disabled 65-year-old employee of a company with 90 employees suffers a heart attack and, as a result, becomes totally disabled. Which of the following statements describes how his health benefits will be paid?
A) His employer-sponsored health insurance
Answer: D
The Medicare Secondary Rule (which requires the private insurer to first pay benefits) does not apply to groups of fewer than 100 persons. Therefore, it is likely that Medicare will pay benefits up to maximum eligibility. Thereafter, if the empl
Paul, age 66, works for American Accounting, Inc., a firm with 500 employees. He is covered by its health insurance plan. He is also covered by Medicare. Which of the following statements is CORRECT?
A) Medicare will pay only the deductibles that are not
Answer: C
Because Paul is over age 65, he is eligible for Medicare. He is also entitled to the same health insurance benefits that American Accounting offers to its younger employees. In this case, the employer-sponsored plan is considered the primary pay
If a disabled Medicare enrollee is also covered by an employer-provided health plan as a family member:
A) the employer's health plan will be the primary payor if it covers 100 or more employees.
B) Medicare will always be considered the primary payor.
C)
Answer: A
If a disabled Medicare enrollee is also covered by an employer-provided health plan as an employee or family member, the employer's plan will be considered the primary payor, but only if it covers 100 or more employees.
Individuals claiming a need for Medicaid must prove that they cannot pay for their own nursing home care. In addition, the potential recipient must:
A) be at least 70 years old.
B) be receiving Social Security.
C) be a long-term care insurance policyowner
Answer: D
To qualify for Medicaid nursing home benefits, an individual must be at least 65 years old, blind, or disabled; be a U.S. citizen or permanent resident alien; need the type of care that is provided only in a nursing home; and meet certain asset
Medicaid provides:
A) funds to states to assist their medical public assistance programs.
B) funds to states for the provision of medical care to the aged.
C) funds to charitable organizations for providing medical benefits to poor people.
D) medical bene
Answer: A
Medicaid provides matching federal funds to states for their medical public assistance programs to help needy persons, regardless of age.
A disabled worker's unmarried dependent child who is younger than 18 years is eligible for monthly benefits equal to how much of the worker's primary insurance amount (PIA)?
A) 75%.
B) 100%.
C) 50%.
D) 25%.
Answer: C
A disabled worker's unmarried dependent child who is younger than 18 years, or who is disabled before reaching age 22, is eligible for monthly benefits equal to 50% of the worker's PIA.
All of the following statements about workers' compensation are true EXCEPT:
A) A worker receives benefits only if the work-related injury was not his fault.
B) All states have workers' compensation laws.
C) Benefits include medical care costs and disabil
Answer: A
All states have workers' compensation laws that are designed to help injured workers recover and return to work. They are based on the principle that the employer should compensate the injured employee for work-related injuries, regardless of fa
Workers' compensation benefits generally provide for all of the following EXCEPT:
A) compensation to a surviving spouse.
B) compensation to dependents.
C) a cause of action against the employer for negligence.
D) payment of burial expenses.
Answer: C
Workers' compensation benefits generally include payment for burial expenses and compensation for the surviving spouse and any dependents of the worker at the time of death. However, because the law entitles the injured worker or deceased worker
Workers' compensation covers income loss resulting from:
A) work-related disabilities.
B) any accidental injury.
C) unemployment.
D) sickness.
Answer: A
Workers' compensation covers income loss resulting from work-related disabilities. It does not cover injuries unrelated to a person's employment. It does not provide unemployment benefits.
Alvin is employed by a construction company to erect a skyscraper downtown. He is injured when the company's crane operator, while lifting an I-beam, accidently strikes Alvin while he is guiding the crane operator. Which of the following statements is COR
Answer: D
State law provides that an injured employee is entitled to benefits as a matter of right, without having to sue the employer for benefits. In return for this immediate access to benefits, the employee waives the right to sue the employer on othe
Which of the following is a common benefit trigger for a long-term care policy?
A) Cognitive or mental impairment.
B) Prior hospitalization.
C) Retirement.
D) Inability to operate a motor vehicle.
Answer: A
A benefit trigger is an event or condition that must occur before policy benefits become payable. Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the individual must be diagnosed as chronically ill to trigger benef
Becky wants to make sure that she has insurance to protect herself if she eventually needs long-term custodial or nursing home care. Which type of policy will cover these types of care?
A) Medicare supplement insurance.
B) Medicaid.
C) Medicare.
D) Long-t
Answer: D
Although Medicare and Medicare supplement insurance help protect the elderly against the costs of medical care, neither program covers long-term custodial or nursing home care. Medicaid covers some of the costs associated with long-term care, bu
Skilled nursing care differs from intermediate care in which of the following ways?
A) Skilled care is typically given in a nursing home, while intermediate care is usually given at home.
B) Skilled care encompasses rehabilitation, while intermediate care
Answer: C
Skilled care is daily nursing care ordered by a doctor and performed by skilled medical personnel. It is available 24 hours a day, and is typically administered in nursing homes. Intermediate care is occasional or rehabilitative care ordered by
A policy or rider designed to provide coverage for at least 12 consecutive months for diagnostic, preventive or personal care services provided in a setting other than the acute care unit of a hospital is called:
A) preexisting condition insurance.
B) lon
Answer: B
Long-term care insurance is any policy or rider that provides coverage for at least 12 consecutive months for diagnostic, preventive, therapeutic, rehabilitative, or personal care in a setting other than the acute care unit of a hospital. It doe
Which of the following provisions gives a long-term care policyowner the option to purchase additional insurance amounts within specified parameters regardless of insurability?
A) Guarantee of insurability.
B) Guaranteed renewability.
C) Guaranteed covera
Answer: A
A guarantee of insurability provides a long-term care insurance policyowner with the option to purchase additional insurance amounts within specified parameters regardless of insurability, claims history, or existing conditions. This is an optio
John purchased a long-term care insurance policy with an optional benefit that provides a lump-sum cash payment equal to 75% of the total premiums paid if the policy lapses or is surrendered. This option is called:
A) a return of premium option.
B) a tota
Answer: A
A return of premium option is a form of nonforfeiture option that provides a lump-sum cash payment to the policyowner, upon lapse or surrender of the policy, that is equal to a percentage (typically 50%, 75%, or 90%) of the total premiums paid.
Long-term care coverage may consist of all of the following EXCEPT:
A) home-based care.
B) community care.
C) surgical care.
D) institutional care.
Answer: A
Long-term care insurance typically provides coverage for skilled nursing care, intermediate nursing care, custodial care, home health care, adult day care, respite care, and continuing care.
A long-term care insurance policy must contain which of the following provisions?
A) Guaranteed renewability.
B) Coverage for drug and alcohol dependency.
C) Probationary period of no longer than 180 days.
D) Coverage for conditions that result from war.
Answer: A
As a result of the 1996 Health Insurance Portability and Accountability Act (HIPAA), all long-term care policies sold today must be guaranteed renewable. The insurer cannot cancel the policy and must renew coverage each year, as long as the insu
Long-term care policies can:
A) be canceled due to the insured's age.
B) limit coverage for alcoholism.
C) be canceled due to deterioration of the insured's mental health.
D) limit coverage for Alzheimer's disease.
Answer: B
No long-term care insurance policy can be canceled because of the deterioration of the insured's mental health or age. Generally, long-term care policies cannot limit or exclude coverage by type of illness, treatment, medical condition, or accid
Long-term care policies can:
A) condition eligibility for benefits on the basis of a diagnosis of terminal or chronic illness.
B) exclude coverage for a loss that is the result of a preexisting condition that occurred two months before the effective date
Answer: B
Long-term care insurance policies may not condition eligibility for benefits on prior hospitalization without also offering a policy with similar benefits that is not subject to such a condition. Coverage cannot be excluded, canceled, or otherwi
Fran, age 39, comes from a family with a history of Parkinson's disease. To protect herself in the future, she is considering purchasing long-term care insurance. Which one of the following statements is CORRECT?
A) Long-term care policies will not cover
Answer: C
Many long-term care insurance policies set a minimum purchase age. While many of the minimum issue ages range from between 50 and 60 years of age, some insurers have younger minimum issue ages. In applying for long-term care insurance, Fran will
George's long-term care policy pays a benefit of $155 a day. His cost of care is $135. How will the insurance company treat his benefit?
A) He receives $155 a day, provided that the remaining $20 goes toward approved medical care.
B) He receives $155 a da
Answer: B
The insured receives the purchased benefit amount. As long as he qualifies to receive long-term care, he can use the additional amount as he sees fit.
Jill's long-term care insurance policy provides a daily benefit amount of $130 per day. If her nursing home facility charges $120 per day, the insurance company will pay:
A) $125.00
B) nothing; the charges will not be covered.
C) $130.00
D) $120.00
Answer: C
If Jill's LTC policy provides a daily benefit amount of $130 per day, the insurer will pay $130, even though the actual cost is less than this amount. Jill may decide what to do with the remaining funds.
All of the following statements characterize long-term care insurance EXCEPT:
A) it must provide for an automatic adjustment to correspond to changes in Medicare's long-term care coverage.
B) it provides coverage for at least 12 consecutive months.
C) it
Answer: A
Long-term care insurance provides coverage for care provided in a setting other than a hospital acute care unit for at least 12 consecutive months. It may be issued as a group policy or as individual policies.
Which of the following statements about long-term care insurance policies is NOT correct?
A) Most begin to pay benefits when an insured becomes cognitively impaired or needs ongoing assistance in two or more activities of daily living.
B) Most offer unlim
Answer: B
Most long-term care policies do not offer unlimited lifetime coverage; rather, they provide maximum coverage periods that generally extend from two to six years
All of the following conditions are typically covered in a long-term insurance policy EXCEPT:
A) alcohol dependency.
B) Alzheimer's disease.
C) senile dementia.
D) Parkinson's disease.
Answer: A
Most LTC insurance policies exclude coverage for drug and alcohol dependency, acts of war, self-inflicted injuries, and nonorganic mental conditions. Organic cognitive disorders, such as Alzheimer's disease, senile dementia, and Parkinson's dise
Long-term care insurance can limit or exclude coverage for all of the following EXCEPT:
A) chronic respiratory ailments.
B) medical conditions arising out of war or war-like activities.
C) participation in crimes.
D) mental or emotional disorders, alcohol
Answer: A
As a general rule, long-term care policies may not limit or exclude coverage by type of illness. They may, however, limit or exclude preexisting conditions or diseases and mental or nervous disorders. Loss from Alzheimer's disease, senile dement
A long-term care policy cannot limit or exclude coverage for which of the following conditions?
A) Alzheimer's disease.
B) Service provided outside the United States.
C) Mental disorders.
D) Intentionally self-inflicted injury.
Answer: A
Although some mental or nervous conditions may be limited or excluded, benefits may not be excluded on the basis of Alzheimer's disease or other organic brain disorders.
A long-term care policy can exclude coverage for all of the following EXCEPT:
A) self-inflicted injury.
B) Alzheimer's disease.
C) alcoholism.
D) drug addiction.
Answer: B
Exclusions or limitation of benefits for Alzheimer's disease or related problems are not permitted.
A long-term care insurance policy may limit or exclude coverage for all of the following reasons EXCEPT:
A) treatment in a government facility when coverage is available through Medicare.
B) Alzheimer's disease.
C) alcoholism.
D) drug addiction.
Answer: B
A long-term insurance policy may limit or exclude coverage for alcoholism, drug addiction and treatment provided in a government facility when coverage is available through other sources such as Medicare. A policy also may limit coverage for men
A long-term care policy can exclude or limit coverage for all of the following EXCEPT:
A) alcoholism.
B) illnesses resulting from war.
C) Alzheimer's disease.
D) mental disorders.
Answer: C
A long-term care policy can exclude or limit coverage for mental or nervous disorders (except for Alzheimer's disease), alcoholism and drug addiction, illnesses resulting from war, treatment provided in a government facility, preexisting conditi
Long-term care policies can limit or exclude coverage for all of the following EXCEPT:
A) intentionally self-inflicted injury.
B) family history of heart condition.
C) preexisting conditions or diseases.
D) treatment provided in a government facility, not
Answer: B
Long-term care policies can exclude coverage for, among other things, preexisting conditions or diseases, treatment provided in a government facility that is not required by law, and intentionally self-inflicted injury. Coverage cannot be limite
A long-term care policy can exclude or limit coverage for all of the following EXCEPT:
A) alcoholism.
B) illnesses resulting from war.
C) Alzheimer's disease.
D) mental disorders.
Answer: C
A long-term care policy can exclude or limit coverage for mental or nervous disorders (except for Alzheimer's disease), alcoholism and drug addiction, illnesses resulting from war, treatment provided in a government facility (unless required by
All of the following types of illnesses may be excluded from long-term care coverage EXCEPT:
A) preexisting conditions that existed within 6 months of the date of coverage for an insured under age 65.
B) intentionally self-inflicted injuries.
C) Alzheimer
Answer: C
In general, long-term care policies may not limit or exclude coverage by type of illness or accident. However, certain illnesses may be excluded, including drug addiction, intentionally self-inflicted injuries, and preexisting conditions that ex
Long-term care policies can limit or exclude coverage for all of the following EXCEPT:
A) intentionally self-inflicted injury.
B) family history of heart condition.
C) preexisting conditions or diseases.
D) treatment provided in a government facility, not
Answer: B
Generally, long-term care policies cannot limit or exclude coverage by type of illness, treatment, medical condition, or accident. A policy, therefore, would not be able to exclude or limit coverage for a family history of a heart condition. How
Long-term care policies permit all the following to be excluded from coverage EXCEPT:
A) any illness or injury resulting from war.
B) treatment for alcoholism or drug addiction.
C) treatment in a skilled nursing care facility.
D) treatment in a federal go
Answer: C
Treatment in a skilled nursing facility will be covered by long-term care policies.
Long-term care insurance policies can limit coverage for all of the following EXCEPT:
A) suicide.
B) treatment provided in a government facility.
C) Alzheimer's disease.
D) mental disorder.
Answer: C
Generally, long-term care policies cannot limit or exclude coverage by type of illness, treatment, medical condition, or accident. However, coverage can be limited or excluded for treatment provided in a government facility. It can also be limit
What is the definition of "preexisting condition" in a long-term care policy?
A) A condition for which advice or treatment was received within three months before the effective date of coverage.
B) A condition for which advice or treatment was received wi
Answer: B
A condition is considered to be preexisting if advice or treatment was received from a health care provider within six months before the effective date of coverage.
Regarding long-term care insurance, the existence of symptoms that would cause an ordinarily prudent person to seek diagnosis or treatment, or a condition for which medical advice or treatment was recommended by or received from a provider of health care
Answer: B
The most restrictive definition allowed for a preexisting condition in long-term care insurance is the existence of symptoms that would cause an ordinarily prudent person to seek diagnosis or treatment, or a condition for which medical advice or
A long-term care policy can be terminated because of the insured's:
A) age.
B) deterioration of mental capacity.
C) loss of physical capability.
D) nonpayment of premium.
Answer: D
Long-term care policies cannot be terminated on the grounds of the insured's age, deterioration of mental capacity, or loss of physical capability.
Which of the following statements regarding a noncancelable long-term care insurance policy is CORRECT?
A) It can be canceled for deterioration of the insured's health.
B) It can be canceled because the insured completed the application form incorrectly.
Answer: C
Individual long-term care insurance policies must contain a noncancelable or guaranteed renewable provision. "Noncancelable" means that the insured has the right to continue the policy in force by the timely payment of premiums. The insurer has
Which of the following statements about long-term care insurance is most CORRECT?
A) Insurers may cancel or refuse to renew long-term care policies solely because of the insured's age or health.
B) All long-term care policies must be guaranteed renewable.
Answer: B
All long-term care policies sold today must be guaranteed renewable. This means that the insurer cannot cancel the policy and must renew coverage each year, as long as premiums are paid. While at one time many nursing home policies required a ho
Long-term care insurance policies must be:
A) nonreplaceable.
B) guaranteed renewable.
C) cancelable.
D) noncancelable.
Answer: B
As a result of the 1996 Health Insurance Portability and Accountability Act (HIPAA), all long-term care policies sold today must be guaranteed renewable. This means the insurer company cannot cancel the policy and must renew coverage each year,
A long-term care policy will cover all of the following kinds of care EXCEPT:
A) emergency hospital care.
B) nursing care.
C) custodial care.
D) home health care.
Answer: A
Long-term care insurance covers skilled and intermediate nursing care, home health care, and custodial care. It does not cover benefits that would be paid by the following kinds of insurance: basic Medicare supplement; basic hospital expense; ba
All of the following are levels of long-term care EXCEPT:
A) skilled nursing care.
B) custodial care.
C) intermediate nursing care.
D) hospital care.
Answer: D
The three levels of long-term care are skilled nursing care, custodial care, and intermediate nursing care. Skilled nursing care is continuous, around-the-clock care provided by licensed medical professionals under the direct supervision of a ph
Which of the following statements about long-term care coverage is CORRECT?
A) Medicaid provides long-term care coverage for individuals, regardless of income levels.
B) Medicare and Medicaid are designed to cover a significant portion of the costs of lon
Answer: C
Although Medicare and Medicare supplement policies protect the elderly against the costs of medical care, neither covers a significant portion of long-term custodial or nursing home care. Although Medicaid provides some long-term custodial care
Which of the following is NOT a typical type of long-term care coverage?
A) Adult day care.
B) Medical care.
C) Skilled nursing care.
D) Home health care.
Answer: B
Long-term care services may include help with daily activities, home health care, respite care, hospice care, adult day care, care in a nursing home or care in an assisted living facility - but not medical care. Medical care coverage is provided
An institution that provides support services to terminally ill people and their families is called:
A) a hospice.
B) a long-term care center.
C) a hospital.
D) a nursing home.
Answer: A
An institution that provides support services to terminally ill people and their families is called a hospice.
Which of the following statements regarding the respite care provision under a long-term care policy is CORRECT?
A) It pays a benefit to reimburse other family members who provide care for the insured.
B) It pays a benefit for a family caregiver to get aw
Answer: B
The respite care provision pays the cost of either bringing in a substitute provider to the insured's home or moving the insured to a care facility for a period of time. Its purpose is to give an unpaid caregiver (such as spouse or other family
A type of long-term care insurance benefit designed to provide nonprofessional family caregivers a brief rest period by paying for short-term professional home health care is called:
A) custodial care benefit.
B) chronic care benefit.
C) adult day care.
D
Answer: D
Coverage for respite care allows the insured to be temporarily moved to a nursing facility or pays for a substitute caregiver to provide care in the insured's home for short periods, so the family can rest from caregiving activities.
Respite care is defined as:
A) care for the terminally ill.
B) care provided for the elderly in a group setting.
C) coverage which provides a rest period for professional caregivers for the disabled or terminally ill.
D) coverage designed to provide a sho
Answer: D
Respite care covers the cost of continued care for the insured in order to give a family caregiver a short rest period. This coverage allows for the insured to move to a full-time care facility, or a substitute care provider can move into the in
To provide a short rest period for a family caregiver, long-term care policies can cover:
A) home health care.
B) respite care.
C) temporary care.
D) custodial care.
Answer: B
Long-term care policies may offer respite care, which is designed to provide a short rest period for a family caregiver. Care is provided under two options: either the insured is moved to a full-time care facility or a substitute care provider m
Of the following, which statement regarding home health care is NOT correct?
A) The services provided under home health care include items such as physical therapy and certain types of custodial care.
B) Most long-term care policies do not provide coverag
Answer: B
As an alternative to nursing home care, most long-term care policies now provide coverage for home health care. Home health care is an extension of intermediate custodial care and provides coverage for those insureds who need some type of health
What is another name for medical and nonmedical services provided to ill, disabled, or infirm persons in their residences?
A) Home health care.
B) Long-term care.
C) Adult day care.
D) Acute care.
Answer: A
Home health care includes medical and nonmedical services provided to persons in their residences. The services can include homemaker services, assistance with activities of daily living, and respite care services.
For a long-term care insurance policy to begin paying benefits, the insured must:
A) be diagnosed as chronically ill.
B) be diagnosed as terminally ill.
C) be hospitalized for at least 3 days.
D) receive skilled nursing care for at least 3 days.
Answer: A
As a result of the Health Insurance Portability and Accountability Act of 1996, prior hospitalization can no longer be used as a benefit trigger for long-term care policies. Instead, the individual must be diagnosed as chronically ill. A diagnos
If a long-term care policy is considered tax qualified:
A) it must conform to certain standards established by the individual state in which it is offered.
B) its benefits will qualify for tax-exempt treatment.
C) it can be offered as an employee benefit
Answer: B
Benefits payable under long-term care policies are not taxable to the insured, provided the policy is considered tax qualified. This means that the policy's provisions must conform to certain standards and guidelines set forth by the Internal Re
To be considered qualified, a long-term care insurance policy must conform to requirements concerning all of the following EXCEPT:
A) policy replacement.
B) policy conversion.
C) marketing standards.
D) premium charges.
Answer: D
To be considered a qualified contract, a long-term care insurance policy must follow NAIC's long-term care insurance model regulations, which address the following: policy replacement, conversion, marketing standards, prohibitions on limits and
MAG Trading Co. established a tax-qualified, long-term care insurance plan for its employees. Which of the following statements is NOT correct?
A) MAG Trading's employees can exclude from income any employer-paid premium contributions.
B) Premiums paid by
Answer: C
If MAG Trading Co. establishes a tax-qualified, long-term care insurance plan for its employees, any premiums it pays are excludable from the employees' incomes. In addition, MAG Trading can take a tax deduction for the premiums paid, which are
If a long-term care policy is considered tax qualified:
A) its benefits will qualify for tax-exempt treatment.
B) it can be offered as an employee benefit by an employer.
C) it must base premiums solely on the insureds' age, health, and benefits provided.
Answer: A
Benefits payable under long-term care policies are not taxable to the insured, provided the policy is considered tax qualified. This means that the policy's provisions must conform to certain standards and guidelines set forth by the Internal Re
To be considered qualified, a long-term care insurance policy must conform to requirements concerning all of the following EXCEPT:
A) marketing standards.
B) premium charges.
C) policy replacement.
D) policy conversion.
Answer: B
To be considered a qualified contract, a long-term care insurance policy must follow NAIC's long-term care insurance model regulations, which address the following: policy replacement, conversion, marketing standards, prohibitions on limits and
MAG Trading Co. established a tax-qualified, long-term care insurance plan for its employees. Which of the following statements is NOT correct?
A) Premiums paid by MAG Trading are considered a necessary business expense for tax purposes.
B) Benefits recei
Answer: B
If MAG Trading Co. establishes a tax-qualified, long-term care insurance plan for its employees, any premiums it pays are excludable from the employees' incomes. In addition, MAG Trading can take a tax deduction for the premiums paid, which are
Which one of the following may be used as a reason to cancel a long-term care policy?
A) Deterioration of the insured's health.
B) Age of the insured.
C) Deterioration of the insured's mental health.
D) Nonpayment of premiums.
Answer: D
Except for nonpayment of premiums, no long-term care contracts can be cancelled. Furthermore, an insured's age or deterioration of mental or physical health cannot be the basis for an insurer's refusal to renew a long-term care contract.
An insurance policy that increases benefits to keep up with anticipated cost increases for long-term care services is said to have:
A) Medicare supplemental protection.
B) loss of income protection.
C) inflation protection.
D) guaranteed benefits.
Answer: C
All insurers offering long-term care policies must offer policyholders the option to buy a policy with inflation protection.
An insurance policy that increases benefits to keep up with anticipated cost increases for long-term care services is said to have:
A) Medicare supplemental protection.
B) all of the above.
C) inflation protection.
D) guaranteed benefits.
Answer: C
Every insurer offering a long-term care policy must give policyholders the option of buying a policy with inflation protection.
With regard to the tax treatment of medical expenses, which of the following statements is CORRECT?
A) Personal medical and dental expenses reimbursed by insurance are not deductible.
B) Unreimbursed medical and dental expenses are deductible by an indivi
Answer: A
Medical expenses that are reimbursed by insurance are not tax deductible. Unreimbursed medical and dental expenses are deductible to the extent they exceed 10% of an individual's adjusted gross income. Benefits received under an individual accid
Becky has the following unreimbursed medical expenses: $2,000 in premiums for group accidental death and dismemberment (AD&D) coverage, $500 in dental expenses, and $4,000 for other medical expenses and prescription drugs. If her adjusted gross income las
Answer: D
When determining the amount of tax deduction that can be taken for unreimbursed medical expenses, premiums paid for group AD&D coverage are not considered qualifying medical expenses. The deduction is limited to the amount exceeding 10% of Becky
None of the following can be considered qualifying expenses for purposes of determining an individual's medical tax deduction EXCEPT:
A) premium contributions paid by an employer to a group disability plan.
B) premium contributions paid by an employer to
Answer: C
Individual premium contributions to a group medical expense plan are deductible only when they and other unreimbursed medical expenses exceed 10% of an individual's adjusted gross income. Premium contributions made by an employer and those made
Rick, who has no health insurance, incurred $3,000 in medical expenses this year. Assuming his adjusted gross income was $29,000, how much of those medical expenses can he deduct from his income taxes, if any?
A) $2,175.00
B) $3,000.00
C) $100.00
D) $0.00
Answer: C
Incurred medical expenses that are not reimbursed by insurance may only be deducted to the extent they exceed 10% of the insured's adjusted gross income. An individual who has an adjusted gross income of $29,000 would be able to deduct only the
Suzanne incurred $10,000 in medical expenses this year that were not covered by her personal medical expense plan. If her adjusted gross income is $50,000, how much of the medical expenses can she deduct from her income taxes, if any?
A) $0.00
B) $2,500.0
Answer: D
Suzanne can take a deduction for medical expenses that exceed 10% of her adjusted gross income. She earned $50,000 this year so she can take a deduction for any expense exceeding $5,000. (10% of $50,000). Therefore, she can deduct $5,000.
Sarah pays $250 each month in premiums for her personal dental insurance policy and earns $300,000 a year as CEO of a small company. If she incurs $500 in dental expenses and the insurer reimburses her for these costs, Sarah:
A) can take an income tax ded
Answer: D
Premiums that Sarah pays on a personal dental insurance policy are not deductible unless they exceed 10% of her adjusted gross income. The same rule applies to unreimbursed medical expenses. Because Sarah was reimbursed for the full amount of he
Joy, age 50, owns an individual long-term care insurance policy and pays $1,000 a year in premiums. After getting injured in a car accident, Joy needed skilled nursing care, for which her policy paid $150 a day in benefits. Which of the following statemen
Answer: A
Amounts received under a long-term care insurance contract are treated as amounts received for personal injuries and sickness and are generally not includable in gross income. However, the amount of LTC benefits that can be excluded from income
When a group disability insurance plan is paid entirely by the employer, benefits paid to disabled employees are:
A) deductible income to the employer.
B) taxable income to the employer.
C) taxable income to the employee.
D) deductible income to the emplo
Answer: C
Disability benefit payments that are attributed to employee contributions are not taxable, but benefit payments that are attributed to employer contributions are taxable.
If a company pays the premiums on a disability income policy covering a key employee:
A) the benefits received by the employee are not subject to tax.
B) the company receives benefits from the policy income tax free.
C) the company can deduct the premium
Answer: B
If a company pays the premiums on a disability income policy covering a key employee, the company cannot deduct the premium if the monthly benefit is payable to the corporation. The benefits received from the policy are not taxed.
If a company buys disability buy-sell insurance:
A) the businessowners must pay tax on the benefits received.
B) the premiums are deductible by the businessowners.
C) the business must pay tax on the benefits received.
D) the premiums are not deductible b
Answer: D
A business cannot deduct premium paid for disability buy-sell insurance, but the benefits received are not taxed.
If a business entity purchases disability insurance on the lives of the business owners to fund a disability buy-out:
A) the business can take a full deduction for the premiums paid.
B) the business can take a partial deduction for the premiums paid.
C) t
Answer: D
If a business entity is the purchaser, policyowner, beneficiary, and premium payor of disability insurance covering the lives of its business owners, the premiums are nondeductible. However, the proceeds are exempt from regularly calculated inco
Accurate Data Inc. pays $5,000 a year in premiums for a disability insurance policy covering its senior vice president, David Mills. If David later becomes disabled and receives the monthly benefits under the policy:
A) David must pay income and FICA tax
Answer: A
If Accurate Data Inc. purchases a disability income policy on David Mills, who receives the monthly benefits upon becoming disabled, David must pay income and FICA tax on the benefits received (note that it is David who is receiving the benefits
Brent is covered by his employer's group disability plan, which is noncontributory. He was involved in a car accident and was unable to work for six months. During that time, Brent received $9,000 in disability income payments. Based on these facts, which
Answer: A
Disability benefits provided by a group insurance plan are fully taxable to the extent that they are paid for by the employer. In this case, since the plan was noncontributory and Brent paid nothing toward the premium, the benefits will be fully
Which of the following statements regarding the tax treatment of disability income insurance premiums is CORRECT?
A) Premiums paid by an employer for a group disability plan are considered a taxable benefit to the employee.
B) Premiums paid by an employer
Answer: C
Premiums paid by an employer for a group disability or sick-pay plan are deductible by the employer as a reasonable business expense. Premiums paid by an individual for a personal disability plan are not tax deductible; however, premiums paid on
When a group disability insurance plan is paid entirely by the employer, benefits paid to disabled employees are:
A) deductible income to the employee.
B) deductible business expenses to the employer.
C) taxable income to the employer.
D) taxable income t
Answer: D
Disability benefit payments that are attributed to employee contributions are not taxable, but benefit payments that are attributed to employer contributions are taxable.
Social Security benefits are financed by a special tax paid by:
A) employees, employers, and those who are self-employed.
B) employers as a percentage of their profits.
C) state and local governments.
D) businesses on the basis of the amount of their asse
Answer: A
Employees, employers, and those who are self-employed pay taxes to finance Social Security benefits. These taxes are based on the tax rate (which changes periodically) and an employee's earnings.
What is the minimum age for applicants for life and accident and health insurance agents' licenses?
A) 18 years.
B) 19 years.
C) 20 years.
D) 21 years
Answer: A
To obtain a license in North Carolina, an individual must apply to the Commissioner; be at least 18 years of age; must be competent, trustworthy, financially responsible, and not have willfully violated North Carolina insurance law; must success
All of the following agent acts would be a violation of North Carolina insurance law EXCEPT:
A) making an agreement with an individual purchaser beyond what is plainly expressed in the policy.
B) offering a rebate or other inducement not specified in a po
Answer: D
Assuring an insured that her group policy could be converted to an individual policy if terminated is a required provision in all group policies. If an individual covered under a group plan is losing coverage through no fault of her own, the ins
The term of office of the Commissioner of Insurance is:
A) unlimited.
B) four years.
C) one year.
D) three years.
Answer: D
The Commissioner of Insurance is elected by the people of North Carolina. The Commissioner's term begins on January 1 following the election and lasts for 4 years or until a successor is elected. The Commissioner is the head of the North Carolin
How many days does an insurer have in which to provide proof of loss forms to claimants after receiving notice?
A) 15 days.
B) 7 days.
C) 21 days.
D) 30 days.
Answer: A
It is a required provision of all accident and health policies that the insurer supply proof of loss forms within 15 days of receiving notice of a loss. The forms and proof of loss must be completed and returned to the insurer within 90 days.
Which of the following statements regarding the buyer's guide and policy summary is CORRECT?
A) They must be presented to the applicant after the policy is issued.
B) They must be presented to the applicant before accepting the first premium.
C) They must
Answer: B
Not only are the buyer's guide and policy summary to be presented to the applicant before the insurer accepts the first premium, they must be signed and submitted along with the application, not before it is submitted. There are no regulations t
A person who engages in the insurance business without the requisite insurance license may be fined up to:
A) $100.00
B) $500.00
C) $10,000.00
D) $5,000.00
Answer: D
Anyone conducting insurance business without the proper insurance license is committing a misdemeanor. If convicted, the individual may be fined between $1,000 and $5,000, serve from one to two years in prison, or both.
All of the following actions are considered unfair trade practices EXCEPT:
A) coercion.
B) replacement.
C) misrepresentation.
D) rebating.
Answer: B
Misrepresentation, rebating, and coercion are examples of unfair trade practices and are illegal. Replacement, however, is a legal transaction whereby a new insurance policy is purchased and, as a result, an existing policy is terminated. The Co
Before issuance of a broker's license, the applicant must obtain a bond in an amount NOT less than:
A) $20,000.00
B) $15,000.00
C) $5,000.00
D) $10,000.00
Answer: B
A broker is a licensed agent who obtains insurance for third parties through an agent of an insurer for which the broker is not authorized to act as agent. A broker's license will be issued to cover only those kinds of insurance authorized by hi
A temporary license may be granted to all of the following EXCEPT:
A) a partner of a disabled licensee.
B) the designee of a licensee entering service in the armed forces.
C) the designee of a licensee whose license has been suspended.
D) the surviving sp
Answer: C
The Commissioner may issue a temporary agent, broker, or limited representative license without requiring an examination to a surviving spouse, next of kin, executor, administrator, or employee of a deceased licensee. He or she also may issue a
An unfair or incomplete comparison of insurance policy coverages and benefits made to induce a sale or policy change is the definition of:
A) ellipsis.
B) disclosure.
C) twisting.
D) rebating.
Answer: C
Any statement that willfully misrepresents any insurance policy for the purpose of inducing a policyholder to terminate or surrender a policy is known as twisting. It is an unfair trade practice punishable by fine and loss of license.
Receiving copies of a license exam before the examination date is:
A) an effective way to prepare for the test.
B) the responsibility of the insurer.
C) the responsibility of the license applicant.
D) a crime punishable by a fine and jail sentence.
Answer: D
A person who steals, buys, sells, or gives away a licensing examination or part of an exam is guilty of a misdemeanor punishable by a fine of up to $500, imprisonment for up to six months, or both.
The agent's written licensing examination may be waived for any of the following applicants EXCEPT:
A) an applicant who attained an LUTCF designation.
B) an applicant who attained an FLMI designation.
C) an applicant who attained an AAI designation.
D) an
Answer: C
A licensing applicant who holds a CLU, ChFC, LUTCF, or FLMI designation is exempt from taking the licensing examination. In addition, a nonresident who has passed a similar written exam in her home state is also exempt.
The Commissioner will examine an insurer for all of the following reasons EXCEPT:
A) to determine whether a company will be granted a certificate of authority.
B) periodic examinations of an insurer's books and records.
C) investigations into alleged viol
Answer: D
All insurers must be examined before receiving a certificate of authority. The Commissioner must examine the records of any insurer at least once every three years or sooner if necessary. Any allegation of a violation of insurance law is reason
Which of the following is NOT one of the Commissioner's duties?
A) Drafting and enacting insurance laws.
B) Inspecting insurers.
C) Adopting rules and regulations.
D) Enforcing insurance laws and regulations.
Answer: A
The Commissioner's duties include enforcing North Carolina insurance laws and regulations, but it is the responsibility of the state legislature to draft and enact insurance laws. The Commissioner's duties also include inspecting insurers and ad
An insurance broker's license must be renewed by:
A) four years from date of issue.
B) April 1.
C) January 1.
D) three years from date of issue.
Answer: B
To renew a broker's license, a licensed broker must complete at least 12 hours of continuing education instruction, complete the renewal application, and submit the renewal fee by April 1 of each year.
If a broker diverts funds belonging to an insurer to his own use, the insurer is guilty of:
A) twisting.
B) misrepresentation.
C) embezzlement.
D) fraud.
Answer: C
Using a client's funds for the agent's or broker's own purposes is embezzlement. Any insurance agent or broker who embezzles any money received by him as an agent or broker has committed a felony.
To qualify for an agent's license, an applicant must:
A) be employed for at least two years by an insurer.
B) be at least 21 years old.
C) pass the state licensing examination.
D) be appointed by at least two insurers.
Answer: C
To obtain a license in North Carolina, an individual must apply to the Commissioner; be at least 18 years of age; be competent, trustworthy, financially responsible, and not have willfully violated North Carolina insurance law; have successfully
The Commissioner of Insurance may conduct investigations:
A) at his or her discretion but cannot subpoena witnesses.
B) on individuals and companies that apply for licenses.
C) and subpoena witnesses whenever he or she deems necessary.
D) relating to insu
Answer: C
The decision to conduct an insurance-related investigation is left to the discretion of the Commissioner. He or she is given wide latitude by the state legislature. If the Commissioner is given information about or suspects that any person or en
Which of the following statements about the North Carolina Life and Accident and Health Insurance Guaranty Association is NOT correct?
A) It prevents insurer insolvency.
B) It is funded by federal tax dollars.
C) It helps maintain public confidence in the
Answer: B
All insurers doing business in North Carolina are members of the Association. Insurer assessments, not federal or state tax dollars, fund the Association. The Commissioner may suspend or revoke the certificate of authority of any insurer that fa
A limited representative may solicit all of the following kinds of insurance EXCEPT:
A) life insurance.
B) travel accident and baggage.
C) credit life insurance.
D) dental services.
Answer: A
A limited representative is a person authorized by the Commissioner to solicit contracts for credit life, accident and health, credit, travel accident and baggage, motor club, and dental services coverages.
The Commissioner must examine each domestic insurer at least every:
A) two years.
B) three years.
C) five years.
D) one year.
Answer: C
The Commissioner can examine any insurer at any time if she feels it would be in the public's interest. This examination must be conducted at least once every five years, regardless of the insurer's history or activity.
Which of the following is NOT a form of discrimination against an applicant for life insurance who carries the sickle cell trait?
A) Charging a higher premium for coverage.
B) Refusing to change the underwriting procedures for applicants who carry the tra
Answer: B
An insurer cannot refuse to issue or deliver a health insurance policy because the insured possesses the sickle cell, or hemoglobin C, trait; furthermore, an insurer cannot charge a higher premium rate on this basis.
To qualify for group employer life insurance coverage, the minimum number of participants in a group is:
A) 25 participants.
B) 100 participants.
C) 10 participants.
D) 2 participants.
Answer: C
A policy issued to an employer to cover the lives of at least ten of its employees is called a group life insurance policy. The policy premiums must be paid by the policyholder, either wholly from the employer's funds or funds contributed by it,
How long must an insurer keep copies of the buyer's guide and the policy summary?
A) One year.
B) Two years.
C) Four years.
D) Three years.
Answer: D
Insurers must keep files of all the buyer's guides and policy summaries they distributed to applicants for 3 years. The buyer's guide and policy summary must be presented to a purchaser before the agent accepts the first premium deposit and the
Which of the following statements regarding a sales presentation for life insurance is NOT correct?
A) The presentation must use colored overheads and videos to make clear important points for the insurance prospect.
B) If a presentation compares the cost
Answer: A
Showing time value of money, not lumping guaranteed and nonguaranteed sums, and explaining future dividends as not guaranteed are examples of the restrictions imposed on the solicitation of life insurance. Any comparison of the cost of two diffe
What is the minimum required grace period in a group accident and health insurance policy?
A) 30 days.
B) 31 days.
C) 7 days.
D) 10 days.
Answer: C
Each accident and health insurance policy must contain a grace period of no less than 7 days for weekly premium policies, 10 days for monthly premium policies, and 31 days for all other policies.
What is the minimum number of insureds who may be covered by a franchise health plan?
A) Five.
B) Two.
C) Three.
D) Four.
Answer: A
Franchise health insurance is issued to five or more employees of an employer or members of an association. The insureds are issued the same form of an individual policy, which varies only as to amounts and kinds of coverage. Premiums are paid t
In the case of Medicare supplement policies, how long is the free look period in which the policyholder has the right to return the policy for a full refund of premium?
A) 10 days.
B) 15 days.
C) 21 days.
D) 30 days.
Answer: D
The free look periods for Medicare supplement policies and long-term care insurance policies differ from the free look periods of other accident and health insurance policies. Insureds are given a 30-day, rather than a 10-day, free look period.
Which of the following characteristics of a Medicare supplement policy violates the minimum benefit standards?
A) The policy pays benefits for sickness on the same basis as benefits for accidents.
B) The policy excludes specific foot treatment.
C) The pol
Answer: C
After exhausting all medical expense coverage, a Medicare supplement policy will provide up to 90% coverage of the Medicare Part A eligible hospital expenses.
An accident and health insurance policy may NOT be issued unless:
A) it contains a change of beneficiary provision.
B) it contains a misstatement of age provision.
C) a change of occupation limitation is provided.
D) it contains a provision limiting benef
Answer: A
A change of beneficiary provision is required in all accident and health insurance policies issued in North Carolina. The other choices are optional provisions that may or may not be included.
An accident and health insurance policy that provides benefits for any illness suffered by a minor child:
A) may not exclude any children after the age of one year.
B) may not exclude any children after the moment of birth.
C) may exclude children under t
Answer: B
Every policy that provides illness benefits for minor children must provide benefits beginning at birth
The right to continue group health insurance after termination of employment extends to which of the following benefits?
A) Prescription drugs.
B) Surgical expenses.
C) Dental benefits.
D) Vision benefits.
Answer: B
Continued coverage is not required to include dental, vision, or prescription drug benefits. Hospital and surgical expenses must be covered.
To continue group health insurance after termination of membership in an association, application must be made to the insurer no later than how many days after termination?
A) 31 days.
B) 60 days.
C) 90 days.
D) 1 year.
Answer: A
To be eligible for conversion, the written application and the first premium payment for the converted policy must be made to the insurer no later than 31 days after the date of termination.
A Medicare supplement policy may exclude all of the following from coverage EXCEPT:
A) Alzheimer's disease.
B) medical conditions arising out of war.
C) costs of chiropractic care.
D) alcoholism.
Answer: A
Other allowed exclusions are treatment for foot care, cosmetic surgery, emotional or mental disorders, dental care, eyeglasses, rest cures, and treatment provided in a government hospital or under a government program (except Medicaid).
Which of the following statements is CORRECT about a long-term care insurance policy?
A) It may be terminated because of the age of the insured.
B) It may contain a provision establishing a new waiting period if existing coverage is replaced.
C) It may in
Answer: D
Termination due to age, a provision establishing a new waiting period, and including a basic Medicare supplement are expressly prohibited by North Carolina insurance law. In addition to those practices, it also is against long-term care insuranc
If an insurance agent refuses to permit the Commissioner to examine his affairs, the Commissioner may
A) impose a penalty up to $500.
B) impose a penalty up to $1,000.
C) revoke the agent's license.
D) suspend the agent's license.
Answer: C
The Commissioner may visit and examine any insurance agency, agent, or broker. Refusal to be examined is grounds for license revocation.
Anyone acting without the proper insurance license:
A) can be fined up to $10,000.
B) can be imprisoned for up to 3 years.
C) may be guilty of a misdemeanor.
D) is guilty of a felony.
Answer: C
Anyone acting without the proper insurance license may be deemed guilty of a misdemeanor. Upon conviction, she must pay a fine of at least $1,000 but not more than $5,000, be imprisoned for at least one year but not more than two years, or both.
When an insurer requires written proof of loss, it must furnish a blank form to the claimant within how many days after receipt of notice?
A) 21 days.
B) 15 days.
C) 5 days.
D) 10 days.
Answer: B
When an insurer requires written proof of loss, it must furnish a blank form for that purpose. If an insurer does not furnish a form within 15 days after receipt of notice, the claimant is considered to be in full compliance with the policy requ
All of the following statements about the North Carolina Life and Accident and Health Insurance Guaranty Association are correct EXCEPT:
A) only domestic insurers must be members.
B) it is subject to the Commissioner's supervision and the state's insuranc
Answer: A
In order to do business in North Carolina, the association requires that all insurers must be members, not just domestic insurers.
A limited representative may solicit contracts for all of the following types of insurance EXCEPT:
A) variable life.
B) credit life.
C) accident and health.
D) dental services.
Answer: B
A limited representative may solicit contracts for credit life, accident and health, credit, travel accident and baggage, motor club, and dental services coverage. The representative may not solicit contracts for variable life insurance.
All of the following must be licensed EXCEPT:
A) agents.
B) brokers.
C) limited representatives.
D) partnerships.
Answer: D
In North Carolina, agents, brokers, and limited representatives must be licensed. Partnerships or corporations may be licensed as agents, brokers, or limited representatives.
Applicants for Medicare supplement licenses must complete how many hours of prelicensing education?
A) 20 hours.
B) 30 hours.
C) 40 hours.
D) 10 hours.
Answer: D
Applicants for Medicare supplement licenses must complete ten hours of prelicensing education. For all other licenses, applicants must complete 40 hours of prelicensing education.
An agent will be considered to have obtained a license for the purpose of writing controlled business if, during any 12-month period, commissions earned from such business exceed what percentage of the total commissions earned on all business?
A) 30%.
B)
Answer: C
Controlled business is insurance written on the licensee or his immediate family and insurance covering a corporation or partnership of which the licensee is an employee or partner. A license is deemed to be used to write controlled business if,
Which of the following statements about nonresident licenses is CORRECT?
A) If the Commissioner revokes a nonresident's license, he must notify the Commissioner in the licensee's home state.
B) A person may qualify for a nonresident license if she holds a
Answer: A
If the North Carolina Commissioner revokes a nonresident's license, he must promptly notify the Commissioner in the licensee's home state. A person may qualify for a nonresident license if she holds a similar license in one other state, not two.
Unless renewed by a company or agent, an agent's license automatically terminates after:
A) 24 months.
B) 36 months.
C) one year.
D) 18 months.
Answer: C
An agent's license automatically terminates after 1 year unless it is renewed by the company or agent.
An agent licensed in North Carolina must complete how many credit hours of continuing education instruction each license renewal period?
A) 18 hours.
B) 24 hours.
C) 30 hours.
D) 15 hours.
Answer: B
Each person holding a life, accident and health or sickness, property, casualty, personal lines, or adjuster license must obtain 24 hours of insurance continuing education credits during each biennial compliance period. These hours must include
If a licensed agent no longer maintains a residence in North Carolina, the agent must deliver her insurance license to the Commissioner within how many days after terminating residency?
A) 31 days.
B) 30 days.
C) 10 days.
D) 20 days.
Answer: B
Any licensee who ceases to maintain her residency in North Carolina must deliver her insurance license to the Commissioner within 30 days after terminating residency.
An agent who offers a $150 gourmet dinner in exchange for the purchase of a life insurance policy has engaged in:
A) misrepresentation.
B) replacement.
C) rebating.
D) twisting.
Answer: C
An agent who offers anything of value to induce an individual to purchase life insurance has committed the unfair trade practice of rebating. An insurer, agent, or broker may not offer anything of value not specified in the policy.
An agent who embezzles $10,000 received from an insured is guilty of a:
A) gross misdemeanor.
B) civil felony.
C) felony.
D) misdemeanor.
Answer: C
If an agent embezzles any money he or she receives as an agent, the agent is guilty of a felony.
All of the following are correct statements about the regulation of life insurance solicitation EXCEPT:
A) the insurer must maintain a complete file containing copies of the buyer's guide and policy summary for 5 years.
B) the agents must inform prospecti
Answer: A
An insurer must maintain a complete file containing copies of the buyer's guide and the policy summary for three years.
An accident and health insurance policy must state all of the following EXCEPT:
A) the time the insurance takes effect and terminates.
B) that there is a grace period of at least 7 days for weekly premium policies, 10 days for monthly premium policies, an
Answer: D
Time taken for insurance to take effect and terminate, a grace period, and change of beneficiary provision are required provisions in every accident and health insurance policy issued in North Carolina. Engaging in an illegal occupation or drug
After receiving an accident and health policy, how many days does a policyholder have to return the policy for a refund of any premium paid?
A) 20 days.
B) 30 days.
C) 31 days.
D) 10 days.
Answer: D
An accident and health policy must include a right to return (free look) provision, which gives the policyholder the right to return it within ten days of receipt for a refund of any premium paid.
Which of the following statements regarding coverage of mammograms is NOT correct?
A) If a woman is considered at risk, yearly mammograms must be covered.
B) The first time a baseline mammogram is covered is when the woman is 50 years old.
C) Accident and
Answer: B
For a woman who is not considered at risk, mammogram coverage begins when she receives a baseline mammogram sometime between the ages of 35 and 39. During the years 40 through 49, one mammogram every two years is covered, or more frequently on a
All of the following statements are correct regarding long-term care insurance EXCEPT:
A) a policy may not condition eligibility on a prior hospitalization requirement.
B) all policies must be filed with and approved by the Commissioner before being used.
Answer: D
A long-term care insurance policy may not be terminated because of the insured's age or deteriorating health.
Which of the following statements about fraternal benefit societies is CORRECT?
A) They may provide disability benefits, as well as hospital, medical, or nursing benefits.
B) They cannot provide death benefits or annuities.
C) They are not subject to the
Answer: A
A fraternal benefit society is any not-for-profit incorporated society with capital stock and conducted solely for the benefit of its members. Fraternal benefit societies may provide death benefits; endowment benefits; annuity benefits; disabili
How many days notice must the Commissioner give an individual to appear before an administrative hearing on a charge of violating North Carolina insurance law?
A) 7 days.
B) 30 days.
C) 60 days.
D) 10 days.
Answer: D
One of the Commissioner's responsibilities is to conduct hearings and investigations. Any individual that the Commissioner wishes to call to a hearing must be given at least ten days' written notice of the date when the examination will take pla
The purpose of a prearranged funeral contract is to:
A) provide long-term care benefits through a rider to the life policy.
B) fund the burial of the insured.
C) provide additional benefits in the case of a disabling accident.
D) make the life benefits av
Answer: B
The sole purpose of a prearranged funeral contract is to pay for the burial of the insured. This contract can be provided through individual or group life insurance. Agents who sell prearranged funeral contracts must meet special disclosure requ
Which of the following people would not qualify for coverage under the North Carolina high-risk insurance pool?
A) Harold, who is receiving treatment for diabetes.
B) Gilbert, whose family history of heart disease has precluded him from getting a preferre
Answer: B
The North Carolina high-risk insurance pool is funded with assessments paid by health insurers in the state. This state program offers health insurance coverage to residents of North Carolina who have been denied individual insurance, who can on