Pre Cert. Practice Exam

Which one of these is NOT considered to be an element of an insurable risk?

A. Speculative risk
B. Pure risk
C. Loss cannot be catastrophic
D. Loss must be due to chance

Who would be the most likely party for legally entering into a contract?

A. Mentally ill person
B. Minor
C. Person under the influence of alcohol
D. Small employer

The powers directly given to an agent in an agency contract are called

A. express
B. apparent
C. implied
D. assumed

An insurance company’s voluntary refusal to enforce a contract’s provision is called a(n)

A. waiver
B. warranty
C. assignment
D. concealment

What happens when an initial offer is answered with a counteroffer?

A. An arbitrator decides on a compromise
B. The counteroffer is legally enforceable
C. Initial offer is void
D. Initial offer is automatically accepted

An insurance contract may be voided if a misrepresentation found on the application is determined to be

A. conditional
B. aleatory
C. material
D. intentional

Which of the following is NOT a function of accidental and health insurance?

A. Pays a death benefit as a result of an illness
B. Covers the loss of income from a disability
C. Covers the cost of medical care as a result of an accident
D. Pays for hospice care in the event of a terminal illness

A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy?

A. Key person
B. Franchise disability
C. Business overhead expense
D. Disability income

Which of the following statements BEST describes disability buy-sell insurance policies?

A. Benefits are taxable to the business entity
B. Premiums are typically tax-deductible
C. Benefits are typically tax-free
D. Benefits are paid to the disabled insured

An accident and health insurance policy defines an injury as “bodily injury by accidental means”. For an injury to be covered on this policy, what is required?

A. The accident must be external and violent
B. The cause of the accident must be intentional
C. Only the injury resulting from an accident must be unintentional
D. Both the cause and the result of an accident must be unintentional

How many employees must an employer have for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply?

A. At least 10
B. At least 15
C. At least 20
D. At least 100

Which parties are directly involved in a group accident and health insurance contract?

A. Insurer and employees
B. Insurer, employees, and employer
C. Insurer and employer
D. Employer and employees

A characteristic of a Preferred Provider Organizations (PPOs) is

A. PPO’s operate like an HMO on a prepaid basis
B. If service is obtained outside the PPO, benefits are reduced and costs increase
C. PPO’s are generally public in nature rather than private
D. Health care providers themselves are barred from forming a PPO due to conflict of interest

Mike had both of his legs amputated after a boulder fell on them. He has a policy that pays a lump sum benefit for this injury. What type of insurance does Mike have?

A. Catastrophic
B. Accidental death and dismemberment
C. Major medical
D. Hospital expense

Typically, states will permit the grouping of two or more small employers in order to obtain group health insurance at a favorable rate. This grouping of employers is known as a multiple employer

A. welfare association
B. trust
C. consortium
D. alliance

A person can receive Medicare Part A Hospital benefits, regardless of age, as long as the person has received which of the following benefits for at least 24 months?

A. Unemployment
B. Workers compensation
C. Medicaid
D. Social Security Disability

Medicaid will pay for nursing home expenses under what condition?

A. Must have permanent kidney failure
B. Must be age 65 or older
C. Must be receiving Social Security disability benefits
D. Must have financial hardship

Rick is a disabled worker receiving Social Security benefits. What is his wife and dependent children eligible for?

A. No benefits
B. Spouse is eligible for an income benefit but the children are not
C. An income benefit which is a percentage of his primary insurance amount (PIA)
D. An income benefit which equals his entire primary insurance amount (PIA)

Pete is covered by an employer-provided group health insurance plan, which covers employees in multiple states. This plan is governed by the laws of which state?

A. Where the certificate of coverage was mailed to
B. Where most of the employees reside
C. Where the master contract was issued
D. Where the insurer’s home office is located

Mary has a Health Savings Account (HSA). Distributions that have been made for anything other than qualified medical expenses are considered taxable and subject to a penalty of

A. 10%
B. 20%
C. 30%
D. 50%

What is the MAXIMUM number of employees an employer may have to qualify for medical savings accounts?

A. 20
B. 30
C. 40
D. 50

Karen is considering replacing her individual accident and health insurance policy with another individual policy. She has had issues in the past with her gall bladder that would be considered a pre-existing condition. How will a pre-existing conditions exclusion affect Karen’s new insurance contract?

A. Will not affect the new contract at all
B. Could potentially increase her benefits
C. Could potentially reduce her benefits
D. Will permanently exclude her from insurance coverage

Long-term care policies normally cover expenses associated with

A. Drug and alcohol dependency treatment
B. Halfway homes
C. Nursing homes
D. Intensive care units

Medicare supplement insurance that provides a preventative medical care benefit will often cover

A. respite care
B. hospitalization
C. custodial care
D. yearly physical examinations

Which of these is a type of private insurance that helps pay for the out-of-pocket expenses involved under Medicare?

A. Major medical insurance
B. Medicaid
C. Disability income
D. Medicare Supplement

According to the needs approach, an emergency reserve fund’s primary purpose is to

A. pay off debt
B. pay for unexpected expenses
C. pay for the cost of life insurance
D. provide an supplemental income source

A health insurer MUST provide a proof of loss form

A. within 10 days of the actual loss
B. within 10 days of receipt of the notice of loss
C. within 15 days of receipt of the notice of loss
D. within 15 days of the actual loss

The insured’s consideration given for a health insurance policy is

A. the initial premium payment and the application
B. the initial premium payment only
C. the application
D. the initial premium and an investigative report

Which statement concerning the Entire Contract provision in an individual accident and health insurance policy is CORRECT?

A. The agent can waive policy provisions and change the policy with the insurer’s consent
B. The agent has the authority to waive the policy’s provisions under certain conditions
C. The agent has the authority to change the policy under certain conditions
D. The agent doesn’t have the authority to change the policy or waive its provisions

An accident and health insurance policy’s premium requirements are set forth in which of the following provisions?

A. Insurance clause
B. Entire Contract clause
C. Consideration clause
D. Premium mode

The standard provisions of an accident and health insurance policy require that the

A. policy, attached papers, and endorsements make up the “entire contract”
B. policy summary, conditional receipt, and initial premium make up the “entire contract”
C. change of occupation provision is mandatory
D. grace period be no shorter than 60

The type of health insurance in which underwriting procedures are the most restrictive is

A. Accidental
B. Individual
C. Group
D. Employer-paid

To which of the following group plans do HIPAA rules NOT apply?

A. PPO’s
B. Disability income
C. HMO’s
D. Major medical

What does the term “field underwriting” refer to in the health insurance industry?
A. The interaction of the producer with the applicant
B. The interaction of an underwriter with the applicant
C. The medical reports issued by the MIB
D. An insurer conducting an investigative report

Beth is a surgeon who has an own-occupation disability income policy. She was injured six months ago and has been unable to return to her practice. Her monthly benefit from the policy is $15,000. During this time, Beth has been working part-time at a local boutique and receives $2,000 monthly. What is her ongoing monthly benefit while she is unable to perform her surgical duties?

A. $13,000
B. $17,000
C. $15,000
D. Nothing

What is taken into consideration when defining “total disability” in a disability income insurance policy?

A. Number of days spent in the hospital
B. The amount of additional coverage the insured has
C. The insured’s education, training and experience
D. The elimination period

Which of these group plans would a claim likely involve the payment of federal estate taxes?

A. Disability income
B. Blanket health
C. Accidental death
D. Major medical

Non-occupational disability coverage is designed for

A. 24 hour protection
B. those who are exempt from Workman’s Compensation coverage
C. sole proprietors and self employed individuals
D. employees who suffer non-work related disabilities, since work-related disabilities are

An insurance policy that can also be classified as a securities product is called

A. variable life
B. modified life
C. universal life
D. a Modified Endowment Contract

Which of the following would permit an insurer to delay a covered disability policy claim?

A. Probationary period
B. Service Waiting period
C. Elimination period
D. Grace period

How are the premiums for an individual disability income policy treated for tax purposes?

A. Amount spent on premiums over 7.5% of gross income is tax deductible
B. Partially tax deductible
C. Fully tax deductible
D. No tax deduction

A 55 year old recently received a $30,000 distribution from a previous employer’s 401k plan, minus $10,000 withholding. Which federal taxes apply if none of the funds were rolled over?

A. Only income taxes on $30,000
B. Only income taxes on $20,000
C. Income taxes plus a 10% penalty tax on $30,000
D. Income taxes plus a 10% penalty tax on $20,000

Splitting the commission with the buyer on a sale of insurance is known as

A. Twisting
B. Binding
C. Soliciting
D. Rebating

In Ohio, when an individual is covered under a small employer’s accident and health plan, the pre-existing conditions exclusion period may be partially or wholly satisfied by

A. having creditable coverage with a previous employer
B. owning an individual dread disease policy
C. electing a high deductible plan
D. paying a fee

Under what circumstances must an agent provide his or her business records to the Director of Insurance?

A. Upon request of an insured
B. Upon request of the Director
C. Under no circumstances due to privacy consideration
D. By authorization from the National Association of Insurance Commissioners (NAIC)

Ohio requires advertisements for accident and health insurance policies covering ONLY a specified illness to prominently display

A. The premium guarantee
B. A statement that the policy is limited
C. A schedule of payments
D. The policy exclusions

Under which marketing system do insurers solicit customers by mass media advertising and mail without the services of an agent?

A. Branch office
B. Contingent
C. Internet exchange
D. Direct response

Long-term care insurance policies may contain exclusions for all of the following EXCEPT

A. Acute care
B. Care outside the U.S.
C. Care for intentionally self-inflicted injury
D. Care for incurable conditions

All of these are used to prevent adverse selection in a group dental plan EXCEPT

A. Provide evidence of insurability
B. Probationary periods
C. Waiting periods
D. Decreased participation

Which of these is typically regarded as a major treatment in an individual dental plan?

A. Fluoride treatment
B. X-rays
C. Restorative fillings
D. Dentures

The Affordable Care Act (ACA) established “exchanges” in order to

A. assist individuals and small businesses when making their health insurance purchases
B. enforce every U.S citizen to purchase health insurance
C. issue fines to those U.S. citizens who do not purchase health insurance
D. assist in the conversion of individual policies to government mandated plans

According to the Affordable Care Act (ACA), health insurance exchanges are expected to be in every state by what year?

A. 2014
B. 2015
C. 2016
D. 2017

Pam is an HIC subscriber and is involved in an automobile accident outside of the HIC service area. Which of these statements is true regarding her treatment?

A. Treatment is covered as an emergency health service
B. Treatment is not covered
C. Treatment must be accepted by the HIC before given
D. Treatment must be given at an approved provider

Which of these statements regarding HIC’s is INCORRECT?

A. HIC’s provide emergency care outside the service area
B. HIC’s requires subscribers to choose a primary care physician
C. HIC’s operate on a prepayment basis
D. HIC’s operate on a reimbursement basis

Which report contains information regarding an individual’s general reputation and credit standing?

A. Credit report
B. Consumer report
C. MIB report
D. Agent’s report

An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT

A. good credit history
B. living in a rural area
C. good health history
D. being a nonsmoker

When does the agent give a premium receipt for an accident and health insurance application?

A. When the application has been approved
B. When the initial premium has been collected with the application
C. During the medical exam
D. When the completed application has been collected

Where is the difference between a standard risk and a substandard risk reflected?

A. backdating
B. coverage is not offered
C. premium charges
D. back-end charges

Which type of deductible must be satisfied again for each illness or accident in a major medical plan?

A. Specific-cause
B. Per-cause
C. All-cause
D. Comprehensive-cause

Typically, working individuals age 65 or over must be

A. offered the same Health benefits as the younger employees
B. covered by Medicare exclusively
C. paying a higher premium than younger employees
D. covered by a Medicare Supplement policy

The courts will normally interpret a policy in favor of the insured when the meaning of the policy is not clear. This is because an insurance policy is a(n)

A. warranty contract
B. aleatory contract
C. contract of adhesion
D. unilateral contract

A medical fee schedule shows the amount an insurer will pay for a given procedure. This amount is considered to be the

A. negotiated amount payable
B. average amount payable
C. lowest amount payable
D. highest amount payable

Skilled nursing facility expenses are sometimes covered by _____, but ONLY if the insured was hospitalized prior to entering the facility.

A. HMOs
B. Medicare
C. Medicaid
D. Medicare Supplements

If group Health benefit levels are too high, what could be the end result?

A. Underutilization of the plan
B. Overutilization of the plan
C. Normal utilization of the plan
D. Adverse selection

Which statement is NOT true regarding health insurance policies that provide limited benefits?

A. Only persons under the age of 65 are eligible
B. Coverage may be limited to a specific dread disease, such as cancer
C. Benefits may be paid on a reimbursement or indemnity basis
D. Coverage may be limited to a specific accident

Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true?

A. Any benefits received will be tax-free
B. The premiums paid by the employer are not tax-deductible
C. The specified benefit amount is a percentage of his wages
D. Long-term policy benefits are not coordinated with Social Security benefits

Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT

A. Disability income
B. HMO
C. Vision
D. Major medical

How are benefit payments from individually-owned medical expense policies treated for tax purposes?

A. Exempt from income taxes
B. Taxed as ordinary income
C. Taxed as a dividend
D. Tax credit given for amount of benefit payment

How do preferred provider organization (PPO) dental plans compensate providers for standard dental procedures?

A. Capitation
B. Prepayment
C. Reduced fee schedules
D. Usual and customary fees

Medicare Part B excess charges are covered by

A. long-term care policies
B. respite care
C. Medicare Part A
D. Medicare Supplemental insurance

Which of the following does NOT meet the requirements of “skilled nursing care”?

A. Must be ordered by a doctor
B. Must require daily care
C. Must be provided exclusively in a hospital
D. Must be provided by skilled medical practitioners

The grouping of two or more small employers in order to obtain group health insurance at a favorable rate is called a multiple employer

A. grouping
B. trust
C. alliance
D. corporation

Alan is an enrollee of a health maintenance organization (HMO) which uses a gatekeeper system. If there ever comes a time when he needs emergency health services, what should he do?

A. Receive permission from the primary physician to begin treatment
B. Call the HMO to verify coverage
C. Proceed to the nearest emergency room
D. Contact the HMO for a listing of approved providers

Inflation protection must be included in all long-term policies delivered in Ohio UNLESS

A. The inflation rate is below a specified level
B. The policyholder rejects the coverage in writing
C. The policyholder elects a coverage percentage equal to reasonable charges
D. The policy contains a premium rate guarantee

Under HIPPA rules, a medical plan’s pre-existing conditions exclusion may be reduced by

A. Any period of treatment in the six months prior to enrollment in the plan
B. Any period of prior coverage
C. The number of months that the exclusion was satisfied under previous qualifying coverage
D. A flat three months if the condition was excluded under an earlier plan

Once an HIC has provided coverage to enrollees for a period of 2 years, it shall hold an open enrollment period of not less than how many days, at least once during each consecutive 12-month period?

A. 30
B. 60
C. 90
D. 180

With whom may the subscriber of an HIC file an appeal regarding the resolution of a complaint concerning services provided?

A. Superintendent of Insurance
B. Peer Review Committee
C. HIC Policy Administrator
D. Ohio Chief of Medicine

Which of the following is true regarding an agent who is found to have violated a state insurance law by the Superintendent of Insurance in Ohio?

A. All policies written by the agent will be voided
B. The agent’s license will be automatically reinstated after 6 months
C. The agent must reimburse any customer effected double premiums paid
D. The agent must pay the administrate costs associated with the investigation of such violations

Which of the following is a key characteristic of an HIC compared to other health and accident plans?

A. HIC does offer group insurance
B. HIC provides medical and disability insurance
C. HIC combines health care delivery and financing
D. Private commercial insurers will not accept nonprofit groups

Which of the following describes the treatment service of a crown?

A. Endodontics
B. Periodontics
C. Prosthodontics
D. Orthodontics

Employer group dental plans may attempt to minimize adverse selection by utilizing all of the following EXCEPT

A. deductibles
B. probationary periods
C. coinsurances
D. encouragement of reduction in employee participation

What is covered under a limited accident and health insurance policy?

A. Losses that occur only in limited occupations
B. Limited pre-existing conditions
C. Losses that occur only in limited age groups
D. Limited perils and amounts

In long-term care insurance, what is the length of time for which claims will be paid?

A. Benefit period
B. Free-look period
C. Grace period
D. Elimination period

After joining a health maintenance organization (HMO), a subscriber will typically select a(n)

A. capitation level
B. primary care physician
C. closed panel
D. deductible level

Which of the following can be defined as a cause of a loss?

A. Adversity
B. Risk
C. Hazard
D. Peril

Which of the following accurately describes the “time limit on certain defenses”?

A. After a stated period of time, claims cannot be denied due to material misrepresentation on the application
B. All claims can be disputed after two years
C. An insured cannot file a lawsuit within 90 days of the claim being filed
D. The right to return an accident and health policy must be within 10 days of policy delivery

A significant difference between HICs and private commercial accident and health insurers is that

A. Private commercial insurers do NOT offer group coverage
B. HICs are limited to providing coverage for nonprofit organizations
C. HICs combine medical care delivery and funding in one organization
D. Private commercial insurers will NOT offer coverage to nonprofit organizations

What is a prosthodontics dental procedure?

A. A filling
B. A root canal
C. Bridgework
D. Teeth cleaning

Quality care in HIC specialty plans is evidenced by all of the following EXCEPT

A. The buildings and equipment are in good repair
B. The plan’s service area is unlimited
C. The providers provide accurate diagnosis and treatment
D. The participants experience improved health

An Ohio agent’s license to sell insurance may be revoked for all of the following reasons EXCEPT

A. Rebating or twisting
B. Misrepresenting contract provisions
C. Being convicted of a felony
D. Sharing commissions with licensed agents

An example of illegal inducement would be

A. Announcing the opening of a new agency
B. Publishing guaranteed dividend rates on a new type of policy
C. Delaying payment on a claim because of an incomplete accident report
D. Advertising that your agency can provide policies with competitive rates

Under the Affordable Care Act (ACA), what is the proportion of premium revenues spent on clinical services and quality improvements?

A. Medical loss ratio
B. Minimum essential coverage
C. Issue rebate
D. Market rate reform

In Ohio, continuation of medical plan coverage for a handicapped child beyond the age limit stated in the policy may require proof of the child’s

A. Continued insurability
B. Incapacity only
C. Incapacity and dependency upon reaching the age limit
D. Dependency for the first two years of continued coverage only

Under the Affordable Healthcare Act, which group works with states to establish new Health Insurance Marketplaces?

A. CICCIO
B. OOIICC
C. IIOCC
D. CCIIO

Before a policyowner replaces an existing individual health insurance policy, all of the following types of provisions in the new policy need to be reviewed EXCEPT

A. Coverage exclusions
B. Benefit levels
C. Coverage limitations
D. Experience rating

An applicant for life insurance must be informed that testing for Human Immunodeficiency Virus (HIV) infection is used to help determine

A. The type of policy that will be issued
B. Effective date and term of coverage
C. Whether an insurable interest exists
D. The insurability of the proposed insured