KY HEALTH LICENSING

The laws of agency that govern the relationship between insurers and their producers are derived from common law. The common law originated with which of the following?

the idea that insurance should protect everyone, regardless of income or status
insurance industry pioneers

ideas and judicial decisions that existed in England at the time of the American Revolution

the U.S. Supreme Court

Which of the following does NOT provide independent ratings of insurance companies' financial strength and claims-paying abilities?

A.M. Best

Duff and Phelps

Moody's

Securities and Exchange Commission

Which of the following illustrates pure risk?

Knowing that his family depends on his income, Franklin wants to insure his life.

Knowing that he needs to do more to boost his retirement savings, Saul invests his life
savings in the stock market.

Hoping to boost his savings in the event of an emergency, Ralph takes a second mortgage on his home and uses the proceeds to gamble in Las Vegas.

Believing his financial situation will be more secure if he were self-employed, Ron cashes in his life insurance policy to start a business.

Which of the following types of insurers pays dividends to its stockholders?

stock company

mutual company

fraternal benefit society

reciprocal insurer

Insurers and their producers are bound by the common law rules of agency. Who are the two parties to this relationship?

insurer and insured

principal and agent

agency and agent

principal and participant

Adam is an independent agent and solicits policies for several different insurers. Which best describes the type of relationship Adam has with each insurer?

fiduciary

dependent

presumptive

non-contractual

Patty is considering purchasing a life insurance policy, and Agent Brown asks if she has any existing policies. She does, and states that she would not maintain her current policy if she purchased the policy that Agent Brown presented. Therefore, Agent Brown has which of the following duties?

He must inform Patty of the consequences of replacing the policy.

He must withdraw the policy from consideration because Patty already has life insurance.

He must ask to see the existing policies and then cancel them.

He must send copies of the existing policies to his insurance company so that the company can formally cancel the policies.

Insurance companies use agents to sell their insurance products. Agents today are more commonly called which of the following?

account executives

general managers

agency lead generators

producers

Most insurance policies are personal contracts between the insurer and the policyowner. Which of the following is NOT a personal contract?

life insurance

homeowner's policy

automobile policy

fire insurance policy

Robin breaks a leg while snow skiing. Considering herself lucky it was only a leg, she decides she will never again attempt snow skiing. Which of the following is Robin using as a means of risk management?

risk retention

risk avoidance

risk reduction

risk transfer

Which of the following describes a group whose members pay a pro-rata share of the losses suffered by other members in the group?

risk retention group

reciprocal insurer

reinsurer

self-insurer

Which of the following is not a requirement for a risk to be insurable?

Loss must be ascertainable.

Loss must be catastrophic.

Loss must be uncertain.

Loss must present an economic hardship.

The fact that an insurance contract generally cannot be transferred to a third party without the insurer's consent makes it what type of contract?

unilateral

personal

aleatory

conditional

When Agent Angela met with Larry for the first time, she learned that he already owned a life insurance policy and was considering replacing it with a new policy. Which action must Angela take?

notify the Commissioner that replacement may occur

obtain a signed statement from the applicant acknowledging that the new policy will cover all of his life insurance needs

inform the applicant that he may return the policy she recommended within 45 days of policy delivery for a full refund of premium

give the applicant a Notice Regarding Replacement

Which of the following terms applies to an insurance company that operates in State A but is domiciled in State B, from the perspective of residents in State A?

alien company

foreign company

unauthorized company

domestic company

All of the following are examples of hazards EXCEPT:

Ron tends to forget to wear his seat belt when he drives.

Sue is a heavy cigarette smoker.

John is taking medications to control his high blood pressure.

Jane, a business owner, refuses to fix a broken sidewalk in front of her shop because she and the town cannot agree on who must repair it.

Jennifer applied for a $500,000 whole life insurance policy. The insurer issued the policy but classified Jennifer as a substandard risk, resulting in a higher premium. Which type of policy delivery would be preferred in this situation?

constructive delivery

preliminary delivery

legal delivery

interim delivery

Tim had paid only four premiums on his health insurance policy when he was diagnosed with cancer. The insurance company paid more than $100,000 to cover the medical bills for his treatment during the next year. This situation demonstrates which of the following characteristics of insurance contracts?

They are unilateral.

They are aleatory.

They are personal.

They are contracts of adhesion.

Stacey is a captive agent for Best Rates Insurance Company. According to her agency contract, she can use business cards containing Best Rates' company logo and can also submit applications for their policies. Which type of authority does Stacey have to take these actions?

apparent authority

express authority

implied authority

imputed authority

What will result if an insured decides to stop paying premiums for his or her insurance policy?

The insurance company can require the insured to continue paying the premiums.

The insured has breached the terms of the contract.

The insurance company must return all premiums that have been paid if no claims
have been made under the policy.

The insurance company is released from its promise to pay benefits and the contract expires.

Which of the following is a benefit trigger under a long-term care insurance policy?

cognitive impairment

inability to function independently every day

need for medically necessary care

need for skilled nursing care only

ABC Insurance Company diligently maintains files of advertisements it uses to market its life and health insurance policies. How long is it required to keep them before it can purge them?

at least three years

until the Commissioner’s next examination or five years, whichever occurs first

until the Commissioner's next examination
at least five years

Nadir Insurance instructs its producers to omit certain information from their records of insurance transactions for the previous year. This information would give the Department of Insurance reason to expand any routine examination of Nadir if the Department knew about it. What is true about Nadir’s instructions?
They are permitted.
They are prohibited.
They are advisable.
They are not addressed by Department regulations.

When meeting with a prospect to discuss life insurance, Agent Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Agent Tyler committed?

defamation

coercion

rebating

unfair discrimination

Acme Insurance and Apogee Insurance agree to offer different premium rates for persons of equal risk within a particular class. They also agree to limit benefits paid to insureds within this class if the insureds live in certain counties of Kentucky. What are Acme and Apogee engaging in?

acceptable marketing and underwriting
practices

unfair and prohibited business practices

insurance fraud

false advertising

Abby lives in Oklahoma, where she is licensed as an insurance producer. She wants to apply for a nonresident license in Kentucky. Which of the following conditions must she satisfy?

She must move to Kentucky.

She must surrender her Oklahoma license.

She must be sponsored by a producer
licensed in Kentucky.

She must show her Oklahoma license to be in good standing.

Larry, Brian, Susan, and Jennifer just started working for AllPro Insurance Company in Kentucky. Based on their job descriptions below, which individual is not acting as a
producer?

Jennifer, who solicits policies and receives commissions

Susan, who collects insurance premiums for AllPro

Brian, who is a vice president in AllPro's human resources department and does not receive commissions

Larry, who receives insurance applications from the public

This year, Agent Todd earned 55 percent of his total commissions from life and health insurance written for his relatives and friends. Which statement is correct?

He has engaged in lawful insurance practices.

He has engaged in controlled business.
He must report the transactions to the Commissioner.

He has violated his fiduciary duties.

Which type of long-term care marketing method fails to disclose that the purpose of the contact is the solicitation of insurance?

twisting

cold lead advertising

high pressure sales tactics

illegal inducemen

Which of the following is not a power granted to the Kentucky Commissioner of Insurance?

examining insurers and producers

enforcing insurance laws

issuing regulations to administer insurance laws

prosecuting individuals for violating the insurance laws

The Commissioner of Insurance cannot suspend or revoke a producer's license for which of the following reasons?

failing to meet projected sales goals

having an agent's license denied or suspended in another state

forging an individual's name on an insurance application

accepting insurance from an unlicensed individual

Which of the following options must be offered to all long-term care policyowners?

waiver of pre-existing conditions clause

inflation protection

guaranteed benefits clause

replacement protection

Although a health insurer may exclude pre-existing conditions from coverage under an individual health insurance policy, it must cover them within how many months after the effective date of coverage?

3

6

12

18

Newborn children are automatically covered under an insured’s individual health insurance policy from birth until when?

to the first birthday

to 31 days

to the end of the first calendar year

to the policy renewal date

Which of the following is not an unfair claims settlement practice if committed by an insurance company in Kentucky?

failing to promptly acknowledge communications about claims

failing to promptly settle a claim for which liability is uncertain

offering to settle claims for less than due to encourage litigation

raising policy defenses to reduce a claim

The Commissioner has charged Brady with engaging in controlled business and unfair discrimination among applicants. If Brady continues to engage in these unlawful practices, what may the Commissioner do?

seek an injunction to prohibit Brady from engaging in the acts

immediately revoke Brady's license

immediately impose a fine of up to $10,000 per violation

notify the appointing insurer to cancel Brady's appointment

Jackson is applying for a health insurance policy and will be taking an HIV test. Which party will be notified if the test results are positive?

the policy beneficiary

the Insurance Commissioner

a physician designated by Jackson

Jackson

For the past two years, Helen was covered under ABC Insurance Company’s group health plan. She obtains a new job and enrolls in her new employer’s group health plan with PDQ Insurance. PDQ excludes pre-existing conditions for 12 months.
In this case,

PDQ cannot impose a pre-existing condition exclusion.

PDQ can exclude certain pre-existing conditions.

PDQ can exclude pre-existing conditions for up to 12 months.

PDQ can exclude pre-existing conditions for up to 6 months.

Blackwell Insurance Company issues an individual health insurance policy to Jaycee. When she reads the policy, Jaycee will find that it contains all of the following information EXCEPT:

amount of premium

date of cancelation

effective date of coverage

amount of benefits payable

Diedre, age 36, is insured under an individual health insurance policy. Which statement correctly describes the coverage that must be provided for mammograms?

The policy must cover one screening mammogram until she reaches age 40.

The policy must cover one mammogram every five years.

The policy may impose a greater deductible for mammograms than for other care and services under the policy.

The policy must cover one mammogram every six months.

Harold is covered by an individual health insurance policy that also covers his family. Harold's son Edmund is diagnosed with autism at age two. Which statement is correct?

The policy must cover the treatment of autism until Edmund reaches age 16.

The policy may pay up to $5,000 in benefits for the treatment of autism.

The policy may exclude benefits for autism spectrum disorders.

The policy must cover the treatment of autism until Edmund reaches age 21.

Health insurance policies are not required to cover the cost of which type of care?

chiropractic

podiatry

cosmetic surgery

mammography

Max submitted an application for an individual long-term care policy to Statewide Insurers. What are Statewide's options if it determines that Max does not meet its financial suitability standards?

It must issue a policy at a substandard rate.

It must send a Max a letter requesting more information about his financial objectives and investments.

It must notify the Department of Insurance.

It may reject Max's application.

To qualify for a resident insurance producer's license, a person must do all of the following EXCEPT:

have a college degree.

pass the licensing examination.

pay the licensing fee.

be at least 18 years of age.

Sasha, Kendall, Adam, and Julio are licensed producers in Kentucky. The Commissioner would not be able to suspend or revoke which producer's license for engaging in the following acts?

Sasha, who sold insurance policies to family members and friends this year

Kendall, who failed to pay state income taxes this year

Adam, who intentionally accepted insurance business from a friend who was not licensed

Julio, who violated an order issued by the Kentucky Commissioner of Insurance

Alex sold an insurance policy before his license lapsed and earned a commission on the sale. Is he entitled to a commission if the policy is renewed?

No, because only one commission can be paid on a policy sale.

No, because he is no longer licensed.

Yes, because his license was not revoked or suspended.

Yes, because he was licensed when the policy was sold.

When collecting personal financial or health information, an insurance company is required to do all of the following EXCEPT

notify individuals about the company’s privacy practices.

describe conditions under which the company may disclose the information to other parties.

provide methods for individuals to prevent disclosure of the information.

provide individuals with copies of documents disclosed to other parties.

ABC Insurers directly solicits prospective health insurance applicants in Kentucky. At what point must it give applicants a Notice Regarding Replacement, if a transaction involves replacement?

at the initial meeting

at the time of application

before the policy is issued

at policy delivery

Ally is an active duty member of the Navy and is currently stationed abroad. Which program will provide health-care coverage
for Ally and her family?

SGLI

CHIP

VIGLI

TRICARE

Self-funded plans are common in all of the following types of group health insurance plans EXCEPT

multiple employer trusts or multiple employer welfare arrangements
cases where the insured group is small, with relatively healthy members and few claims

large companies with many claims but sufficient wealth to self-fund

companies that use the services of an insurance company to act as a third-party plan administrator

If ABC, Inc. terminates its group health plan, the insurer must offer ABC, Inc. the option to buy other group health coverage it offers at the time of termination. If ABC decides to buy a different plan, which of the following statements applies to any deductible or co-insurance payments the participants made?

The insurer keeps any deductible or co-insurance payments the participants made.

The insurer applies any deductible or co-insurance payments to the new plan.

Any deductible or co-insurance payments the participants made will be refunded to the individual members.

Any deductible or co-insurance payments the participants made can be used as leverage by the insured to renew ABC's group health business.

All of the following are common types of government health insurance plans EXCEPT:

Medicare

Medicaid

the disability program under Social Security

federal workers' compensation plans

Jerry was seriously injured in a car accident and spent 50 days in the hospital, at $250 per day, before being discharged. He is insured under a basic hospital expense indemnity policy, which pays a hospital benefit of $250 per day for up to 45 days. What amount of the hospital stay is Jerry responsible for?

$0

$1,250

$1,250, plus the policy's co-payments

$1,250, plus the policy's coinsurance amount

Which of the following statements about the Fair Credit Reporting Act is CORRECT?

Insurers must notify their applicants any time that a consumer or investigative report has been requested.

The act states that applicants cannot dispute consumer reports because they are final in nature.

The act attempts to keep all consumer data private by prohibiting its disclosure to any third parties, including insurers.

If an insurance applicant has been rejected based on a consumer report, the insurer is prohibited from disclosing the name of the reporting agency.

ABC Corporation contributes 80 percent of the premium to a group disability plan, and the employees pay the remaining 20 percent. For income tax purposes, an employee can

deduct the amount of premium he or she paid.

deduct the amount of premium he or she paid only if it exceeds 10 percent of his or
her adjusted gross income.

deduct the amount of premium he or she paid, regardless of his or her adjusted gross income level.

not deduct the amount of premium he or she paid.

Which of the following statements best describes the Medicare program?

Medicare is a federal health insurance program designed specifically for people age 65 and over and for certain disabled people.

It was signed into law in 1962 by President Kennedy.

As a broad-reaching social program, it extends the Social Security program beyond retirement, disability, and survivor benefits into the field of disability income insurance.

Medicare is funded by federal income taxes.

Ben is covered by his employer's group health insurance plan and is also eligible for Medicare benefits. In Ben's case, what is Medicare considered?

the primary payor

the secondary payor

the back-up insurer

a state health insurer

One difference between individual and group disability income policies is that

group DI policies are not portable, while individual policies are not affected by the insured leaving one employer for another.

individual DI is generally less expensive than group DI.

group DI benefits are non-taxable, while individual DI benefits are taxed as ordinary income.

it is easier to qualify for individual DI than group DI.

Disability income insurance is typically provided through all of the following EXCEPT:

a basic medical expense policy

an employer's or association's group
insurance policy

individual disability income policies
Social Security

For Medicare Supplement plans K and L, which of the following statements is true?

Plans K and L pay 50 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached.

Plans K and L pay 100 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached.

Plans K and L pay 70 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached.

Plans K and L pay 80 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached.

A long-term care policy cannot contain pre-existing condition limitations or exclusions lasting longer than how many months?

24

12

6

3

Experience rating for group life insurance is more likely to be applied to which of the following?

large groups

small groups

self-employeds

brand-new companies

Terry wants to apply for disability income benefits under his group policy. The policy has a 90-day elimination period. What does this mean for Terry?

He must wait 90 days before filing the claim.

Benefits will not begin until 90 days after

Terry submits his initial claim for benefits.

Benefits will be paid only for 90 days.

Benefits will not begin until 90 days after the disability occurs.

Melina paid $5,000 out of pocket for medical care this year. If her adjusted gross income is $36,000 this year, how much of these expenses can she deduct from her income taxes, if any?

$5,000

$1,400

$0

$2,300

If an individual disability income policy is issued as guaranteed renewable, which of the following statements is correct?

The insurer can refuse to renew the policy if the insured submits a claim.

The insurer can never increase the premium.

The insurer can cancel the policy if the insured does not pay the premiums.

The insurer can increase the premium if the insured files several claims.

Delta Enterprises set up a cafeteria plan for its employees. Which of the following benefits can it cover?

disability income premium payments

unreimbursed medical expenses

Medicare supplement premium payments

retirement plan contributions

How would you explain the meaning of "Medicare approved" to a client?

Medicare must approve the patient in advance.

Medicare must approve the medical service in advance.

Medicare must approve the health-care provider in advance.

Medicare must approve the primary payor in advance.

Individual short-term disability plans typically pay benefits for up to how long?

6 months

1 year

2 years

10 years

What are the main sources of information about an applicant for health insurance?

the agent report and application

the application and investigative consumer report

the application and credit reports

the application and attending physician's statement

Which of the following is a way to finance health-care costs that is not tied to a high-deductible insurance plan?

health savings accounts (HSAs)

medical savings accounts (MSAs)

individual retirement accounts (IRAs)

flexible spending accounts (FSAs)

Jeff is injured while working at home and becomes partially disabled. Although he can no longer work as a fireman, he has started working part-time at the local library. Which of the following statements is NOT correct?

Jeff is not eligible for Social Security benefits because he is not totally disabled.

Jeff is not eligible for Social Security benefits because he is working part-time.

Jeff's disability must last at least six months in order to be eligible for Social Security
disability benefits.

Jeff must be unable to work in any gainful occupation in order to be eligible for Social Security disability benefits.

Insurers can sell both qualified and non-qualified LTC policies. What can those who buy qualified policies do?

buy additional benefits unavailable to those who buy non-qualified policies

exclude benefits from tax-qualified long-term care insurance policies from the recipient's income with no limits

deduct their premiums from their state income taxes

deduct their premium payments from their federal income taxes within certain specified limits

Six months after Todd was injured in a car crash, he began receiving occupational therapy to help him eventually return to work. This treatment was covered by his disability income policy. In order for this to happen, what must his policy contain?

a relation-to-earnings provision

an elimination period

a rehabilitation provision

an exclusion provision

Mary is covered under a prepaid dental plan offered through her employer. All the following are characteristics of this type of plan EXCEPT

A fixed amount is paid to the service
provider monthly to cover dental care for the covered employees

The dental service provider provides the contracted services regardless of cost or frequency of use by an employee.

Prepaid dental plans typically do not include a deductible

These plans typically require employees to pay a co-payment following treatment.

HMOs particularly stress the importance of what kind of health care among their members?

cosmetic care

hospital care

surgical care

preventive care

Jeff was a marketing writer when he bought his health insurance policy, but he changed jobs six months later. He is now a private investigator. Assuming that his policy contains the change of occupation provision, what is the likely result of Jeff's having a more hazardous occupation?

His insurance coverage and premium would not change.

The insurer could reduce Jeff's benefits.

The insurer could require additional proof of continued insurability.

The insurer must reduce the premium rate.

All of the following statements about flexible spending accounts (FSAs) are correct, EXCEPT:

An FSA is designed specifically as a group benefit that an employer can offer to its employees.

An FSA allows an employee to contribute to the plan on a pre-tax basis.

Employees can use the amounts contributed to FSAs to pay qualified medical costs as well as costs their employer's health plan covers.

Employees can use the contributed amounts to pay for partially covered costs.

Dondra is covered by a Section 125 cafeteria plan. To pay for her benefits, the employer will

withhold part of her post-tax salary.

make a matching contribution to her account.

withhold part of her pre-tax salary.

make a one-time contribution to her account.

If a group health insurance plan is experience-rated, which of the following factors will the insurer NOT examine when issuing the policy?

the average age of group members and their sex

the community or region in which the group operates

the group's prior claims history

the group's participation levels

Ellen, Bob, Miguel, and Amy all turned 40 this year. Assuming they are all in good health, which person will most likely pay the highest premium for a disability insurance
policy?

Ellen, who is a construction worker

Bob, who is an engineer

Miguel, who is an architect

Amy, who is an optometrist

Grant's Medicare SELECT plan offers the same benefits as the coverage provided under a standard plan. So why are Grant's Medicare SELECT plan premiums lower than those for a standard Medicare supplement policy?

All Medicare SELECT policies must be issued as guaranteed renewable.

Medicare SELECT beneficiaries exhaust their financial resources long before their need for care ends because Medicare does not cover custodial care, and many custodial nursing home stays exceed 30 months. This reduces the cost of the Medicare SELECT policy.

Grant must obtain covered services through the plan's network. For this reason, his Medicare SELECT plan's premiums are lower than those for standard Medicare supplement policies.

Grant could obtain covered services through the provider of his choice. For this reason, his Medicare SELECT plan's premiums are lower than a standard Medicare supplement policy's.

Which statement about the Medicare supplement program is NOT correct?

Plan A provides the basic core benefits.

All companies selling Medicare supplement policies must sell Plan A.

As Medicare adjusts its deductibles and co-payments, Medicare supplement policies can align their benefits to match the adjustments, but that is not required.

All Medicare supplement policies must be issued as guaranteed renewable. Once issued, a policy cannot be canceled because of the insured's health.

Which statement is correct about the dollar amount of the per diem limitation in a long-term care policy?

It can make the coverage affordable to more insureds.

It can increase monthly.

It can increase quarterly.

It can increase annually.

Which of the following optional provisions addresses the situation in which an insured provides the wrong age on the application for insurance?

the misstatement of age provision

the other insurance in this insurer provision

the change of occupation provision

the other insurance with other insurer provision

What is the primary purpose of the many tax-favored health insurance plans sponsored by the federal government?

to generate income for federal spending projects

to satisfy public demand for nationalized health insurance

to encourage people and employers to save for health-care expenses

to serve as a provider of last resort

In the context of group health insurance, who buys the coverage?

Each individual makes a selection and submits it to the group.

a group employer or group sponsor

a third-party administrator

the most senior employees in the covered group

Which of the following is the most important in determining an insured's maximum monthly benefit, maximum benefit period, and premium rate under a disability income
policy?

the insured's earnings

the insured's occupational class

the insured's health

the insured's age and sex

For insurance purposes, which of the following statements applies to a group?

A group is defined by federal law.

A group must have at least 100 members.

A group means employees only.

A group must consist of members who have a common association other than insurance.

As required by the Patient Protection and Affordable Care Act, essential health benefits (EHBs) are best described as:

emergency health care services that are not subject to benefit limits

pediatric care services that are not subject to benefit limits

preventive and wellness medical care services that are not subject to benefit limits

various medical services that include pediatric, laboratory, preventive, rehabilitative, and emergency care services that are not subject to benefit limits

Jim owns an individual disability income policy. He is also covered by a group disability income policy. If he suffers a disabling injury and his personal disability income policy contains a relation-to-earnings provision, what will happen?

The total amount he can receive from both policies cannot exceed half of his current wages.

The total amount he can receive from both policies cannot exceed his current wages.

The individual policy will pay benefits only after the group policy pays its maximum amount.

The individual policy will pay benefits without taking into account what the group policy pays.

A person must be totally disabled to qualify for Social Security disability benefits. In addition, a person is subject to a waiting period of how long before benefits are paid?

two months

three months

four months

five months

When Vincent began work at The New Company, he was making $5,000 per month. He knew at that time that if he became disabled, his benefit would be 60 percent of his salary, or $3,000 monthly. Since then, his work schedule has been reduced to part time, only 20 hours per week, and his salary has been cut in half. Three years after becoming a part-time employee, he filed a disability income claim. Which of the following policy provisions is most likely to affect his actual disability benefit?

the integration provision

the relation of earnings to insurance
provision

the insurance with other insurers provision.

the free-look provision

Which of the following statements about Medicare supplement Plans K and L is correct?

Plans K and L represent a higher level of benefits.

Plans K and L premiums are much higher than those associated with other plans.

Plans K and L both pay 80 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached.

Plans K and L can offer high-deductible options, which further decrease premium payments.

AJ Industrial Supply offers a group health plan for its employees and pays 90 percent of the premium. The employees pay the remainder. Which type of group health plan does AJ Industrial Supply offer?

compensatory

contributory

reimbursement

noncontributory

Nelson is covered by ABC Corporation's group disability plan. He has no other disability income protection and wants to continue the coverage after he terminates his employment with ABC Corporation. What is the most likely outcome?

He will be able to continue the policy for up to 18 months.

He will be able to convert the policy to an individual disability income policy.

He will be able to continue the policy for up to 18 months after which he has the option of converting the policy.

He will not be able to continue or convert the policy.

Starr Construction Company applied for a group health insurance policy for its employees. Which of the following statements is correct if the insurer offers Starr a community-rated plan?

Starr's plan will be the same as that offered by the insurer to all similar groups in the area.

When issuing the policy, the insurer will consider the business in which Starr is engaged as well as the stability of the group's member base.

Starr Construction will be able to design and arrange the plan's specific benefits according to its needs.

Starr's employees will be required to submit to a medical exam or provide satisfactory evidence of insurability.

Tina is covered by a group short-term disability plan, while Earl is covered by a group long-term disability plan. Their employers pay the premiums for the policies, and both subsequently become disabled. What is the result?

Tina can expect to receive benefits for up to two years, while Earl may receive benefits for more than two years.

Tina's benefits will be taxable, but Earl's will not.

Tina will receive benefits only if injured while working, while Earl will receive benefits only if injured outside his job.

Neither Tina's nor Earl's benefits will be taxable.

Disability income policies usually contain certain exclusions for which no coverage is provided. Common exclusions include all of the following, EXCEPT

acts of war.

self-inflicted injuries

pre-existing conditions

accidental injuries

Ed was seriously injured while working at a construction site. He incurred $10,000 in medical expenses, $3,000 for vocational rehabilitation, and $25,000 in lost wages. Which of these items will be covered by workers' compensation?

the lost wages only

the medical expenses only

the lost wages and medical expenses

the lost wages, medical expenses, and vocational rehabilitation expenses

Self-funded plans are common in all of the following types of group health insurance plans EXCEPT

multiple employer trusts or multiple

employer welfare arrangements

cases where the insured group is small, with
relatively healthy members and few claims
large companies with many claims but sufficient wealth to self-fund

companies that use the services of an insurance company to act as a third-party plan administrator

Janet is the owner of a small hardware store and is insured under a business overhead expense policy. If Janet became disabled, the policy would cover all of the following EXCEPT

rent

the store's utility bills

Janet's salary

insurance covering the store

If Chris is eligible for Social Security disability benefits, what is his work status?

fully insured

completely insured

currently insured

partially insured

Which of the following statements is not true about group insurance?

A master contract is issued.

Underwriting is on a group, not an individual, basis.

Exclusions and riders are written for the most at-risk members.

The cost is lower than it is for individual policies.

When pricing health insurance policies, insurers must account for morbidity rates. What do these rates indicate?

the average number of persons in a large group who can be expected to die in any given year

the average number of persons at various ages who can be expected to become disabled because of accident or sickness

the average number of persons who are likely to allow the policy to lapse during the first year

the average number of persons who are likely to submit a claim during the first year

Those who buy tax-qualified long-term care insurance policies can deduct their premium payments by the amount that their unreimbursed medical expenses (including LTC premiums) exceed what percent of their adjusted gross incomes?

6 percent

10 percent

7.5 percent

5 percent

Harold has short-term disability income policy. Were he to become disabled, benefits would typically be payable for no more than

6 months

one year

two years

5 years

In individual medical expense insurance policies, which of the following is an effect of the guaranteed renewable provision?

Guaranteed renewable coverage is usually less expensive than otherwise comparable noncancelable coverage.

Guaranteed renewable coverage is generally more marketable to insureds in professional occupations.

Guaranteed renewable coverage is usually more expensive than otherwise comparable noncancelable coverage.

The guaranteed renewable provision cannot appear in disability income insurance policies available to all occupation classes.

Which of the following statements about most common government health insurance plans is correct?

Government health insurance is a right of citizenship.

Government health insurance is available to individuals and groups.

Government health insurance is available only to state or federal employees.

Government health benefits are tax free.

Which of the following statements about the standard Medicare supplement plans is NOT correct?

Plan A provides the basic core benefits.
Once issued, a policy cannot be canceled because of the insured's health.

Plans B through N contain the basic core benefits available under Plan A plus additional benefits.

Companies selling Medicare supplement policies do not have to sell Plan A, but they may sell any or all of the other plans

In conditionally renewable health insurance policies, the insurer guarantees that the policyowner can renew the coverage, as long as he or she first meets what types of conditions?

conditions associated with the insured's health

conditions related to the insured reaching a certain age or losing employment or membership in an association that provides health coverage

conditions tied to the insured's age; specifically, the insured must be under age 65

conditions tied to the number of claims; specifically, the insured must not have had more than three claims in any 18-month period

Debbie is insured under a noncancelable individual disability income policy from State Insurers. She submitted a disability claim, received benefits for one year, and then returned to work. Debbie would now like to renew her policy. Which of the following
statements is correct?

State Insurers can increase her premiums.

State Insurers can cancel the policy because
Debbie submitted a claim.

State Insurers can increase Debbie's premium only if it increases the premium for all policies of the same class.

State Insurers cannot refuse to renew Debbie's policy as long as she pays the premiums.

All of the following incidents of ownership in a disability policy used to fund a buy-sell agreement cause a taxable event to the insured EXCEPT:

the insured's right to change the beneficiary

the insured's right to assign or transfer the policy

the insured's right to policy proceeds

the company's right to policy proceeds

The special needs plan (SNP) under Medicare Advantage provides for all of the following EXCEPT:

those who are institutionalized

those who are Medicare and Medicaid eligible

those who are severely disabled

those with acute onset conditions

Which of the following statements is correct about the payment of benefits under a Blue Cross Blue Shield plan?

It pays benefits directly to the insured.

It pays the provider directly, with no claim form.

It is prepaid insurance.

It is a form of managed care.

Cara is considering purchasing an individual disability income policy, while her brother Calvin will receive disability coverage through his new employer's group plan. Which statement about their policies is correct?

Calvin will have to go through individual underwriting, but Cara will not.

The premium for Calvin's policy will typically be lower than for Cara's policy.

Calvin must prove insurability, but Cara does not have to prove insurability.

Cara will probably be classified as a standard risk, while Calvin will have a harder time proving insurability.

What is another name for traditional or fee-for-service health insurance?

Blue Cross/Blue Shield

indemnity insurance

doctors and surgeons insurance

managed care

Ken has a history of severe back pain. He applies for disability income coverage. Concerned about early and significant disability claims, what may the insurer add?

a guaranteed insurability rider

a multiple indemnity rider

an impairment rider

a nonrenewable (cancelable or term) policy

When Kay moved to the facility where she now resides, she became party to a contract obligating the facility to provide care for her for the rest of her life, whatever the future state of her health, though Kay is currently in good health. The type of facility where Kay lives is most certainly which of the following?

a skilled nursing facility

a continuing care retirement community

an adult foster care facility

a congregate housing facility

Jim applied for a health insurance policy. The insurer attached a waiver to the policy that excludes any loss associated with cardiac illness. How has Jim's application been classified?

preferred

substandard

standard

declined

In conditionally renewable policies, the insurer cannot cancel coverage as long as the insured meets the required conditions. What can the insurer do?

require proof of continuing insurability

require evidence of financial solvency

increase the premiums for the coverage

try to convince the insured to increase coverage amounts

Bob is applying for an individual health insurance policy while his sister Terri is planning to enroll in her group health insurance plan. In which case must the insurer account for adverse selection?

with Bob's application

with Terri's application

with both Bob's and Terri's applications

with neither Bob's nor Terri's application

Which statement about the coordination of benefits provision in health insurance plans is NOT correct?

Individual health policies recognize that a person may be covered under more than one plan or policy, so health plans specify how benefits will be coordinated with other plans.

Individual health policies typically pay for covered benefits after Medicare or other government programs pay their portions.

Children who are covered as dependents under the group insurance plans of two working parents have two sources of
coverage.

In these cases, the primary provider is the insurance plan of the parent whose birthday occurs first in the calendar year.

Insurers generally have no right to recover excess amounts paid over the amount their plan called for from the person to whom they made the payments.

With what type of policies are guaranteed insurability riders typically associated?

medical expense policies

long-term care policies

disability income policies

group plans

Sky Corporation contributes 80 percent of the premium for its group medical plan each year while the employees pay the remaining 20 percent. All employees are under age 65. Which statement is correct for income tax purposes?

The employees can take an income tax deduction for the entire premium they pay.

The employees cannot deduct any of the premiums they pay.

The employees can deduct the amount of premiums they pay that exceed 10 percent of their adjusted gross income.

The employees can deduct both the amount of premium that they pay and that the company contributes on their behalf.

Is it possible for one person to qualify as a group and be eligible for group health insurance coverage?

Yes; sometimes a business group of one can qualify as a small group.

Yes, but only if the business is formed as something other than a sole proprietorship.

Yes, but the premiums will be especially high.

No; a group of one is not a group.

All of the following statements about grace period provisions in health insurance contracts are correct, EXCEPT:

All states require a 31-day grace period for all modes of premium payment.

A seven-day grace period is allowed for premiums that are paid weekly.

A ten-day grace period is allowed for premiums that are paid monthly.

Some states allow a 31-day grace period for all payment modes other than weekly or monthly.

As Medicare adjusts its deductibles and co-payments, what must Medicare supplement policies do, and what can they NOT do?

Medicare supplement policies must increase their benefits by the same or greater amount, and they may drop certain people for health reasons.

Medicare supplement policies must align their benefits to match the adjustments, and they cannot drop people for health reasons.

Medicare supplement policies must keep their benefits the same for 18 months, but they may selectively increase or decrease benefits after the end of that period.

Medicare supplement policies do not have to align their benefits to match the
adjustments.

They cannot drop coverage from any existing insured for health reasons.

Sara just purchased a disability income policy and is reading the fine print. Assuming she meets the policy's definition of disability, in which of the following scenarios will coverage under her policy apply?

Her previously diagnosed muscular dystrophy becomes debilitating.

Her alcoholism renders her chronically immobile.

She is severely injured while making deliveries at her job.

In a freak accident, she is struck by lightning and is paralyzed.

Paul has a flexible spending account. Which of the following is a correct statement with respect to the account and taxation?

Paul makes his contributions on a pre-tax basis.

Employer contributions are taxable as a business expense.Paul's contributions are subject to payroll taxes.

Paul may withdraw the FSA contributions tax-free for any health-related purpose.

Jim is a skilled laborer with a stable job. In recent years he has experienced health complications resulting from a chronic illness. What type of disability income policy would be best for Jim?

group plan

individual plan

individual short-term plan

individual long-term plan

Belinda's health insurance policy offers a $1 million lifetime benefit limit and provides coverage for hospital, surgical, and physician expenses. Each year, she must pay a $500 deductible before benefits begin, along with 20 percent of all covered costs. What type of policy is Belinda covered by?

major medical plan

basic medical plan

HMO

Catastrophic medical plan

Whether a person is eligible for Medicaid depends largely on which of the following factors?

age of the person needing care

financial need

state of residence

type of medical care needed

Which of the following types of health insurance benefit is paid weekly or monthly due to injury or sickness?

disability insurance

medical expense coverage

blanket coverage

scheduled coverage

ABC, Inc. has a group health plan. Which of the following statements about the termination of ABC's group health plan is correct?

Only the insurer can terminate ABC, Inc.'s group health plan.

The insurer must follow the requirements of the federal authorities in canceling ABC,
Inc.'s group health plan.

If ABC, Inc. goes out of business, it will likely end its plan. If it moves to an area outside the insurer's area of operation, the plan will no longer be available to ABC's employees.

The insurer is generally required to notify ABC, Inc. of the intent to discontinue the health plan at least 30 days before terminating it.

Mr. Smith, a shoe store owner, is insured under a business overhead expense policy that pays a maximum monthly benefit of $2,500. If Mr. Smith becomes disabled and has actual monthly expenses of $3,000, which of the following is correct?

The policy will pay $3,000 as a monthly benefit.

The policy will pay $2,500 as a monthly benefit.

The excess amount of expenses cannot be carried over and paid in future months.

The policy will pay $3,000 if Mr. Smith pays higher premiums the following month.

Sherry operates her business as a sole proprietor. The company buys a disability insurance policy on her to fund a buy-sell agreement in the event of her disability. It treats the premiums as a business expense. Assuming Sherry's disability, all of the following are correct statements EXCEPT:

Policy premiums are tax deductible to the business.

Policy proceeds may be taxable to the
business.

Sherry will have a capital gain on her business interest as a result of the sale.

Policy proceeds are tax deductible to the business.

A tax-qualified long-term care insurance policy enables policyowners to deduct premiums as a medical expense and to also do which of the following?

receive limited benefits tax free

receive unlimited benefits tax free

receive a partial return of premium if no
claims are filed within three years

receive a partial return of premium if no claims are filed within ten years

Gene is seriously injured in a car accident while on vacation. His employer-sponsored group disability plan pays benefits for over two years but reduces the amount paid by the benefits he receives under an individual disability policy. Which type of policy is Gene most likely covered by?

group short-term disability plan

group occupational plan

group long-term disability plan

group partial disability plan

In 2006, federal legislation expanded Medicare to include which of the following?

Part C

an updated Medigap program

Part D

Part F

In health insurance policies with a guaranteed renewability provision, the policy is guaranteed renewable until when?

The insured files three or more claims within an 18-month period.

the insured reaches age 70.

The insured reaches age 62 1/2.

the insured reaches age 65.

In underwriting a group health insurance contract for XYZ Company, the insurer uses a community rating. The focus of a community rating is which of the following?

characteristics of the local community where the group operates

the combined experience of the group

past claims experience of the group

neighborhoods in which the individual members live

Dee has her first job and is insured under her employer-provided health-care plan. Which of the following are characteristics of such a plan?

The plan benefits are taxable to her.

Her plan is backed by the federal government.

There will be no limit on how much the plan will pay in benefits.

Her contributory cost toward coverage is less than if she had purchased an individual policy.

A patient who has experienced total kidney failure and requires dialysis would be a candidate for which Medicare program?

Medicare Part A

ESRD Demonstration Plan

Medicare Part B

special needs plan

Mr. Johnson is covered under his employer's group health plan, as well as under his wife's health plan. The provision that prevents duplicate benefits from being paid to Mr.
Johnson is which of the following?

the double-dip provision

the coordination of benefits provision

the portability provision

the spousal benefits provision

Master Manufacturers has decided to self-insure its health benefits but wants to be sure it is not exposed to unexpectedly large claims. What type of policy should Master probably purchase?

a capping policy

a limiting policy

a stop-loss policy

a backstop policy

Medicare supplement Plan A provides the co-payment for hospitalization from day 61 through day 90. Which of the other Medicare supplement plans also provide this coverage?

Plans A and B only

Plans A and C only

Plans C and D only

Plans A through N

Sullivan has a health savings account. All of the following are correct statements about taxation of this account EXCEPT:

Sullivan makes contributions to the account on an after-tax basis.

The earnings in the account grow tax free.

The earnings in the account grow tax deferred.

Contributions to the account are tax deductible.

Carla was a construction worker when she bought her health insurance policy, but eight months later became a full-time homemaker and part-time insurance agent. Assuming that her policy contains a change of occupation provision, what is the likely result of Carla's having a less hazardous occupation?

Her insurance coverage and premium would not change.

The insurer could reduce Carla's benefits.

The insurer could require additional proof of continued insurability.

The insurer must reduce the premium rate.

The two broad categories of long-term care policies are which of the following?

tax qualified and non-tax qualified

home health care and community-based

managed care and fee-for-service

limited and unlimited

Which law prevents an insurer from rejecting a member of a small group for health insurance?

OBRA

HIPAA

TEFRA

COBRA

Which of the following is considered by many to be the most significant benefit that employers offer?

individual accidental death and dismemberment insurance (AD&D)

group health insurance

individual medical expense insurance

401(k) plans

If ABC, Inc. terminates its group health plan, the insurer must offer ABC, Inc. the option to buy other group health coverage it offers at the time of termination. If ABC decides to buy a different plan, which of the following statements applies to any deductible or co-insurance payments the participants made?

The insurer keeps any deductible or co-insurance payments the participants made.

The insurer applies any deductible or co-insurance payments to the new plan.

Any deductible or co-insurance payments the participants made will be refunded to the individual members.

Any deductible or co-insurance payments the participants made can be used as leverage by the insured to renew ABC's group health business.

Which group health plan gives employers the most flexibility in designing and arranging the plan's benefits?

experience-rated plans

community-rated plans

health maintenance organization (HMO)

accidental death and dismemberment policies

Dana is covered by TD Industries' group long-term disability plan; the company pays 80 percent of the premium, and Dana pays the remainder. Dana becomes disabled and receives $2,000 a month in benefits for three months. How much of Dana's benefits are subject to income tax?

$2,000

$1,600

$1,000

$400

Ava incurs the following unreimbursed medical expenses this year: $12,000 in health insurance premiums, $2,000 in long-term care premiums, $500 in doctors' fees, and $1,000 in disability income insurance premiums. She can take an income tax deduction to the extent these expenses exceed 10 percent of her adjusted gross income for all of the expenses EXCEPT:

$12,000 in health insurance premiums

$2,000 in long-term care premiums

$500 in doctors' fees

$1,000 in disability income insurance premiums

Under an insured plan for group health insurance, an insurer takes over the risk of covering member claims and benefits. The employer's premiums are given directly to the insurance company. ABC, Inc. does not want an insured plan, nor does it want to entirely self-fund, either. What can ABC do?

ABC can self-fund part of its plan; the balance can be funded by the state insurance department's self-insured fund.

ABC must choose an insured plan if it does not want to self-fund.

ABC can self-fund part of its plan and cover small claims and benefits; the balance of the plan can be insured.

ABC does not have any other options; if it does not want an insured plan it must self-fund.

A health insurance policy's grace period does which of the following?

The grace period provision allows insurers to cancel a health insurance policy if the premium is paid after the due date.

The grace period provision allows insurers to cancel a health insurance policy if the premium is not paid on the due date.

The grace period provision allows the policyholder more time beyond the due date to pay the premium.

The grace period provision forces the policyholder to pay the premium on the due date.

Laura was injured when she accidentally fell from a ladder. As a result of the accident, she incurred $1,000 in medical bills. Her disability income policy paid for these expenses even though she did not lose any income or have a sustained disability. What must her policy have?

a nondisabling injury provision

a rehabilitation provision

a relation-to-earnings provision

an elimination period

Which of the following is a correct statement about the coordination of benefits provision under group health insurance policies?

A primary insurer is not required to reimburse any other insurer.

A secondary plan can be a primary plan.

The benefits of a plan covering a dependent are determined before those of a plan covering an employee.

No insurer is required to reimburse for any benefit or coverages in excess of those specified in the contract.

Which of the following optional provisions either allows the insurer to reduce benefits or requires the insurer to reduce the premium rate under certain conditions?

the entire contract provision

the other insurance in this insurer provision

the change of occupation provision

the other insurance with other insurer provision

Joanna is retired and paid $1,500 this year in premiums for her long-term care insurance policy. Which statement correctly describes her income tax options?

Joanna may take an income tax deduction for the entire premium paid, regardless of her income level or age.

Joanna may take an income tax deduction only if she is self-employed.

Joanna may take an income tax deduction for the amount of premium that exceeds 7.5 percent of her adjusted gross income.

Joanna may not take an income tax deduction for the premiums she paid.

Agent Jones is meeting with a landscaper who is interested in purchasing an individual disability income policy. Because Agent Jones is unsure whether the prospect will be insurable, he should ask the prospect about all of the following EXCEPT:

whether the prospect's business is located in an industrial area or city

the prospect's medical history

details about the prospect's occupation

the prospect's base earnings

A person who is covered by an individual medical expense insurance plan is considered which of the following?

a participant

an enrollee

a provider

an insured

John has a history of severe leg pain. He applies for disability income coverage. The insurer may add an impairment rider. What usually determines whether a policy will be issued with an impairment rider?

the insurer's medical team

whether the insured will accept the exclusion

the underwriting process

whether the state will allow the policy to be issued with the impairment rider

An employer contributes $500 in premiums annually for each employee under its group medical plan. How much of the contribution is taxable to the employee?

$500

$0

$250

$300

What is a Medicare supplement plan of an insurance company that offers the policy's benefits through a network of doctors, hospitals, and health-care service providers called?

Medicaid

long-term care insurance

tax-qualified long-term care

Medicare SELECT plan

Under an insured plan for group health insurance, an insurer takes over the risk of covering member claims and benefits. The employer's premiums are given directly to the insurance company. ABC, Inc. does not want an insured plan, nor does it want to entirely self-fund, either. What can ABC do?

ABC can self-fund part of its plan; the balance can be funded by the state insurance department's self-insured fund.

ABC must choose an insured plan if it does not want to self-fund.

ABC can self-fund part of its plan and cover small claims and benefits; the balance of the plan can be insured.

ABC does not have any other options; if it does not want an insured plan it must self-fund.

Christina lives in a state without a medical underwriting requirement. What can the insurer do if she applies for an individual health insurance policy?

The insurer can reject her application based on her health status.

The insurer can charge a lower premium based on her health status.

The insurer can charge Christina an additional premium if her health status is substandard.

The insurer must use a single community rate when setting a premium for Christina's policy.

Managed care companies have entered the Medicare services market through the expansion of which of the following?

Medicare supplement policies

Part A

Part B

Part C

Four years ago, Warren filed a claim on his health insurance policy. The claim was paid. Last week, however, the insurer discovered that Warren had misstated information about preexisting conditions on the original application. What can the insurer do?

The insurer can retroactively deny the claim.

The insurer can demand that Warren return the money.

The insurer cannot contest the policy.

The insurer can impose a fine to punish Warren.

An employer with fewer than ten employees applies for a group insurance policy that will provide medical expense benefits. Which of the following statements is correct?

The insurer may require the participants to complete a medical exam or provide evidence of insurability before it will issue a policy.

The insurer can exclude specific members from coverage under the policy.

The plan will be community-rated.

The insurer can charge a specific employee a higher premium if he or she is considered a poor risk.

Paul has a health savings account (HSA) that was set up on a group basis. If Paul changes jobs, what happens to his HSA?

Paul's HSA remains with the employer.

Paul's HSA cannot be moved or converted.

Paul can take the amount he contributed to the plan.

Paul's HSA goes with Paul; it does not remain with the employer.

Which of the following statements best describes Medicaid?

a medical assistance program funded by federal and state taxes to assist low-income people

a welfare program of medical expense insurance funded by state governments only

supplemental medical care insurance attached to accident and health insurance policies

Medicaid insurance is identical to Medicare insurance.

If Tim wants to avoid paying taxes on the interest earned on his AD&D benefits, how should he receive the benefits?

in a lump sum

monthly

quarterly

semi-annually

Which of the following statements about business overhead expense policies is NOT correct?

The premiums are deductible as a business expense.

Benefits paid by a policy are not considered taxable income to the business.

Benefits are normally paid as reimbursements.

They typically have an elimination period of 15 to 60 days.

Under which of the following type(s) of plans does cognitive impairment NOT require substantial assistance from another person to qualify as a benefit trigger?

tax-qualified LTC plans

non-tax-qualified LTC plans

both tax-qualified and non-tax-qualified LTC plans

neither tax-qualified nor non-tax-qualified LTC plans

All of the following incidents of ownership in a disability policy used to fund a buy-sell agreement would cause a taxable event to the insured EXCEPT:

the insured's right to policy proceeds

the insured's right to use policy values as collateral for a loan

the company's right to use policy values as collateral for a loan

the insured's right to surrender the policy

When an insurer issues individual health insurance policies, all of the following factor into the premium rate EXCEPT:

the insurer's interest earnings on investments.

the insurer's reserves.

the insurer's cost of issuing the policy.

the insurer's expenses in administering the policy.

Jonah is covered by a traditional medical expense insurance policy. He must pay each health-care provider for any services rendered, and the insurer then reimburses him for the costs incurred. Which type of payment system is Jonah's plan operating under?

managed care

fee-for-service

reimbursement

prepaid

Which of the following is a characteristic of basic hospital, surgical, and physician policies?

low deductibles

small co-payments

low coinsurance amounts

first-dollar coverage

How does HIPAA protect the owner of a qualified small business with employees?

Employees' privacy is guaranteed.

Insurers must accept the application for group insurance.

special underwriting treatment

mandated discounts on the premium

Abby received $15,000 of benefits this year under her group HMO plan. Which of the following statements is correct?

She is not required to include any part of the benefits in her income.

She must include part of the benefits in her income.

She must include all of the benefits in her income.

She must include the benefits in her income to the extent they exceed a certain percentage of her adjusted gross income.

Which of the following best illustrates what makes a state's long-term care partnership policy different from other long-term care policies?

The insurers that offer partnership policies are more reliable and have better customer service.

A partnership policy holds tax-favored status.

Partnership policies are endorsed by senior advocacy groups.

A partnership is established between the insurer and the insured.

For what groups of people were medical savings accounts (or MSAs), the forerunners of health savings accounts (HSAs), specifically created?

the employers of large numbers of
employees

self-employed people and employees of small employers

sole practitioners only

all employers who have employees

What is the purpose of a disability reducing term insurance policy?

to cover any outstanding loans a business might have if the business owner becomes disabled

to reimburse a business for overhead expenses it incurs if the business owner becomes disabled

to provide funds to a business when a key employee becomes disabled

to provide funds to buy the interest of a business owner if he or she becomes disabled

ABC, Inc. has a group health plan. Which of the following statements about the termination of ABC's group health plan is correct?

Only the insurer can terminate ABC, Inc.'s group health plan.

The insurer must follow the requirements of the federal authorities in canceling ABC, Inc.'s group health plan.

If ABC, Inc. goes out of business, it will likely end its plan. If it moves to an area outside the insurer's area of operation, the plan will no longer be available to ABC's employees.

The insurer is generally required to notify ABC, Inc. of the intent to discontinue the health plan at least 30 days before terminating it.

Your client is enrolled in Medicare Part C. Another common name for Part C is which of the following?

Medigap

Medicare supplement

Medicare Advantage

Medicare+Choice

The time limit on certain defenses limits the time in which an insurer can void a contract or deny a claim for material misrepresentations in the application. What is this period in most states?

one year

two to three years

four years

five to six years

Sal loses his sight in a chemical accident in his garage. His group disability insurance plan pays a regular monthly benefit but does not require proof of ongoing disability. Which of the following policy provisions is guiding
this practice?

statutory disability

partial disability

presumptive disability

residual disability

Which of the following statements is true about the use of an HMO point-of-service plan?

The insured must first seek approval from the primary care physician.

The insured cannot leave the network.

The insured may obtain services outside the network, but the cost will be higher.

The insured pays the same costs whether in or out of the network.

All of the following might receive Medicaid funds directly EXCEPT:

a physician

a heart specialist

a patient in a skilled nursing facility'

a laboratory performing diagnostic testing

Debbie, Lisa, Greta, and Jessica apply for individual health insurance policies. At the end of the underwriting process, the insurer classified them as follows: Debbie as substandard, Lisa as standard, and Jessica as preferred. Greta's application was declined. Which of the following statements is correct?

Debbie's policy will be issued at standard premium rates.

Lisa's policy may be charged an additional premium.

Jessica's policy will be issued with the lowest premium rate.

Greta can submit to another medical exam in order to qualify for a policy with the insurer.

Mr. Jones is covered under Medicare Advantage, which includes a private fee-for-service (PFFS) plan. What does PFFS provide for?

prescription drug and durable equipment charges

ambulance services

payment of traditional Medicare services, plus certain additional services

rehabilitative services

During the underwriting process, ABC Insurers determined that Joel was more likely to file a future disability insurance claim than other applicants. Which action is the insurer not likely to take?

issue the policy at a standard rate

issue the policy at a substandard rate

deny coverage

issue the policy with certain exclusions or a higher premium

Under the Patient Protection and Affordable Care Act, until when are dependent children eligible to be covered under their parent’s group medical insurance policy?

age 19

age 22

age 26

They become married.

If the funds in a health savings account are withdrawn but not used for qualified medical expenses, they are:

forfeited

taxed as income

not taxed

tax deferred

Congress amended the law regarding Medicaid spend-down rules to eliminate what problem?

spousal abuse

spousal participation

spousal impoverishment

spousal abandonment

Ginger is self-employed and operates an accounting business as a sole proprietor. She pays $1,600 each month in premiums for a health insurance policy covering herself and her family. What are the tax consequences?

The premiums are not tax deductible.

Ginger can deduct up to one-half of the premiums paid for her health insurance policy.

Ginger can deduct 100 percent of the premiums paid for her health insurance policy.

Ginger may take an income tax deduction only to the extent the premiums exceed 10 percent of her adjusted gross income.

Besides the elderly, who else receives Medicaid assistance?

illegal aliens who are not eligible for Medicare

middle-income people who are not eligible for Medicare

any American who is not eligible for Medicare

children who are not eligible for Medicare

Underwriter Ulysses is new on the job and wants to make sure he does not engage in any discriminatory practices. He should know that state law prohibits discrimination against a specific group of people in all of the following EXCEPT

determining eligibility.

establishing selection criteria based on statistical records.

identifying coverage exclusions.

setting coverage limits.

The purpose of health insurance is to provide financial protection against the financial risks posed by which of the following?

intentional injury and illness

negligence and illness

accidental injury and illness

death and illness

Which of the following statements about business overhead expense policies is NOT correct?

The premiums are deductible as a business expense.

Benefits paid by a policy are not considered taxable income to the business.

Benefits are normally paid as reimbursements.

They typically have an elimination period of 15 to 60 days.

Tom works for Acme Industries and is covered by its group long-term disability plan. The company pays 80 percent of the premium. Tom pays 20 percent. All of the following statements about taxes on this arrangement are correct, EXCEPT:

Acme Industries can deduct the 80 percent premium it pays.

Tom will not be taxed on the premium the company pays.

Tom will be taxed on the premium the company pays.

Tom cannot deduct his 20 percent premium contributions.

Employer group health plans are prohibited from offering Medicare-covered employees or spouses coverage under a Medicare supplement plan that

discriminates based on age.

pays for services covered by Medicare.

gives preference to one spouse over the other.

is more expensive than Medicare.

Which of the following statements about the Medical Information Bureau (MIB) is CORRECT?

Information obtained by the MIB is available to all physicians.

It is a nonprofit agency that collects medical information about insurance applicants.

It collects medical claims information about insureds and compiles a report based on their claim histories.

It compiles information on people's credit histories, lifestyles, and financial conditions.

How long are benefit periods for short-term disability income policies typically limited to?

6 months or less

12 months or less

18 months or less

two years or less

The fee schedules that managed care plans once used to determine appropriate costs of medical care and services have been largely replaced by which of the following?

resource utility groups

third-party adjusters

the UCR method

surgical unit values

Jan is 60 years old. Her adjusted gross income this year is $50,000. She incurs $8,000 in unreimbursed medical expenses. Jan can deduct expenses that are more than 10 percent of her AGI. How much will Jan be able to deduct this year?

$3,000

$3,750

$1,800

$1,200

Selene just turned 65 and is overwhelmed by the Medicare program. She knows that part of her coverage is provided at no charge and that she will pay for other parts. Which of the following coverages will she have to buy through a private insurer?

Medicare Part A

Medicare Part B

Medicare Advantage

Medicaid

Rachel is diagnosed with high blood pressure, and she does not have health insurance. One month later she finds a job with group health benefits. For how long will her condition be excluded from coverage?

indefinitely

up to but no more than 36 months

up to but no more than 24 months

up to but no more than 12 months .

Although the specific requirements for coverage, eligibility, and benefits vary by state, each state's workers' compensation program offers all of the following, EXCEPT

compensation to a worker's spouse and dependents if the worker is killed in an industrial accident.

employer funding for the plan.employer liability for work-related disabilities a worker may suffer.

state tax deduction of premiums paid by employees.

What are the main sources of information about an applicant for health insurance?

the agent report and application

the application and investigative consumer report

the application and credit reports

the application and attending physician's statement

Which of the following statements correctly describes Medicare Part A hospital insurance?

For Medicare to cover hospitalization costs, they must be within American Medical Association (AMA) guidelines.

Hospitalization for cosmetic surgery is covered.

A benefit period begins on the day a beneficiary is admitted to the hospital.

The benefit period ends 30 days after release from the hospital.

Your client's basic health insurance policy will pay a $10,000 benefit if he were to die in an accident. At the client's death, the policy instead pays a $30,000 benefit. Which type of rider did the policy include?

indemnity rider

double indemnity rider

triple indemnity rider

accidental indemnity rider

An insurer intends to terminate the group health plan of ABC Company. Generally, how much advance notice is required before the termination?

30 days

45 days

60 days

90 days

Which of the following must employer group plans offer enrollees in a group plan when they are over age 65?

lower premiums

Medicare supplement plans

same coverage that is provided to younger
employees

Medicaid

What does Carol's managed care plan refer to her as?

patient

subscriber or participant

insuree

policyowner

Marty is a widower with no surviving family members. He is concerned about how he will pay for custodial or nursing home care if it is ever needed. Which of the following will provide a significant amount of coverage for this type of care?

Medicare supplement insurance

Medicare Advantage

Medicare

long-term care insurance

What type of plan can business owners use to help employees pay for their portion of group insurance coverage and other benefits?

Section 125 cafeteria plan

501(c)(3) plan

401(k) plan

Section 403(b) plan

Kendra is a welder and is covered by a group long-term disability plan. She is injured on the job and receives benefits under that plan. The benefit can be reduced by income that she receives from all of the other sources EXCEPT

workers' compensation

government benefits

other disability insurance

personal savings used for support

Group health insurance is a plan of insurance that an eligible group sponsor, such as an employer, provides for its members. Which of the following statements about eligible group sponsors and group insureds is correct?

The plan sponsor owns the plan and pays its premiums. The individual group members are the insureds.

The plan sponsor owns the plan. The individual group members are the insureds and pay the premiums.

The employer sponsors the plan, the insurer owns it, and the individual insureds pay premiums for their coverage to the employer through payroll deductions.

The plan sponsor is the insurance carrier who owns several group plans and pays the premiums. The group is composed of the employees of those insurance carriers.

Premiums for Medicare Part B and Medicare supplement insurance are tax deductible if, when added to other medical expenses, they exceed how much of a person's adjusted gross income?

2 percent

5 percent

7.5 percent

10 percent

Under most disability income policies, how is partial disability defined?

the inability of a worker to work at his or her own job

the inability of a worker to work at any job for which he or she is reasonably suited

the loss of two or more limbs

a worker's inability to perform some of his or her usual job functions

Carl is in the hospital. In order for Medicare Part A to pay for his hospital services, what must those services be?

for any type of medical treatment, with a benefit period that begins on the day he is admitted to the hospital and ends 30 days after his release

for any type of medical treatment, with a benefit period that begins on the day he is admitted to the hospital and ends 90 days after his release

for any medically necessary treatment, with a benefit period that begins on the day he is admitted to the hospital and ends 120 days after his release

for any medically necessary and reasonable treatment, with a benefit period that begins on the day he is admitted to the hospital and ends 60 days after his release

Which statement about HMOs is NOT correct?

People become members or participants in an HMO by signing a contract to join the organization.

People pay premiums monthly, quarterly, semi-annually, or annually to an HMO.

An HMO's network of providers is limited to a town or city.

The HMO is responsible for the availability, accessibility, quality, and cost of the health care it delivers.

Introduced in the late 1990s, medical savings accounts (MSAs) have since been replaced by which of the following?

POS accounts

flexible spending accounts (FSAs)

health savings accounts (HSAs)

individual retirement accounts (IRAs)

Which of the following must employer group plans offer enrollees in a group plan when they are over age 65?

lower premiums

Medicare supplement plans

same coverage that is provided to younger
employees

Medicaid

Which of the following best describes the IRS rule that applies to deductible medical expenses for persons under age 65?

A person can deduct expenses up to 7.5 percent of his or her adjusted gross income (AGI).

A person can deduct expenses exceeding 10 percent of his or her adjusted gross income (AGI).

A person can deduct expenses exceeding 7.5 percent of his or her adjusted gross income (AGI), and the expenses may be deducted within three years of when they were incurred.

A person can deduct expenses exceeding 75 percent of his or her adjusted gross income (AGI).

George is applying for an individual disability income policy. He has excellent health, does not have risky habits, works in a low-risk job, and has no family history of disability or illness at an early age. George is likely to be classified as which of the following?

a preferred risk

a superior risk

a special risk

a standard risk

If a claim is filed because the insured died, what can the insurer do?

order an autopsy to determine the cause of death

deny the claim if the death was under suspicious circumstances

pay the claim as promised in the contract
require that the deceased's family arrange to
have an autopsy performed to determine the cause of death

Those eligible for family coverage under individual or group medical expense plans are typically all of the people in which of the following examples?

the primary insured, Bob; his wife, Ann; and her brother, Ned

the primary insured, Greg; his wife, Ellen; their son, Vince; and Ellen's children, Dee and Ben, from a previous marriage

the primary insured, Sally; her husband, Paul; and Sally's mother, June

the primary insured, Harry; and his wife-to-be, Fran

Sky Corporation is applying for a new group health insurance plan. During the underwriting process, the insurer looks specifically at Sky Corporation's past claims experience and the makeup of its group. Which rating method is the insurer using?

experience rating

prospective rating

standard rating

community rating

Group long-term disability plans generally provide coverage for which of the following disabilities?

non-occupational disabilities only

occupational disabilities only

both non-occupational and occupational disabilities

sickness-related disabilities only

All of the following are generally considered activities of daily living (ADLs) for purposes of qualifying for long-term care insurance EXCEPT:

eating

dressing

bathing

driving

Which of the following best characterizes how overinsurance affects insurers?

If many insurers are insuring for the same risk, it limits the ability of the insured to seek damages if the claim is ever denied.

If many insurers are insuring for the same risk, the insured will receive duplicate benefits from multiple insureds.

If many insurers are insuring for the same risk, it limits the liability of any one insurer's policy to the proportion of the total benefits it assumes.

If many insurers are insuring for the same risk, the insured may end up receiving no benefits if all insurers cancel the coverage.

Dave has a small business. What kind of insurance can his small business use to provide funds necessary to continue operations if he becomes disabled?

property and casualty insurance

business overhead expense insurance

long-term care insurance

liability insurance

Which of the following is not a power granted to the Kentucky Commissioner of Insurance?

examining insurers and producers

enforcing insurance laws

issuing regulations to administer insurance laws

prosecuting individuals for violating the insurance laws

Blackwell Insurance Company issues an individual health insurance policy to Jaycee. When she reads the policy, Jaycee will find that it contains all of the following information EXCEPT:

amount of premium

date of cancelation

effective date of coverage

amount of benefits payable

Which of the following is not an unfair claims settlement practice if committed by an insurance company in Kentucky?

failing to promptly acknowledge
communications about claims

failing to promptly settle a claim for which liability is uncertain

offering to settle claims for less than due to encourage litigation

raising policy defenses to reduce a claim

Which of the following is a benefit trigger under a long-term care insurance policy?

cognitive impairment

inability to function independently every day

need for medically necessary care

need for skilled nursing care only

Newborn children are automatically covered under an insured’s individual health insurance policy from birth until when?

to the first birthday

to 31 days

to the end of the first calendar year

to the policy renewal date

ABC Insurers directly solicits prospective health insurance applicants in Kentucky. At what point must it give applicants a Notice Regarding Replacement, if a transaction involves replacement?

at the initial meeting

at the time of application

before the policy is issued

at policy delivery

Nadir Insurance instructs its producers to omit certain information from their records of insurance transactions for the previous year. This information would give the Department of Insurance reason to expand any routine examination of Nadir if the Department knew about it. What is true about Nadir’s instructions?

They are permitted.

They are prohibited.

They are advisable.

They are not addressed by Department regulations.

Acme Insurance and Apogee Insurance agree to offer different premium rates for persons of equal risk within a particular class. They also agree to limit benefits paid to insureds within this class if the insureds live in certain counties of Kentucky. What are Acme and Apogee engaging in?

acceptable marketing and underwriting practices

unfair and prohibited business practices
insurance fraud

false advertising

Alex sold an insurance policy before his license lapsed and earned a commission on the sale. Is he entitled to a commission if the policy is renewed?

No, because only one commission can be paid on a policy sale.

No, because he is no longer licensed.

Yes, because his license was not revoked or suspended.

Yes, because he was licensed when the policy was sold.

For the past two years, Helen was covered under ABC Insurance Company’s group health plan. She obtains a new job and enrolls in her new employer’s group health plan with PDQ Insurance. PDQ excludes pre-existing conditions for 12 months. In this case,

PDQ cannot impose a pre-existing condition exclusion.

PDQ can exclude certain pre-existing conditions.

PDQ can exclude pre-existing conditions for up to 12 months.

PDQ can exclude pre-existing conditions for up to 6 months.

Which type of long-term care marketing method fails to disclose that the purpose of the contact is the solicitation of insurance?

twisting

cold lead advertising

high pressure sales tactics

illegal inducement

When collecting personal financial or health information, an insurance company is required to do all of the following EXCEPT

notify individuals about the company’s privacy practices.

describe conditions under which the company may disclose the information to
other parties.

provide methods for individuals to prevent disclosure of the information.

provide individuals with copies of documents disclosed to other parties.