Ch. 19 - Health Insurance Underwriting

Which of the following situations would a medical exam NOT be required for an individual health insurance applicant?

a. applicant was recently hospitalized
b. applicant has not a physical exam in a number of years 
c. applicant's family members have a history of cancer
d. applicant has no prior health insurance

Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible?

a. 0%
b. 50%
c. 75%
d. 100%

Which of these is NOT an underwriting responsibility of an insurance producer?

a. asking relevant questions concerning an applicant's avocations
b. requesting an attending physician's report (APR)
c. ordering an inspection report
d. determining the final rate classification

In what situation could an insurance policy's coverage be modified?

a. applicant is a preferred risk
b. applicant is a substandard risk
c. applicant is a standard risk
d. applicant is uninsurable

How is a community rating used for underwriting purposes?

a. each member of a large group is individually underwritten
b. each individual and group plan in the same geographical area is individually underwritten
c. the same rates are charged for individual and group plans in the same risk category
d. the same rates are charged for individual and group plans in the same geographical area

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

a. accidental
b. individual
c. group
d. employer-raid

When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?

a. producer
b. insurer
c. underwriter
d. fiduciary

What must be given to an accident and health insurance applicant when the producer receives an application and the initial premium?

a. producer's report
b. conditional receipt
c. commission disclosure 
d. good health statement

What is normally the consequence for NOT obtaining certification prior to receiving inpatient medical care?

a. a reduction in benefits
b. a delay in the payment of benefits
c. a cancellation of coverage
d. a taxation of benefits

Field underwriting by a producer

a. is used to reduce costs to the insurer
b. involves conducting a physical examination of the applicant
c. may result in the disclosure of hazardous activities of the applicant
d. is illegal in most states

Which of these noncontributory group plans would a claim likely result in the payment of federal income taxes?

a. accidental death
b. blanket health
c. major medical
d. disability income

When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?

a. insurer is not obligated to take any action
b. insurer is obligated to verify that the agent is in compliance
c. give notice, explain, and allowing opting out
d. provide the proper NAIC paperwork

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that

a. a false statement could lead to loss of coverage
b. premium refunds are not allowed
c. the policy is guaranteed to be issued
d. the premium quoted by the agent is final

Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?

a. HMO
b. Medicare Supplement
c. point-of-service
d. limited benefit

A signed good health statement may be collected by a producer at the time of

a. policy issue
b. application
c. policy delivery
d. physical examination

Lamont has a point-of-service plan is seeking to obtain health services outside the network. What will like be the end result?

a. reduction in care given
b. higher out-of-pocket costs
c. increase in premiums
d. denial of specialized services

Who must sign a rider attached to a health insurance policy in order for it to be valid?

a. producer only
b. insured only
c. insured and producer
d. insurance company underwriter

Which statement is true regarding hospital permission certification for emergency situations?

a. notification is not required for emergency situations
b. insured cannot be admitted without preadmission certification
c. notification is required to be given before insured is admitted to the hospital
d. notification is required to be given after insured to the hospital

Health care costs can be better controlled by utilizing preadmission testing. Preadmission testing can reduce the

a. surgeon's fees
b. prescription drug charges
c. length of hospitalization
d. elimination period

Which of these is NOT considered the responsibility of a producer in the underwriting process?

a. collecting additional medical information if needed
b. promptly sending the completed application to the insurance company
c. forwarding any material personal observations to the insurer
d. selecting the final approval date

K is an agent who takes an application for individual accident and health insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?

a. the date the sales appointment was made
b. the date the application was submitted to the insurance company
c. the date of application
d. the date of the producer delivered the policy, collected the initial premium, and obtained a good health statement from the insured

Which of the following best describes the tax treatment of medical expense policies for the self-employed?

a. 100% of medical expense plan premiums are tax deductible
b. 50% of medical expense plan premiums are tax deductible
c. 7.5% of medical expense plan premiums are tax deductible
d. 0% of medical expense plan premiums are tax deductible

How does an underwriter take into account an applicant's marital status? 

a. when determining if a policy will be issued'
b. when determining if an applicant is insurable
c. when determining who is eligible for dependent coverage
d. when determining if a rating will be placed on a policy

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

a. PPOs
b. Disability income
c. HMOs
d. Major Medical

A producer gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

a. When the policy is issued
b. The date of policy delivery
c. When the conditions of the receipt are met
d. the date the sales appointment was set

Reductions in coverage are one feature of          in health insurance policies. 

a. optional provisions
b. mandatory provisions
c. cost containment
d. the insuring clause

The initial premium for an accident and health insurance policy is typically paid in what way?

a. the applicant mails it to the insurer after the policy has been approved
b. it is typically obtained by the agent and forwarded to the insurer
c. it is typically forwarded to the insurer by the applicant
d. the agent pays it from any commissions received

A disability income insurance policy was recently issued with a rating. What does this mean?

a. policyowner will be charged an additional premium
b. policy will have specific illnesses excluded from coverage
c. policyowner will be charged a reduced premium
d. policy will have a longer waiting period

When does the producer 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

Reductions in coverage are one feature of                   in Health insurance policies.

a. optional provisions
b. mandatory provisions
c. cost containment
d. the insuring clause

The Medical Information Bureau consists of members from which group?

a. doctors 
b. hospitals
c. insurance companies
d. underwriters

Which of these is NOT a factor during the health insurance underwriting process?

a. current residence 
b. physical condition
c. occupation
d. former residence

The disability income policy most likely to have been issued on a substandard basis is

a. non-cancelable with a 60-day elimination period
b. conditionally renewable
c. non-cancelable with a health condition exclusion rider
d. guaranteed renewable with an inflation rider

Which of these is NOT used as selection criteria in the underwriting process of an accident and health insurance application?

a. credit report
b. national origin
c. age of applicant
d. sex of applicant

All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT

a. acquire a statement of good health signature
b. gather the initial premium
c. review policy with applicant
d. leave a conditional receipt with client

An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of the application?

a. binding receipt
b. good health statement
c. agent's report
d. MIB disclosure

Which of the following is NOT a basic underwriting action for accident and health insurance?

a. excluding a particular health condition from coverage
b. removing uniform policy provisions
c. declining applications
d. issuing a policy at standard issue

What does the term "field underwriting" refer to in the health insurance industry?

a. a producer's contact 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

After a health insurance application has been originated, the producer normally

a. can change the policy provisions
b. determines whether a claim will be paid
c. is the major personal contact to the insured
d. conducts a physical examination

Which of the following statements regarding hospital pre-admission authorization is NOT true?

a. no delays for emergency treatment
b. it encourages weekend admission
c. non-emergency situations require notification to the insurance company
d. other types of treatment may be encouraged

Which of the following are used by most insurers when determining the premiums for large groups?

a. large number rating
b. group rating
c. area rating
d. experience rating

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 applicant for accident and health insurance has a risk factor that is similar to a majority of the insurer's other applicants. What will be the likely outcome of this applicant?

a. issued with a below-standard premium rate
b. issued with a standard premium rate
c. issued with an above-standard premium rate
d. declined coverage

What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?

a. no pre-existing condition exclusions
b. higher employee retention
c. containment of the employer's premium cost
d. increase in surgical procedures

An attending physician's statement is best described as

a. an MIB report
b. a physician's report from an insurance exam
c. medical information on the application
d. a summary of medical history from the physician listed on the application

When a health insurance policy includes a Mandatory Second Surgical Opinion provision, the insured must

a. cover the cost of the second opinion
b. seek a second opinion for all surgeries
c. seek a second opinion for specified elective surgeries
d. seek a second opinion for emergency surgery

In accident and health insurance, field underwriting is very important because of

a. the protection given to the producer's commission
b. the opportunity to charge a higher premium
c. inflation
d. the risk of a moral hazard

Julie is an employee with a group health plan that contain the Mandatory Second Surgical Opinion provision. What is to be expected with this provision in place?

a. Mandatory second surgical opinions are required when emergency surgery is needed
b. The second surgical opinion must always be accepted by the insured
c. Out-of-pocket expenses are higher when a second surgical opinion is obtained as opposed to having only one
d. Out-of-pocket expenses are lower when a second surgical opinion is obtained as opposed to having only one

Which pf the following best describes a point-of-service (POS) plan?

a. a plan which combines medical health care with long-term care coverage
b. a plan which combines indemnity plan features with those of an HMO
c. a plan which does not allow treatment with non-network providers
d. a plan which operates like a PPO plan without a gatekeeper

Which of these is a typical result of a concurrent review?

a. the deductible amount is increased
b. the length of time spent in the hospital is monitored
c. the insured's premiums usually increase
d. the coinsurance is waived

An applicant submits an accident and health insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?

a. applicant can determine which items in the report to leave out
b. insurer can obtain a copy of the heart without the applicant's knowledge
c. fee for the report is typically paid by the applicant
d. applicant has a right to receive a copy of the 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

A health insurance underwriter will most likely view alcohol abuse as a(n)

a. decreased exposure to risk
b. increased exposure to risk
c. condition which cannot be taken into account
d. condition which results in an automatic rejection for coverage

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

What is a Pap test designed to detect?

a. cervical cancer
b. prostate cancer
c. oral cancer
d. breast cancer

In what situation would disability income insurance premiums be a deductible expense?

a. partnership paying for group disability income coverage for the partners
b. corporation paying for group disability income coverage for its employees
c. individual paying for his/her own individual disability policy
d. parent paying for a child's individual disability policy

Tim is in need of surgery. Before being hospitalized, he is referred to an outpatient clinic for diagnostic tests. What is this an example of?

a. pre-admission testing
b. capitation
c. mandatory second opinion
d. concurrent review

A health insurance applicants is notified that a physical examination is required. Which of the following statements is correct?

a. physical examinations are performed at the expense of the applicant
b. physical examinations are performed at the expense of the insurer
c. all applicants for group health insurance require a physical examination
d. all applicants for health insurance do not require a physical examination

Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be?

a. He may be reimbursed for the surgical procedure at a reduced benefit level 
b.He may be reimbursed for the surgical procedure at a higher benefit level 
c. He will have to start paying higher premiums starting with the next billing cycle
d. He will be ineligible to receive any benefits for this procedure