1. Contracts that are prepared by
one party and submitted to the other party on a "take it or leave it"
basis are classified as
B Unilateral contracts.
C Aleatory contracts.
D Binding contracts.
- Insurance policies are written by
- the insurer and submitted to the insured on a "take it or leave it"
- basis. The insured does not have any input into the contract, but simply
- adheres to the contract.
Insurable interest can be best described by which of the following?
- A It is not necessary for the
- insured to be aware of the insurable interest or give permission for the insurance
- that is to be written
- The applicant must experience a financial loss due to an accident or sickness
- that befalls the insured.
- C The insured must be genuinely
- interested in the life of the applicant.
- D All beneficiaries need to have
- notification of their status.
- Insurable interest means that the
- applicant must experience a financial loss when the insured is hurt or sick.
- Insurable interest is only needed by the applicant and only at the time of
3. When a client is considering
replacing existing health insurance, all of the following would be areas of
A Waivers for impairments.
C Time limit on certain defenses.
D Pre-existing conditions.
- When a new health insurance policy
- is issued, the insurer may contest statements on the application for 2 years.
- Also, certain claims could be denied because of waivers for impairments or
- pre-existing conditions provisions in the policy. Reciprocity refers to writing
- insurance across state lines.
Which of the following would be an
example of a limited accident and health insurance policy?
A A long-term care policy
C An automobile liability policy
D A Medicare policy
- Limited risk policies cover specific
- illness or accidents.
This arrangement specifies who will
purchase a disabled partner’s interest in the event he or she becomes disabled.
A Business overhead expense
B Key-person insurance
C Employee benefit plan
- Incorrect! The disability buyout agreement
- specifies who will purchase a disabled partner's interest and legally obligates
- that person or party to purchase such interest upon disability.
6. Which of the following LTC
Coverages would NOT encourage an insured to receive care at home?
A Respite Care
B Home Health Care
C Adult Day Care
- Respite care, home health care, and
- adult day care are all coverages used to reduce the necessity of admission into
- a care facility.
7. Which statement accurately
describes group disability income insurance?
A There are no participation
requirements for employees.
B Short-term plans provide benefits
for up to 1 year.
The extent of benefits offered is determined by the insured’s income.
D In long-term plans, monthly
benefits are limited to 75% of the insured’s income.
- Group plans usually specify the
- benefits based on a percentage of the worker’s income. Short-term group plans
- usually provide maximum benefit periods of 13 to 26 weeks. Group long-term
- plans provide monthly benefits usually limited to 60% of the individual’s
- income. Group disability plans also have minimum participation requirements -
- usually the employee must have worked for 30 to 90 days before they become eligible
- for coverage.
8. Long term care coverage may be
sold in all of the various ways EXCEPT
A Endorsement to life policy.
Endorsement to health policy.
C Group long term care.
D Individual long term care.
- Long-term care insurance policies
- may be purchased on an individual or group basis, or as an endorsement to a
- life insurance policy.
9. After a person's employment is
terminated, it is possible to obtain individual health insurance after losing
the group health coverage provided by the employer. Which of the following is
A The employee can convert from
group to individual insurance within 31 days of termination.
B The premium of the individual
health insurance policy can be higher than the original policy.
By law, the new, individual policy must provide the same benefits as the group
D Continuation of group coverage
need not include dental, vision, or prescription drug benefits.
- Terminated employees have 31 days to
- convert to an individual health insurance policy, without having to provide
- proof of insurability. The insurer can adjust the new, individual health
- policy’s premium as it sees fit, as long as coverage is provided. The new
- policy could offer lesser benefits than the original group health policy.
10. All of the following are correct
about the cancellation of an individual health policy EXCEPT
X Unearned premiums are retained by the insurance company.
B Cancellation is on a
"short-rate" basis if insured cancels.
C Claims incurred before
cancellation must be honored.
D An insurance company may cancel
upon meeting statutory requirements.
- Any unearned premium must be
- returned to the policyholder. If the insured requests cancellation, the
- unearned premium will be returned on a "short rate" basis. If the
- insurer cancels, the unearned premium will be returned on a 'pro rata' basis.
11. Teresa pays a monthly premium of
$100 for her health insurance. What would be the duration of the grace period
under her policy?
A 60 days
B 7 days
X 10 days
D 31 days
- The grace period is seven days if
- paid weekly, 10 days if paid monthly, 31 days for all other modes.