Health Insurance Licensing exam questions and answers 2023/24

Blackout Period Social Security pays a benefit to a surviving spouse left to care for a child under the age of 16. That benefit stops when the child turns 16 and will not resume until the surviving spouse is at least 60. Misstatement of Age or Sex Provision If the insured's age or sex is misstated in an application for insurance, the benefit payable is adjusted to what the premiums paid should have purchased. Change of Occupation Provision This provision is found in health insurance stating if the insured changes to a more hazardous occupation, benefits are reduced; if changing to a less hazardous occupation, premiums are reduced. Fraud An act of deceit; concealment or misrepresentation of material fact. Medicare Supplement Policy Health insurance that provides coverage to fill the gaps on Medicare coverage. Basic Medical Expense Policy Health insurance policy that provides first dollar coverage for specified (and limited) health care, such as hospitalization, surgery, or physician services. Characterized by limited benefit periods and relatively low coverage limits. Own Occupation A definition of total disability. The insured must be unable to work at her own occupation. It is easier for the insured to receive benefits under policies using this definition. Aleatory Insurance premiums will always be unequal to the benefits received. Benefits will usually be larger than the premium. Indemnity Approach Payment based on a predetermined, fixed amount for the medical services provided, regardless of the actual expenses incurred or reimbursement received from other insurance. Preferred, Standard, Substandard, or Decline The four ways risks are classified. Limited Policies Restrict benefits to specified accidents or diseases, such as travel policies, dread disease policies, and so forth. (Ex. HITABCD) Primary Insurance Amount (PIA) Amount equal to a covered worker's full Social Security retirement benefit or disability benefit. Recurrent Disability Provision A disability income policy provision that specifies the period of time during which the reoccurence of a disability is considered a continuation of a prior disability. Peril The reason for the loss (fire, wind, hail, etc.). Skilled Nursing Care Medical care leading to recovery which is received on a daily basis. Open-Panel HMO A network of physicians who work out of their own offices and participate in the HMO on a part-time basis. Medicare Part B Covers physicians and outpatient treatment, subject to a monthly premium, annual deductible, and coinsurance. Accidental Means Provision Accident policies require that claims must result from an accident, rather than an illness. For example, a dismemberment policy will not pay for amputation of a diseased limb. Corridor Deductible In superimposed or comprehensive major medical plans, a deductible amount is not required until the insurer has paid coverage under the base plan. The deductible then creates what looks like a corridor between the base plan and the major medical benefits. COBRA Extends group health coverage to an employee who loses her job for reasons other than gross misconduct. Coverage may also be extended to family members who lose coverage for various reasons such as death or divorce. Any Occupation A definition of total disability. The insured must be unable to perform any job for which he is "reasonably suited by reason of education, training, or experience." It is more difficult for the insured to collect benefits under this definition. Long-Term Care Refers to the broad range of medical and personal services for individuals (often the elderly) who need assistance with daily activities for an extended period of time for chronic illnesses like arthritis, rheumatism, and so forth. Intermediate Nursing Care Medical care leading to recovery which is received on an occasional basis as opposed to intense, daily care. Medicare Part A Hospitalization insurance that provides specified in-hospital and related benefits. Hospital admissions are subject to deductible and possible co-pays. Presumptive Disability Benefit Regardless if the insured is able to work, he is eligible for full disability benefits if he has complete loss of speech, hearing, vision, or the loss of use of two or more limbs. Principal Sum The amount under an AD&D policy that is payable as a death benefit if death is due to an accident. Partial Disability Illness or injury preventing insured from performing at least one or more, but not all, of the insured's occupational duties. National Association of Insurance Commissioners (NAIC) Association of state insurance commissioners active in insurance regulatory problems and in forming and recommending model legislation and requirements. Hazard Any factor that gives rise to a peril; making the situation more dangerous. Custodial Care Health or medical care designed to help an individual perform the activities of daily living. Coverage for this type of care is only provided by long-term care insurance. Respite Care Type of health or medical care designed to provide a short rest period for a caregiver. Elimination Period The period of time an insured must wait before receiving benefits from a disability income policy or a long-term care policy. This is a deductible of time as opposed to an amount of money. Guaranteed Renewable Insurance contract where the insurer may not cancel the contract as long as premiums have been paid. The insurer is only entitled to an increase of premiums if the increase applies to all insureds in the same class. Multiple Employer Trust (MET) Several small groups of individuals that need life and health insurance but do not qualify for true group insurance band together under state trust laws to purchase insurance at a more favorable rate. Probationary Period A period of time between the issuance of a policy and the date coverage begins (sickness is not covered during this time). Residual Disability Benefit While not totally disabled, the policy will pay the insured a portion of his lost income if he is not able to work as much or is forced to work at a job that pays less. Assignment of Benefits The policyowner allows a health care provider to bill the insurer and receive benefits on the policyowner's behalf. Noncancelable Renewal Provision This renewal provision is most favorable to the insured as the insurer cannot cancel coverage (except for nonpayment of premium) nor increase the premium. Stop-Loss Provision Limits the maximum out-of-pocket expense an insured must pay for health care and once this threshold has been met, the health insurance policy covers all expenses for the remainder of the year at 100%. Business Overhead Expense Insurance If a businessowner becomes disabled, this policy will not replace the owner's income, but will instead pay the expenses of operating the business such as rent, utilities, and wages. Insurance Transfers the risk of loss from the insured to the insurer through a legal contract. Experience Rating The method of establishing the premium for a group base on the group's previous claims experience. Proof of Loss A mandatory NAIC provision stating that the insured must submit a completed claim form with documentation of loss to the insurer within 90 days of the date of loss. Preexisting Condition An illness or medical condition that existed before a policy's effective date. Legal Purpose In contract law, the requirement that the object of, or reason for, the contract must be legal. Independent Agency System A system for marketing, selling, and distributing insurance in which independent brokers are not affiliated with any one insurer but represent any number of insurers. Health Insurance A broad description of insurance to offset the cost of accident or illness. May be in the form of reinbursement or indemnity (cash) policies. Deductible Amount of expense or loss to be paid by the insured before a health insurance policy starts paying benefits. It prevents overutilization of insurance benefits by the insured and helps reduce premium cost.