LIFE AND HEALTH INSURANCE -
FINAL EXAM 2024 GRADED A
SOLUTIONS
Basic Medical Expense policies - Provide coverage for Hospital, Surgical and Physicians
Medical Expense.
-Purchased as an individual or group policy.
-provide first dollar coverage (no deductibles).
-limited benefit periods and low coverage limits.
Major Medical Expense Policy - -A supplement (in addition) to Basic Medical or as a stand-
alone policy.
-individual or group policy.
-Take over when the Basic Policy runs out
Hospital Expenses - -Pay for covered expenses incurred during a hospital stay.
1. Daily hospital benefit - Room and Board
2. Miscellaneous expenses - Other Medical Expenses (X-Rays, MRI, Prescriptions, Doctor
Visits)
Daily Hospital Benefit - -Cost of a hospital room, up to a daily $ limit. The limit may be
expressed either as a dollar amount, e.g. $500 per day, or it may be expressed as the Usual,
Customary and Reasonable (UCR) and Charge
Usual, Customary and Reasonable (UCR) - Insurance company will pay an amount for a given
procedure based upon the average charge for that procedure in that specific geographic area. The
coverage is subject to a maximum amount or number of days.
Benefit Schedule - -Specifically states what is covered in the plan and for how much. The
coverage is subject to a maximum amount or number of days.
Indemnity - Insured pays the bill and is reimbursed by the insurance company up to a specified
limit amount. Medical expense policies that pay a fixed rate provide the insured with a stated
benefit amount for each day of hospital confinement.
Reimbursement - Policyowners obtain medical treatment from whatever source they want and
submit their charges to their insurer for reimbursement (actual amount).
Service Based Contracts - -Pay doctors and hospitals directly according to the # of days of
coverage that is provided in the contract for each event and are prepayment plans. Once a claim
is settled, the insured will receive an Explanation of Benefit (EOB), which is a written
,confirmation that the claim was paid. Blue Cross and Blue Shield, Health Service Corporations
and Medicare coverage are all provided on a Service Basis.
Miscellaneous Expense Benefits - -Secondary benefits (inside benefits) because they occur
inside the hospital for charges related to the stay. X-rays, prescriptions, MRI's, anesthesia and lab
fees are usually separate fees incurred during a stay. Miscellaneous Expense Benefits have
separate limits, referred to as Inside Limits. The are expressed usually as a multiple of the daily
amount (UCR)
Surgical Expense - A schedule of procedures lists the amount allowable for each procedure. If a
surgical procedure is not found in the schedule, it will still be payable. The amount payable for a
procedure not listed is based on its relative value to a procedure of similar difficulty. There are
usually no deductibles.
Surgical Schedule - Is simply a price list. Each procedure is listed and a dollar amount assigned
and if a procedure is not listed in the schedule it is still paid.
Relative Value - scientific method of paying different benefits based on the region of the country
an insured lives. It is based on assigning a value to each procedure and using a conversion factor.
A schedule of assigned points for each procedure must be included in the policy.
Physicians Medical Expense - Pays for visits to the doctor (office hospital) plus post operation
care. There may be a per-visit benefit, or the coverage is based on UCR.
-May or may not be a deductible . This policy is usually written as an indemnity plan and has
first dollar coverage (no deductible).
-usually written as an indemnity plan and has first dollar coverage
Major Medical Expense - -Cover "catastrophic" or huge loss. A Catastrophic loss is defined as
whenever Basic coverage runs out and not a specific dollar amount.
-High Maximum Limits ($2,000,000)
-Deductibles (per person or per family ea yr))
-Co- insurance (Usually 80/20%)
-Stop Loss
-Miscellaneous Expense Benefits - x-rays, MRI, lab tests, etc.
Coinsurance - - Once the deductible is met the insured and the insurance company share in the
expenses in what is called coinsurance. It is written as 80/20, 70/30, etc. Also called percentage
participation requirement.
Flat Deductible - -Portion of medical expenses that are paid by the insured each year before
benefits start. The higher the deductible the lower the annual premium will be.
-If a medical incident occurs in the last three months of any plan year and the annual deductible
has met the yearly requirement then the medical treatment for that incident only would be
covered in the new plan year. Thus a "carryover" into the next year of the paid deductible has
occurred.
, Per Cause Deductible - A separate deductible for each separate illness or accident.
Stop Loss - Max amount the insured is required to pay out of pocket: After the stop loss amount
is reached by the insured, in a calendar year, the company will pay 100% of the remaining
covered expenses.
-calculated by adding both deductibles and coinsurance amounts.
Comprehensive major medical - Major Medical and Basic Medical are written together.
Corridor deductible - Occurs in the middle of the hospital stay, and bridges the gap from the
basic to the major medical plan.
Pre-Existing Condition - -To Prevent avoid adverse selection.
-A is a medical condition for which an insured sought medical attention, treatment, or advice for
symptoms or for which should have sought medical advice/treatment in the previous 6 months.
-For individual policies, the exclusion can not exceed 24 months, for group policies 12 months,
and for late enrollees in group plans, 18 months.
Exclusions found in Basic and Major Medical - -Injuries due to war or military conflict
-Elective cosmetic surgery
-Routine Dental Care
-Eye Exams & Glasses Treatment in a Veterans Hospital or other Gov Facility
-Workers Compensation Accidents
-Claims Occurring Outside the U.S.
-Intentionally Self-Inflicted Injury
Limited Coverage - Specified Coverage policies, or Limited Coverage, are insurance policies
that limit coverage to one illness or one limiting group of coverage.
Dread Dieses (Limited Risk) - Policies provide a variety of benefits for a specific disease such as
a cancer policy or a heart disease policy. Benefits are usually paid as a scheduled amount of
indemnity for specified events or medical procedures, such as hospital confinement or
chemotherapy.
Critical Illness Plans - -Pays a lump sum to the insured upon the diagnosis (& survival) of a
critical illness. The insured must survive the illness for a certain time period (Ex 30 days).
Hospital Indemnity - -Provides a specific amount on a daily, weekly or monthly basis while the
insured is confined to a hospital. The benefit payments are sent directly to the insured and can be
used for any purpose.
Travel Insurance - Covers most kinds of travel accidents, but only for a specified period of time.
Workers Compensation - A benefit required by the state and benefits will vary to some degree
from state to state. This coverage is made available through government programs, private
FINAL EXAM 2024 GRADED A
SOLUTIONS
Basic Medical Expense policies - Provide coverage for Hospital, Surgical and Physicians
Medical Expense.
-Purchased as an individual or group policy.
-provide first dollar coverage (no deductibles).
-limited benefit periods and low coverage limits.
Major Medical Expense Policy - -A supplement (in addition) to Basic Medical or as a stand-
alone policy.
-individual or group policy.
-Take over when the Basic Policy runs out
Hospital Expenses - -Pay for covered expenses incurred during a hospital stay.
1. Daily hospital benefit - Room and Board
2. Miscellaneous expenses - Other Medical Expenses (X-Rays, MRI, Prescriptions, Doctor
Visits)
Daily Hospital Benefit - -Cost of a hospital room, up to a daily $ limit. The limit may be
expressed either as a dollar amount, e.g. $500 per day, or it may be expressed as the Usual,
Customary and Reasonable (UCR) and Charge
Usual, Customary and Reasonable (UCR) - Insurance company will pay an amount for a given
procedure based upon the average charge for that procedure in that specific geographic area. The
coverage is subject to a maximum amount or number of days.
Benefit Schedule - -Specifically states what is covered in the plan and for how much. The
coverage is subject to a maximum amount or number of days.
Indemnity - Insured pays the bill and is reimbursed by the insurance company up to a specified
limit amount. Medical expense policies that pay a fixed rate provide the insured with a stated
benefit amount for each day of hospital confinement.
Reimbursement - Policyowners obtain medical treatment from whatever source they want and
submit their charges to their insurer for reimbursement (actual amount).
Service Based Contracts - -Pay doctors and hospitals directly according to the # of days of
coverage that is provided in the contract for each event and are prepayment plans. Once a claim
is settled, the insured will receive an Explanation of Benefit (EOB), which is a written
,confirmation that the claim was paid. Blue Cross and Blue Shield, Health Service Corporations
and Medicare coverage are all provided on a Service Basis.
Miscellaneous Expense Benefits - -Secondary benefits (inside benefits) because they occur
inside the hospital for charges related to the stay. X-rays, prescriptions, MRI's, anesthesia and lab
fees are usually separate fees incurred during a stay. Miscellaneous Expense Benefits have
separate limits, referred to as Inside Limits. The are expressed usually as a multiple of the daily
amount (UCR)
Surgical Expense - A schedule of procedures lists the amount allowable for each procedure. If a
surgical procedure is not found in the schedule, it will still be payable. The amount payable for a
procedure not listed is based on its relative value to a procedure of similar difficulty. There are
usually no deductibles.
Surgical Schedule - Is simply a price list. Each procedure is listed and a dollar amount assigned
and if a procedure is not listed in the schedule it is still paid.
Relative Value - scientific method of paying different benefits based on the region of the country
an insured lives. It is based on assigning a value to each procedure and using a conversion factor.
A schedule of assigned points for each procedure must be included in the policy.
Physicians Medical Expense - Pays for visits to the doctor (office hospital) plus post operation
care. There may be a per-visit benefit, or the coverage is based on UCR.
-May or may not be a deductible . This policy is usually written as an indemnity plan and has
first dollar coverage (no deductible).
-usually written as an indemnity plan and has first dollar coverage
Major Medical Expense - -Cover "catastrophic" or huge loss. A Catastrophic loss is defined as
whenever Basic coverage runs out and not a specific dollar amount.
-High Maximum Limits ($2,000,000)
-Deductibles (per person or per family ea yr))
-Co- insurance (Usually 80/20%)
-Stop Loss
-Miscellaneous Expense Benefits - x-rays, MRI, lab tests, etc.
Coinsurance - - Once the deductible is met the insured and the insurance company share in the
expenses in what is called coinsurance. It is written as 80/20, 70/30, etc. Also called percentage
participation requirement.
Flat Deductible - -Portion of medical expenses that are paid by the insured each year before
benefits start. The higher the deductible the lower the annual premium will be.
-If a medical incident occurs in the last three months of any plan year and the annual deductible
has met the yearly requirement then the medical treatment for that incident only would be
covered in the new plan year. Thus a "carryover" into the next year of the paid deductible has
occurred.
, Per Cause Deductible - A separate deductible for each separate illness or accident.
Stop Loss - Max amount the insured is required to pay out of pocket: After the stop loss amount
is reached by the insured, in a calendar year, the company will pay 100% of the remaining
covered expenses.
-calculated by adding both deductibles and coinsurance amounts.
Comprehensive major medical - Major Medical and Basic Medical are written together.
Corridor deductible - Occurs in the middle of the hospital stay, and bridges the gap from the
basic to the major medical plan.
Pre-Existing Condition - -To Prevent avoid adverse selection.
-A is a medical condition for which an insured sought medical attention, treatment, or advice for
symptoms or for which should have sought medical advice/treatment in the previous 6 months.
-For individual policies, the exclusion can not exceed 24 months, for group policies 12 months,
and for late enrollees in group plans, 18 months.
Exclusions found in Basic and Major Medical - -Injuries due to war or military conflict
-Elective cosmetic surgery
-Routine Dental Care
-Eye Exams & Glasses Treatment in a Veterans Hospital or other Gov Facility
-Workers Compensation Accidents
-Claims Occurring Outside the U.S.
-Intentionally Self-Inflicted Injury
Limited Coverage - Specified Coverage policies, or Limited Coverage, are insurance policies
that limit coverage to one illness or one limiting group of coverage.
Dread Dieses (Limited Risk) - Policies provide a variety of benefits for a specific disease such as
a cancer policy or a heart disease policy. Benefits are usually paid as a scheduled amount of
indemnity for specified events or medical procedures, such as hospital confinement or
chemotherapy.
Critical Illness Plans - -Pays a lump sum to the insured upon the diagnosis (& survival) of a
critical illness. The insured must survive the illness for a certain time period (Ex 30 days).
Hospital Indemnity - -Provides a specific amount on a daily, weekly or monthly basis while the
insured is confined to a hospital. The benefit payments are sent directly to the insured and can be
used for any purpose.
Travel Insurance - Covers most kinds of travel accidents, but only for a specified period of time.
Workers Compensation - A benefit required by the state and benefits will vary to some degree
from state to state. This coverage is made available through government programs, private
