LIFE AND HEALTH
INSURANCE EXAM 1 2025
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
,Basic Medical Expense Policies
1. Basic Medical Expense policies
o Provide coverage for Hospital, Surgical and Physicians Medical Expense.
o Purchased as an individual or group policy.
o Provide first dollar coverage (no deductibles).
o Limited benefit periods and low coverage limits.
Major Medical Expense Policy
2. Major Medical Expense Policy
o A supplement (in addition) to Basic Medical or as a stand-alone policy.
o Individual or group policy.
o Takes over when the Basic Policy runs out.
Hospital Expenses
3. Hospital Expenses
o Pay for covered expenses incurred during a hospital stay.
o 3.1 Daily hospital benefit - Room and Board.
o 3.2 Miscellaneous expenses - Other Medical Expenses (X-Rays, MRI,
Prescriptions, Doctor Visits).
Daily Hospital Benefit
4. Daily Hospital Benefit
o Cost of a hospital room, up to a daily dollar 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) Charge.
Usual, Customary and Reasonable (UCR)
5. Usual, Customary and Reasonable (UCR)
o 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
6. Benefit Schedule
, o 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
7. Indemnity
o 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
8. Reimbursement
o Policyowners obtain medical treatment from whatever source they want
and submit their charges to their insurer for reimbursement (actual
amount).
Service Based Contracts
9. Service Based Contracts
o Pay doctors and hospitals directly according to the number 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 Benefits (EOB), which is a written confirmation that the
claim was paid.
o Examples: Blue Cross and Blue Shield, Health Service Corporations, and
Medicare coverage are all provided on a Service Basis.
Miscellaneous Expense Benefits
10. Miscellaneous Expense Benefits
o Secondary benefits (inside benefits) because they occur inside the
hospital for charges related to the stay. X-rays, prescriptions, MRIs,
anesthesia, and lab fees are usually separate fees incurred during a stay.
Miscellaneous Expense Benefits have separate limits, referred to as
Inside Limits, usually expressed as a multiple of the daily UCR amount.
Surgical Expense
11. Surgical Expense
o 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
12. Surgical Schedule
o Is simply a price list. Each procedure is listed with a dollar amount
assigned, and if a procedure is not listed in the schedule, it is still paid.
Relative Value
13. Relative Value
o A 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
14. Physicians Medical Expense
o Pays for visits to the doctor (office or hospital) plus post-operation care.
o May have per-visit benefits or coverage based on UCR.
o May or may not have a deductible. This policy is usually written as an
indemnity plan and has first dollar coverage.
Major Medical Expense
15. Major Medical Expense
o Cover "catastrophic" or huge losses. A catastrophic loss is defined as
whenever the Basic coverage runs out, not a specific dollar amount.
o High Maximum Limits (e.g., $2,000,000).
o Deductibles (per person or per family each year).
o Coinsurance (Usually 80/20%).
o Stop Loss.
o Miscellaneous Expense Benefits - X-rays, MRI, lab tests, etc.
Coinsurance
16. Coinsurance
INSURANCE EXAM 1 2025
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
,Basic Medical Expense Policies
1. Basic Medical Expense policies
o Provide coverage for Hospital, Surgical and Physicians Medical Expense.
o Purchased as an individual or group policy.
o Provide first dollar coverage (no deductibles).
o Limited benefit periods and low coverage limits.
Major Medical Expense Policy
2. Major Medical Expense Policy
o A supplement (in addition) to Basic Medical or as a stand-alone policy.
o Individual or group policy.
o Takes over when the Basic Policy runs out.
Hospital Expenses
3. Hospital Expenses
o Pay for covered expenses incurred during a hospital stay.
o 3.1 Daily hospital benefit - Room and Board.
o 3.2 Miscellaneous expenses - Other Medical Expenses (X-Rays, MRI,
Prescriptions, Doctor Visits).
Daily Hospital Benefit
4. Daily Hospital Benefit
o Cost of a hospital room, up to a daily dollar 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) Charge.
Usual, Customary and Reasonable (UCR)
5. Usual, Customary and Reasonable (UCR)
o 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
6. Benefit Schedule
, o 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
7. Indemnity
o 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
8. Reimbursement
o Policyowners obtain medical treatment from whatever source they want
and submit their charges to their insurer for reimbursement (actual
amount).
Service Based Contracts
9. Service Based Contracts
o Pay doctors and hospitals directly according to the number 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 Benefits (EOB), which is a written confirmation that the
claim was paid.
o Examples: Blue Cross and Blue Shield, Health Service Corporations, and
Medicare coverage are all provided on a Service Basis.
Miscellaneous Expense Benefits
10. Miscellaneous Expense Benefits
o Secondary benefits (inside benefits) because they occur inside the
hospital for charges related to the stay. X-rays, prescriptions, MRIs,
anesthesia, and lab fees are usually separate fees incurred during a stay.
Miscellaneous Expense Benefits have separate limits, referred to as
Inside Limits, usually expressed as a multiple of the daily UCR amount.
Surgical Expense
11. Surgical Expense
o 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
12. Surgical Schedule
o Is simply a price list. Each procedure is listed with a dollar amount
assigned, and if a procedure is not listed in the schedule, it is still paid.
Relative Value
13. Relative Value
o A 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
14. Physicians Medical Expense
o Pays for visits to the doctor (office or hospital) plus post-operation care.
o May have per-visit benefits or coverage based on UCR.
o May or may not have a deductible. This policy is usually written as an
indemnity plan and has first dollar coverage.
Major Medical Expense
15. Major Medical Expense
o Cover "catastrophic" or huge losses. A catastrophic loss is defined as
whenever the Basic coverage runs out, not a specific dollar amount.
o High Maximum Limits (e.g., $2,000,000).
o Deductibles (per person or per family each year).
o Coinsurance (Usually 80/20%).
o Stop Loss.
o Miscellaneous Expense Benefits - X-rays, MRI, lab tests, etc.
Coinsurance
16. Coinsurance
