Page 1 of 32
LIFE & HEALTH INSURANCE EXAM PREP PRACTICE
QUESTIONS AND ANSWERS
>> Basic Medical Expense policies
- correct answers-
Provide coverage for Hospital, Surgical and Physicians Medical Expense.
-Purchased as a individual or group policy.
-provide first dollar coverage (no deductibles).
-limited benefit periods and low coverage limits.
>> Major Medical Expense Policy
- correct answers-
-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
- correct answers-
-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
- correct answers-
-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
, Page 2 of 32
>> Usual, Customary and Reasonable (UCR)
- correct answers-
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
- correct answers-
-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
- correct answers-
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
- correct answers-
Policyowners obtain medical treatment from whatever source they want and submit their
charges to their insurer for reimbursement (actual amount).
>> Service Based Contracts
- correct answers-
-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
- correct answers-
, Page 3 of 32
-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
- correct answers-
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
- correct answers-
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
- correct answers-
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
- correct answers-
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
, Page 4 of 32
>> Major Medical Expense
- correct answers-
-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
- correct answers-
- 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
- correct answers-
-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
- correct answers-
A separate deductible for each separate illness or accident.
>> Stop Loss
- correct answers-
LIFE & HEALTH INSURANCE EXAM PREP PRACTICE
QUESTIONS AND ANSWERS
>> Basic Medical Expense policies
- correct answers-
Provide coverage for Hospital, Surgical and Physicians Medical Expense.
-Purchased as a individual or group policy.
-provide first dollar coverage (no deductibles).
-limited benefit periods and low coverage limits.
>> Major Medical Expense Policy
- correct answers-
-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
- correct answers-
-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
- correct answers-
-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
, Page 2 of 32
>> Usual, Customary and Reasonable (UCR)
- correct answers-
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
- correct answers-
-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
- correct answers-
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
- correct answers-
Policyowners obtain medical treatment from whatever source they want and submit their
charges to their insurer for reimbursement (actual amount).
>> Service Based Contracts
- correct answers-
-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
- correct answers-
, Page 3 of 32
-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
- correct answers-
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
- correct answers-
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
- correct answers-
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
- correct answers-
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
, Page 4 of 32
>> Major Medical Expense
- correct answers-
-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
- correct answers-
- 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
- correct answers-
-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
- correct answers-
A separate deductible for each separate illness or accident.
>> Stop Loss
- correct answers-
