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MASSACHUSETTS HEALTH & ACCIDENT
INSURANCE EXAM BANK – COMPLETE
PRACTICE QUESTIONS WITH VERIFIED
ANSWERS & EXPLANATIONS 2025/2026
Hazard-correct-answer-Situation that increases chance of loss
Annuity-correct-answer-Policy issued by an insurance company to promise you an
income that can last you a lifetime
Insurer-correct-answer-An insurance company
Insured-correct-answer-A person or business covered by an insurance policy
Health Insurance-correct-answer-Broad field of insurance plans that provide
protection against financial consequences of illness, accidents, injury, and
disability
- Paid on a year-to-year basis
- Subject to periodic premium increases
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- Benefits not fixed
Medical Expense Insurance-correct-answer-Pays benefits for nonsurgical doctors'
fees commonly rendered in a hospital; sometimes pays for home and officecalls
Disability Income Insurance-correct-answer-Provide a replacement income when
wages are lost due to disability; based on education, training, experience
- income creates limits
- monthly income payments
- highest premium = 14 day waiting period w/ 10 year benefit
- ceiling amount
Accidental Death and Dismemberment Insurance (AD&D)-correct-answer-
Provides the insured with a lump-sum benefit amount in the event of accidental
death or dismemberment under accidental circumstances
Interim Coverages-correct-answer-Term insurance for a period of months or less
by special agreement of the company; it permits a permanent policy to become
effective at a selected future date.
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Interim-correct-answer-the intervening time
Subrogation-correct-answer-the right for an insurer to pursue a third party that
caused an insurance loss to the insured
Business Continuation Plans-correct-answer-continue the operation of the
business in the event of a disabling sickness to a business owner or key employee
Employee Benefit Plans-correct-answer-- help employee in event of disabling
sickness or injury
- rare to not include provision of health insurance/benefits
- contributes to morale and productivity of employee
- provides needed benefits (helps hold down demands for wage increases)
- gives employer tax deductions
- enhances employer image
Business Overhead Expense Insurance-correct-answer-- sold individually
- designed to reimburse business for overhead expenses in the event a business
owner becomes disabled (day to day operations)
- does not include compensation for disabled owner
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- premiums are tax-deductible as insurance expense
- benefits are taxable income
Disability Buy-Sell Plan/Disability Buy-Outs-correct-answer-An agreement
between business co-owners that provides that shares owned by any one of them
who becomes disabled shall be sold to and purchased by the other co-owners or
by the business using funds from disability income insurance.
- legal binding agreement funded with disability income policy
- pay benefits in periodic payments
- buy-out plan contains provision allowing for a lump-sum payment of the benefit
- benefits tax-free
- premiums not tax deductible
- lengthy elimination periods (2+ yrs)
Key Person Disability Insurance-correct-answer-- pays monthly benefit to a
business for additional help or outside services when an essential person is
disabled
- key persons economic value to a business is determined by potential loss of
business income that could occur (hiring price)
- business = owner and premium payer of policy
- benefits tax-free
- premiums not tax deductible
- policies reserved for "hard to replace" employees or key sales members
MASSACHUSETTS HEALTH & ACCIDENT
INSURANCE EXAM BANK – COMPLETE
PRACTICE QUESTIONS WITH VERIFIED
ANSWERS & EXPLANATIONS 2025/2026
Hazard-correct-answer-Situation that increases chance of loss
Annuity-correct-answer-Policy issued by an insurance company to promise you an
income that can last you a lifetime
Insurer-correct-answer-An insurance company
Insured-correct-answer-A person or business covered by an insurance policy
Health Insurance-correct-answer-Broad field of insurance plans that provide
protection against financial consequences of illness, accidents, injury, and
disability
- Paid on a year-to-year basis
- Subject to periodic premium increases
,2|Page
- Benefits not fixed
Medical Expense Insurance-correct-answer-Pays benefits for nonsurgical doctors'
fees commonly rendered in a hospital; sometimes pays for home and officecalls
Disability Income Insurance-correct-answer-Provide a replacement income when
wages are lost due to disability; based on education, training, experience
- income creates limits
- monthly income payments
- highest premium = 14 day waiting period w/ 10 year benefit
- ceiling amount
Accidental Death and Dismemberment Insurance (AD&D)-correct-answer-
Provides the insured with a lump-sum benefit amount in the event of accidental
death or dismemberment under accidental circumstances
Interim Coverages-correct-answer-Term insurance for a period of months or less
by special agreement of the company; it permits a permanent policy to become
effective at a selected future date.
,3|Page
Interim-correct-answer-the intervening time
Subrogation-correct-answer-the right for an insurer to pursue a third party that
caused an insurance loss to the insured
Business Continuation Plans-correct-answer-continue the operation of the
business in the event of a disabling sickness to a business owner or key employee
Employee Benefit Plans-correct-answer-- help employee in event of disabling
sickness or injury
- rare to not include provision of health insurance/benefits
- contributes to morale and productivity of employee
- provides needed benefits (helps hold down demands for wage increases)
- gives employer tax deductions
- enhances employer image
Business Overhead Expense Insurance-correct-answer-- sold individually
- designed to reimburse business for overhead expenses in the event a business
owner becomes disabled (day to day operations)
- does not include compensation for disabled owner
, 4|Page
- premiums are tax-deductible as insurance expense
- benefits are taxable income
Disability Buy-Sell Plan/Disability Buy-Outs-correct-answer-An agreement
between business co-owners that provides that shares owned by any one of them
who becomes disabled shall be sold to and purchased by the other co-owners or
by the business using funds from disability income insurance.
- legal binding agreement funded with disability income policy
- pay benefits in periodic payments
- buy-out plan contains provision allowing for a lump-sum payment of the benefit
- benefits tax-free
- premiums not tax deductible
- lengthy elimination periods (2+ yrs)
Key Person Disability Insurance-correct-answer-- pays monthly benefit to a
business for additional help or outside services when an essential person is
disabled
- key persons economic value to a business is determined by potential loss of
business income that could occur (hiring price)
- business = owner and premium payer of policy
- benefits tax-free
- premiums not tax deductible
- policies reserved for "hard to replace" employees or key sales members
