Chapter 1 – Exam
True/False Questions
1. Insurance is an agreement between insurance companies, who collect fees or premiums, and
individuals, who pay the premiums in return for specific benefits.
Answer: T
2. If an employer provides insurance to an individual, there is no need for a waiting period.
Answer: F
3. A renewal allows the individual to pay a premium in order to continue coverage after the
initial or subsequent policy periods have expired. In most cases, if the insurance has lapsed,
the individual must pay the premium and then the insurance is reinstated.
Answer: T
4. Insurance companies operate on the principle that most of those who pay premiums will not
need services, or that the services they need will cost less than the premiums paid.
Answer: T
5. Group insurance provides coverage for several people who have a common purpose under one
contract, called a master contract.
Answer: T
6. In a self-funded insurance plan, the risk of loss is assumed by the insured individual and may
be increased by purchasing reinsurance or stop loss insurance.
Answer: F
7. Electronic Data Interchange (EDI) information defines the tasks involved in the retrieval of
information and is an essential part of each claims examiner’s day.
Answer: T
8. Insurance speculation occurs when someone buys insurance coverage for the purpose of
gambling on market trends.
Copyright © 2014 by Pearson Education, Inc.
, Chapter 1 – Exam
Answer: F
9. The False Claims Act and the Anti-Kickback Statute are two fraud statutes that significantly
narrow the federal government’s ability to prosecute fraud within the healthcare industry.
Answer: F
10. Embezzlement occurs when employees illegally take funds from a company in which they
work.
Answer: T
Multiple Choice Questions
1. Which of the following is NOT included in a standard health insurance policy?
a. Provides an outline of benefits
b. Payment of vitamin supplement expenses
c. The replacement or repair of personal property
d. The payment for expenses of others who have been injured by you or on your property
2. What information appears in all or most insurance policies?
a. Effective date of coverage
b. Termination date of life
c. Maintenance of households
d. Lapse in coverage as a prerequisite for policy renewal
3. Which of the following is a restriction that insurance companies place on the amount and
type of benefits that will be paid?
a. Eligibility requirements
b. Loans
c. Tax write offs
Copyright © 2014 by Pearson Education, Inc.
True/False Questions
1. Insurance is an agreement between insurance companies, who collect fees or premiums, and
individuals, who pay the premiums in return for specific benefits.
Answer: T
2. If an employer provides insurance to an individual, there is no need for a waiting period.
Answer: F
3. A renewal allows the individual to pay a premium in order to continue coverage after the
initial or subsequent policy periods have expired. In most cases, if the insurance has lapsed,
the individual must pay the premium and then the insurance is reinstated.
Answer: T
4. Insurance companies operate on the principle that most of those who pay premiums will not
need services, or that the services they need will cost less than the premiums paid.
Answer: T
5. Group insurance provides coverage for several people who have a common purpose under one
contract, called a master contract.
Answer: T
6. In a self-funded insurance plan, the risk of loss is assumed by the insured individual and may
be increased by purchasing reinsurance or stop loss insurance.
Answer: F
7. Electronic Data Interchange (EDI) information defines the tasks involved in the retrieval of
information and is an essential part of each claims examiner’s day.
Answer: T
8. Insurance speculation occurs when someone buys insurance coverage for the purpose of
gambling on market trends.
Copyright © 2014 by Pearson Education, Inc.
, Chapter 1 – Exam
Answer: F
9. The False Claims Act and the Anti-Kickback Statute are two fraud statutes that significantly
narrow the federal government’s ability to prosecute fraud within the healthcare industry.
Answer: F
10. Embezzlement occurs when employees illegally take funds from a company in which they
work.
Answer: T
Multiple Choice Questions
1. Which of the following is NOT included in a standard health insurance policy?
a. Provides an outline of benefits
b. Payment of vitamin supplement expenses
c. The replacement or repair of personal property
d. The payment for expenses of others who have been injured by you or on your property
2. What information appears in all or most insurance policies?
a. Effective date of coverage
b. Termination date of life
c. Maintenance of households
d. Lapse in coverage as a prerequisite for policy renewal
3. Which of the following is a restriction that insurance companies place on the amount and
type of benefits that will be paid?
a. Eligibility requirements
b. Loans
c. Tax write offs
Copyright © 2014 by Pearson Education, Inc.
