Florida Life & Health Insurance 2-40 Practice Exam Questions #2 Latest Updated

Which of the following is NOT a form of medical insurance? -Business overhead expense -Surgical expense -Hospital expense -Long term care - Answer Business overhead expense (Explanation:Business Overhead Expense insurance is designed to reimburse a business for overhead expenses in the event a business owner becomes disabled. Expenses such as rent, utilities, telephone, equipment, employees' salaries, etc.) All of the following are state or federal government programs that provide health insurance, EXCEPT? -Medicare -OASDI disability -Medicaid -Medigap - Answer Medigap (Explanation:A Medigap policy is a Medicare supplement insurance policy sold by private insurance companies to fill "gaps" in Medicare Parts A and B.) What type of health insurance is available to assist low-income individuals? - Answer Medicaid What types of reserves are set aside and held by health insurance companies? - Answer Premium and Claims reserves (Explanation:Reserves are set aside for the payment of future claims.) Group health insurance is generally written on a basis that provides for dividends or experience rating. What is the basis called? - Answer Participating (Explanation:Group plans written by mutual companies provide for dividends while stock companies frequently issue experience-rated plans.) Which of the following is NOT TRUE regarding eligibility for subsidies for families under the new health care act? -For those who make between 100-400% of the Federal Poverty -Level -Cannot be covered by an employer -Cannot be eligible for Medicare -Can be eligible for Medicaid - Answer Can be eligible for Medicaid Which of the following operates as a corporation, society, or association to provide life insurance primarily for the mutual benefit of its members, has a lodge or social system with rituals and representative form of government? A) Mutual companies B) Fraternal associations C) Stock companies -Fraternal benefit society - Answer B) Fraternal associations What does each member pay in a typical HMO plan? -Fixed premium based on a deductible and copay -Fixed premium whether or not plan is used -Premium based on how often plan is used - Answer Fixed premium whether or not plan is used Which of the following is correct about those who are eligible for Medicare and wish to join an HMO? -They must have a current Medicare supplement policy -They must be told that'll be getting all the benefits from the Medicare Advantage plan -They must be age 70 and above -They must have been enrolled previously in an HMO - Answer They must be told that'll be getting all the benefits from the Medicare Advantage plan Joyce is totally disabled. Her HMO policy just terminated. All of the following are correct regarding "extension of benefits" for Joyce, EXCEPT? -Coverage ends once maximum benefits have been exhausted -Coverage ends once another carrier assumes coverage -Coverage ends if no longer totally disabled -Coverage ends after 18 months - Answer Coverage ends after 18 months All of the following are correct regarding Florida regulation of HMOs, EXCEPT? -Must obtain a Certificate of Authority -Must file a report of its activities within 3 months of the end of each fiscal year -Must deposit $100,000 with the Rehabilitation Administration Expense Fund -Must be sold by agents licensed and appointed as health insurance agents - Answer Must deposit $100,000 with the Rehabilitation Administration Expense Fund (Explanation: They must deposit $10,000 with the Rehabilitation Administration Expense Fund.) What is "capitation" as it relates to an HMO? -Amount to be collected by the HMO from participating health care providers -Fixed amount paid by an HMO during a policy period -Fixed amount paid by an HMO to a physician for medical services -Amount required to be deposited with the State of Florida - Answer Fixed amount paid by an HMO to a physician for medical services When a person is covered by an HMO, the contract certificate or member's handbook must be delivered within how many days after approval of the enrollment by the HMO? -20 days -10 days -5 days -14 days - Answer 10 days Which of the following statements about health service organizations is true? -They reimburse Policyowners directly for physicians' fees -They provide loss of income benefits to Policyowners -They reimburse Policyowners directly for all medical expenses -They provide benefit payments directly to the hospitals and physicians providing services - Answer They provide benefit payments directly to the hospitals and physicians providing services What is the period of time for an HMO "open enrollment"? -45 days during every 18-month period -30 days during every 12-month period -30 days during every 18-month period -45 days during every 12-month period - Answer 30 days during every 18-month period If an HMO is found guilty of unfair trade practices, what is the maximum penalty that can be charged? -Up to $50,000 -Up to $150,000 -Up to $200,00 -Up to $100,000 - Answer Up to $200,00 Which of the following statements about Worker's Compensation laws is INCORRECT? -Employers can purchase coverage through the state program, private insurers or can self-insure -Worker's compensation provides benefits for work-related injuries, illness or death -Not all states have a workers compensation law -Basic principle is that work-related injuries are compensable by the employer without regard to fault - Answer Not all states have a workers compensation law What year was the Social Security Act amended to add health insurance protection for the aged and disabled? -1973 -1965 -1985 -1935 - Answer 1965 All of the following are true statements about Workers Compensation, EXCEPT..? -Benefits are not paid unless there is employer negligence -Pays benefits for work related injuries and illnesses -Employee does not contribute to the plan -All states have Workers Compensation laws - Answer Benefits are not paid unless there is employer negligence Which of the following is a state administered disability plan? -Social Security -Workers Compensation -Medigap -Medicare - Answer Workers Compensation All of the following are nontraditional methods of providing health insurance, EXCEPT? -Multiple Employer Trusts -Multiple Employer Welfare Arrangements -Self-insurance -Commercial insurers - Answer Commercial insurers All of the following are true about a multiple employer welfare arrangement (MEWA), EXCEPT? -Required by law to have an employment-related common bond -Often provide insurance on a self-insured basis -Tax-exempt entities -Large employers who have joined together to provide health insurance benefits - Answer Large employers who have joined together to provide health insurance benefits (Explanation: MEWAs consist of small employers who join together to provide health insurance benefits for their employees) Grouping small businesses together to obtain health insurance as one large group is a characteristic of what type of group? -Multiple Employer Trust (MET) -Franchise Health plan -Health Maintenance Organization (HMO) -Blue Cross/Blue Shield - Answer Multiple Employer Trust (MET) Casey has a medical expense policy that provides a fixed rate of $150 per day for hospitalization. Casey is hospitalized for 10 days and incurred covered medical expenses of $20,000. What will her medical expense policy pay? -$1,500 -$20,000 -$15,000 -$3,000 - Answer $1,500 (Explanation: Casey's policy will only cover a fixed rate per day for hospitalization of $150. If she is hospitalized for 10 days, then her policy will pay $1,500 ($150 x 10) of the total $20,000 in expenses.) Jamie has a reimbursement type medical expense policy with a maximum benefit of $500,000. She is hospitalized and incurs $25,000 in covered medical expenses. What will her policy provide in coverage? -$20,000 -$25,000 -$10,000 -$12,500 - Answer $25,000 (Explanation: A reimbursement type policy will provide coverage for expenses incurred. In this case that would be the total $25,000.) Which of the following will not be covered under "Miscellaneous Expenses" of a hospital expense policy? -Drugs -Lab fees -Daily room and board -Use of operating room - Answer Daily room and board There are three different approaches used by insurers in providing basic surgical expense coverage and determining the benefits payable. Which of the following is NOT one of these approaches? -Reasonable and customary approach -Physician schedule approach -Relative value scale approach -Surgical schedule approach - Answer Physician schedule approach Charlie has a hospital expense policy and a surgical expense policy. The hospital pays $100 a day for room and board and a maximum of $1,000 for miscellaneous hospital charges. The surgical policy pays a maximum of $500 for any one operation. If Charlie was hospitalized for 10 days and had charges of $200 per day for room and board, $1,500 for miscellaneous expenses, and $2,000 for surgical expenses. What will his policies pay of these expenses? -$3,500 -$1,000 -$5,500 -$2,500 - Answer $2,500 (Explanation: Hospital will pay - $1,000 for room and board ($100 per day for 10 days) and $1,000 (maximum allowed) for miscellaneous expenses. Surgical will pay - $500 (maximum allowed) for surgery) Once the insured has paid a specified amount of his expenses, under the stop-loss feature of a health insurance policy, how much will the company then pay? -75% -20% -80% -100% - Answer 100% How will the "miscellaneous expenses" benefit be expressed in a basic health insurance policy? -Reasonable, usual and customary rates -Multiple of daily room and board rate -Approved charge per day rate -Percentage of daily room and board rate - Answer Multiple of daily room and board rate Roberta has a basic hospital expense policy with a $10,000 limit for benefits, coordinated with a major medical policy with a $500 corridor deductible and 80/20 coinsurance provision. If she incurs a loss of $20,000, how much will the insurer pay? -$17,600 -$18,000 -$11,900 -$2,400 - Answer $17,600 (Explanation: Total expenses are $20,000. Basic medical will pay the first $10,000 which leaves $10,000 remaining. Roberta will pay the first $500 of this $10,000 with $9,500 remaining. Company will now pay 80% of $9,500 or $7,600. Total company pays will be $10,000 from the basic medical plus $7,600 from the major medical = $17,600) Which of the following statements is TRUE about basic hospital, medical and surgical expense policies? -The benefits provided are usually equal to the actual expenses incurred -They contain high deductibles -They usually have a stated limit for specific expenses -Benefits are provided for loss of income - Answer They usually have a stated limit for specific expenses Which of the following types of insurance policies combines several types of benefits and provides more coverage than any of the others? -Hospital expense -Comprehensive major medical -Hospital indemnity -Surgical expense - Answer Comprehensive major medical (Explanation: Comprehensive major medical plans cover virtually all medical expenses in a single policy. Such as hospital, physician and surgeon, nursing care, drugs, physical therapy, x-rays, medical supplies, etc.) Wanda has a Major Medical policy with a flat deductible of $250, coinsurance of 80%/20% and a stop-loss of $5,000. She has a covered claim for $5,500. What will Wanda pay? -$1,100 -$250 -$1,300 -$4,450 - Answer $1,300 (Wanda will pay the first $250 (her deductible) and then 20% of the remainder ($5,250, remainder amount, x .20 = $1,050. So Wanda will pay a total amount of $1,300 ($250 deductible, plus 20% of 5,250).) Travis has a Major Medical policy with a flat deductible of $500 and coinsurance of 80%/20% on the next $5,000 in covered expenses with 100% coverage for any remaining covered expenses. On an claim of $10,000, what amount will Travis pay? -$2,500 -$1,500 -$2,000 -$1,000 - Answer $1,500 (Explanation: Travis will pay the first $500 (deductible) and then 20% of the next $5,000 ($5,000 x .20 = $1,000. So Travis will pay a total of $1,500 (deductible plus 20% of $5,000).) When comparing a major medical policy having an 80%/20% coinsurance provision with one having a 75%/25% coinsurance provision, the insured will pay more or less premium for the 80%/20% provision? -Less premium -The same premium -Significantly less premium -More premium - Answer More premium (Explanation: Because the insured will be responsible for less of the cost for medical expenses (20% verses 25%), he will pay more in premium costs.) Jason has a Major Medical policy with a flat deductible of $500, coinsurance of 80%/20% and a stop-loss of $5,000. If he has a covered claim of $5,500, what will the insurance company pay? -$0 -$4,400 -$1,500 -$4,000 - Answer $4,000 (Explanation: Jason will pay the first $500 (his deductible amount) of the total medical bills. After this Jason will pay 20% of the remainder ($5,000) and the insurance company will pay 80%. $5,000 (amount remaining) x .80 = $4,000 paid by insurance company.) All of the following are types of major medical policy deductibles, EXCEPT? -Franchise -Integrated -Corridor -Flat - Answer Franchise What type of medical expense policy simply provides a daily, weekly, or monthly payment of a specified amount based on the number of days the insured is hospitalized? -Daily room and board expense policy -Surgical expense policy -Hospital Fixed-rate policy -Hospital expense policy - Answer Hospital Fixed-rate policy What type of medical expense policy would be available to cover the high costs associated with a specific kind of illness such as cancer or heart disease? -Hospital expense -Surgical expense -Major medical -Limited risk - Answer Limited risk (Explanation: Limited risk or dread disease policies are designed specifically to cover the high costs associated with a specific illness.) William was involved in a 2-car accident in which he is disabled and his passenger and the driver of the other car are injured. Which of the following would most likely be covered by William's disability income policy? -Disability of the other driver -His lost income -William's medical expenses -Dismemberment of the passenger's leg - Answer His lost income Cathy is a dentist and decides to purchase insurance that would cover a large portion of her income should she become disabled. What type of coverage will she purchase? -Disability income insurance -Business overhead expense insurance -Medical expense insurance -Lump sum disability - Answer Disability income insurance All of the following are true regarding a disability income policy defining total disability as "own occupation", EXCEPT? -Insured is unable to work at their own occupation as a result of an accident or sickness -Difficult to qualify for -More advantageous to the insurer -More expensive than a policy providing "any occupation" - Answer More advantageous to the insurer Which of the following terms relates to payments made for partial disabilities? -Residual amount -Gross amount -Net amount -Recurrent amount - Answer Residual amount (Explanation: The amount of benefit payable when a policy covers partial disabilities depends on whether the policy stipulates a flat amount or a residual amount) Daniel's disability income policy defines total disability as "the insured's inability to perform the duties of any occupation for which he or she is reasonably qualified by education, training or experience". This definition is known as? -Own occupation and is less restrictive than other definitions -Any occupation and is more restrictive than other definitions -Any occupation and is less restrictive than other definitions -Own occupation and is more restrictive than other definitions - Answer Any occupation and is more restrictive than other definitions Which of the following is NOT correct about partial disability? -Benefit period is usually 3 to 6 months -Flat amount benefit is usually 50% of the total disability benefit -Proof of disability is not required for partial disabilities -Follows period of total disability - Answer Proof of disability is not required for partial disabilities For individual disability income policies there are basically two types of benefit periods, which are? -Short-term and long-term -Short term and interim term -Basic term and broad term -Full term and partial term - Answer Short-term and long-term Tad earns $2,000 a month and currently has a disability income policy with Company X and is limited to a monthly benefit of $400. If Tad decides to purchase another disability income policy from Company Z and Company Z's limit on benefits is 70% of his monthly income, how much coverage can he purchase with this second disability policy? -$1,200 -$1,120 -$1,400 -$1,000 - Answer $1,000 (Explanation: Tad currently has a disability income policy that will pay him $400 per month. The second policy limits payments to 70% of his income, which would be ($2,000 x .70 = $1,400) $1,400. Because he is already covered for $400 by Company X, Company Z will only pay $1,000 per month. The total of the two policies will then equal 70% of Tad's monthly pre disability income of $2,000.) Peter is injured in an auto accident. He is only able to work on a part-time basis and at 60% of his predisability salary. If Peter's disability income policy provides for residual disability benefits of $2,000, what amount would he receive in monthly benefit payments? -$1,200 -$1,000 -$400 -$800 - Answer $800 (Explanation: Residual amount benefit is based on the proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income. The benefit is usually determined by multiplying the percentage of lost income by the stated monthly benefit for total disability. In this example Peter is would receive 40% of the total disability benefit of $2,000 which will equal $2,000 x .40 = $800.) Joseph has a disability income policy stating a flat amount of $2,000 monthly benefit. He has been totally disabled for 6 months but is now able to work part-time. What can he expect to receive from his disability income policy if the policy also covers partial disability? -$1,000 monthly benefit -$500 monthly benefit -$0 benefit -$2,000 monthly benefit - Answer $1,000 monthly benefit What form of insurance is the primary form of pure accident coverage? -Major Medical -Disability Income -Medical Expense -Accidental Death and Dismemberment - Answer Accidental Death and Dismemberment George was in an accident. His Accident, Death and Dismemberment policy will cover all of the following, EXCEPT? -Loss of sight -Loss of use of a limb -Broken arm -Death - Answer Broken arm (Explanation: AD&D is the primary form of pure accident coverage. It provides a stated lump-sum benefit in the event of accidental death or in the event of loss of bodily members due to an accidental injury.) What does the principal sum represent in an AD&D policy? -Amount payable for accidental loss of sight -Amount payable as a death benefit -Amount payable for dismemberment -Amount payable for accidental loss of sight or dismemberment - Answer Amount payable as a death benefit An individual accidental death and dismemberment policy (AD&D) will pay benefits if an insured dies from... -Heart attack -Catastrophic illness -Head injury resulting from an auto accident -Occupational disease - Answer Head injury resulting from an auto accident Michael has an AD&D policy. Which of the following statements is CORRECT? -The benefit for the loss of both eyes is 75% of the principal sum -Michael's beneficiary will receive the capital sum of $100,000 as a death benefit -Principal sum is the amount paid for the accidental loss of sight or dismemberment -The benefit amount for the loss of one foot or one hand is 50% of the principal sum - Answer The benefit amount for the loss of one foot or one hand is 50% of the principal sum Which of the following is an example of a limited risk policy? -Surgical policy -Medical expense policy -Hospital policy -Aviation policy - Answer Aviation policy A famous dancer decides to take out a special policy covering her legs for $1 million. What type of accident policy is this? -Disability income policy -Limited risk policy -Major Medical policy -Special risk policy - Answer Special risk policy Margaret has a special risk policy. It will pay a benefit for... -Unusual hazards normally not covered by other policies -Death or dismemberment resulting from an aviation accident during a specified trip -Dreaded diseases -Special risks such as Lou Gehrig's disease or Parkinson's disease - Answer Unusual hazards normally not covered by other policies What is the free-look period for a Medicare Supplement policy? -7-days -10-days -14-days -30-days - Answer 30-days Which of the following statements is true about a Medicare Supplement policy? -These policies are designed to cover deductibles and co-insurance -Only insurance companies affiliated with Medicare can provide Medicare Supplement policies -These policies may be issued to anyone 59 1/2 or older without evidence of insurability -Anyone who qualifies for Medicaid benefits may be issued these policies - Answer These policies are designed to cover deductibles and co-insurance All of the following are correct regarding Medicare Supplement policies, EXCEPT -Must cover pre-existing conditions from the date the policy goes into effect -Must automatically adjust its benefits to reflect statutory changes in Medicare -Must cover all expenses not covered by Part A from the 61st to the 90th day -Must supplement both Part A and Part B of Medicare - Answer Must cover pre-existing conditions from the date the policy goes into effect Which of the following is NOT a requirement for an agent soliciting Medicare supplements? -Explain to prospect where there will be overlapping coverage -Send a signed form to the company explaining why coverage could not be placed -Inquire from each prospect if they already have coverage -Have prospect sign a form acknowledging information has been provided - Answer Send a signed form to the company explaining why coverage could not be placed Which of the following is NOT a category level of long-term care? -Custodial care -Intermediate nursing care -Hospitalization care -Skilled nursing care - Answer Hospitalization care Long-term care insurance also provides for a short rest period for a family caregiver. What is the known as? -Home care -Custodial care -Continuing care -Respite care - Answer Respite care What type of care, in a long-term care policy, is described as providing assistance in meeting daily living requirements, such as bathing, dressing, getting out of bed or toileting? -Custodial care -Respite care -Intermediate nursing care -Skilled nursing care - Answer Custodial care Which of the following conditions would NOT typically be covered by a Long Term Care policy? -Dementia -Drug dependency -Diabetes -Alzheimer's disease - Answer Drug dependency Florida requires a minimum participation of how many people for a group policy to be issued? -25 persons -15 persons -10 persons -No minimum percentage - Answer No minimum percentage (It can be one person) All of the following are ways in which to classify employees for a group health insurance policy, EXCEPT? -Age -Duties -Length of service -Type of payroll - Answer Age All of the following are requirements in Florida to be eligible to purchase group health insurance, EXCEPT? -Natural group -Minimum of 15 employees -No specific minimum percentage participation -Group formed for reasons other than obtaining insurance - Answer Minimum of 15 employees (There is no minimum)