Life & Health Insurance Exam Prep
Questions and Correct 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
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:-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
, 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:Max amount the insured is required to pay out of pocket: After the stop loss
amount is reached by the insured, in a calendar year, the company will pay 100% of the remaining
covered expenses.
-calculated by adding both deductibles and coinsurance amounts.
Comprehensive major medical - correct answers:Major Medical and Basic Medical are written together.
Corridor deductible - correct answers:Occurs in the middle of the hospital stay, and bridges the gap from
the basic to the major medical plan.
Pre-Existing Condition - correct answers:-To Prevent avoid adverse selection.
Questions and Correct 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
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:-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
, 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:Max amount the insured is required to pay out of pocket: After the stop loss
amount is reached by the insured, in a calendar year, the company will pay 100% of the remaining
covered expenses.
-calculated by adding both deductibles and coinsurance amounts.
Comprehensive major medical - correct answers:Major Medical and Basic Medical are written together.
Corridor deductible - correct answers:Occurs in the middle of the hospital stay, and bridges the gap from
the basic to the major medical plan.
Pre-Existing Condition - correct answers:-To Prevent avoid adverse selection.
