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NJ Health and Accident Insurance Practice Exam (NEW UPDATED VERSION) LATEST ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED QUESTIONS AND ANSWERS) |
GUARANTEED PASS A+ UPDATED THIS YEAR
1–10: Insurance Basics
1. Which type of insurance provides a payment upon the death of the insured?
A) Health insurance
B) Life insurance
C) Accident insurance
D) Disability insurance
Answer: B
Explanation: Life insurance pays a death benefit to beneficiaries upon the insured’s
death.
2. The principle of indemnity means:
A) The insurer will pay more than the loss
B) The insured cannot profit from a loss
C) The policyholder can transfer benefits
D) Premiums are refundable
Answer: B
Explanation: Indemnity ensures the insured is restored to the same financial position as
before the loss, no more.
3. Which of the following is considered a perils-based policy?
A) Health maintenance organization (HMO)
B) Disability income insurance
C) Homeowners insurance
D) Group life insurance
Answer: C
Explanation: Perils-based policies cover losses from specific causes, such as fire or
theft.
4. In insurance, risk that can be transferred to an insurer is called:
A) Speculative risk
B) Pure risk
C) Catastrophic risk
D) Hazard
Answer: B
Explanation: Pure risk involves only the possibility of loss, which is insurable.
5. What is the primary purpose of health insurance?
A) To cover all living expenses
B) To provide financial protection against medical costs
C) To provide retirement income
D) To guarantee investment returns
2026 2027 GRADED A+
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Answer: B
Explanation: Health insurance helps protect individuals from high medical expenses.
6. Which of the following is a characteristic of an insurable risk?
A) Speculative in nature
B) Catastrophic
C) Definable and measurable
D) Unpredictable with no history
Answer: C
Explanation: Insurable risks must be measurable and definite to calculate premiums.
7. The law of large numbers in insurance refers to:
A) Premiums increase as policyholder numbers rise
B) Predicting loss based on large groups
C) Restricting coverage to a few individuals
D) Insurer profits
Answer: B
Explanation: Larger numbers of similar exposures allow insurers to predict losses more
accurately.
8. What is the term for the amount an insured must pay before insurance benefits begin?
A) Deductible
B) Premium
C) Copay
D) Coinsurance
Answer: A
Explanation: A deductible is the out-of-pocket expense before the insurer pays.
9. What type of insurance covers bodily injury or property damage caused by accidents?
A) Life insurance
B) Liability insurance
C) Health insurance
D) Disability insurance
Answer: B
Explanation: Liability insurance protects against claims from third-party damages.
10. What is the name of the person or entity covered under an insurance policy?
A) Beneficiary
B) Insured
C) Insurer
D) Producer
Answer: B
Explanation: The insured is the individual whose life, health, or property is covered by
the policy.
11–20: Health Insurance Concepts
11. A policy that pays a fixed amount for each day of hospitalization is called:
A) Comprehensive health insurance
B) Hospital indemnity insurance
2026 2027 GRADED A+
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C) Disability income insurance
D) Life insurance
Answer: B
Explanation: Hospital indemnity policies pay a set amount per day, regardless of actual
costs.
12. Coinsurance is defined as:
A) A flat fee paid to a provider
B) The portion of medical costs shared between insurer and insured
C) The amount paid before coverage starts
D) A premium discount
Answer: B
Explanation: Coinsurance is usually expressed as a percentage that the insured pays after
the deductible.
13. What is the main purpose of a copayment?
A) To reduce overuse of medical services
B) To fund insurance company profits
C) To pay the full cost of treatment
D) To avoid paying premiums
Answer: A
Explanation: Copayments encourage responsible use of healthcare resources.
14. The maximum amount an insured must pay out-of-pocket in a policy year is called:
A) Premium
B) Deductible
C) Stop-loss or out-of-pocket maximum
D) Coinsurance
Answer: C
Explanation: The out-of-pocket maximum limits total expenses paid by the insured in a
year.
15. Which type of health insurance plan requires referrals to see specialists?
A) PPO
B) HMO
C) POS
D) Indemnity plan
Answer: B
Explanation: HMOs require primary care physician referrals to access specialists.
16. Medicaid is primarily designed to provide health coverage for:
A) High-income individuals
B) Low-income individuals and families
C) All adults over 65
D) Private employers
Answer: B
Explanation: Medicaid assists low-income populations with healthcare costs.
17. Medicare Part A primarily covers:
A) Prescription drugs
B) Hospitalization
C) Outpatient physician visits
2026 2027 GRADED A+
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D) Dental services
Answer: B
Explanation: Part A covers inpatient hospital, skilled nursing, and some home health
services.
18. Medicare Part B covers:
A) Prescription drugs
B) Physician services and outpatient care
C) Hospitalization
D) Vision and dental
Answer: B
Explanation: Part B pays for outpatient and physician services, preventive care, and
durable medical equipment.
19. In group health insurance, the employer usually:
A) Pays all premiums
B) Shares premium costs with employees
C) Is the insured
D) Has no involvement
Answer: B
Explanation: Employers typically share the cost of premiums with employees.
20. COBRA allows:
A) Immediate Medicare enrollment
B) Continuation of group health coverage after leaving a job
C) Medicaid enrollment
D) Life insurance conversion
Answer: B
Explanation: COBRA provides temporary continuation of employer-sponsored coverage
after termination.
21–30: Accident Insurance
21. Accident insurance primarily covers:
A) Death only
B) Injury resulting from unforeseen events
C) Chronic illnesses
D) Elective procedures
Answer: B
Explanation: Accident insurance provides benefits for injuries caused by accidents.
22. Which of the following is an example of a disqualifying hazard in accident insurance?
A) Injuries from sports
B) Injuries from war or military service
C) Slip-and-fall at home
D) Car accident
Answer: B
Explanation: Acts of war are typically excluded from accident coverage.
2026 2027 GRADED A+
NJ Health and Accident Insurance Practice Exam (NEW UPDATED VERSION) LATEST ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED QUESTIONS AND ANSWERS) |
GUARANTEED PASS A+ UPDATED THIS YEAR
1–10: Insurance Basics
1. Which type of insurance provides a payment upon the death of the insured?
A) Health insurance
B) Life insurance
C) Accident insurance
D) Disability insurance
Answer: B
Explanation: Life insurance pays a death benefit to beneficiaries upon the insured’s
death.
2. The principle of indemnity means:
A) The insurer will pay more than the loss
B) The insured cannot profit from a loss
C) The policyholder can transfer benefits
D) Premiums are refundable
Answer: B
Explanation: Indemnity ensures the insured is restored to the same financial position as
before the loss, no more.
3. Which of the following is considered a perils-based policy?
A) Health maintenance organization (HMO)
B) Disability income insurance
C) Homeowners insurance
D) Group life insurance
Answer: C
Explanation: Perils-based policies cover losses from specific causes, such as fire or
theft.
4. In insurance, risk that can be transferred to an insurer is called:
A) Speculative risk
B) Pure risk
C) Catastrophic risk
D) Hazard
Answer: B
Explanation: Pure risk involves only the possibility of loss, which is insurable.
5. What is the primary purpose of health insurance?
A) To cover all living expenses
B) To provide financial protection against medical costs
C) To provide retirement income
D) To guarantee investment returns
2026 2027 GRADED A+
,2|Page
Answer: B
Explanation: Health insurance helps protect individuals from high medical expenses.
6. Which of the following is a characteristic of an insurable risk?
A) Speculative in nature
B) Catastrophic
C) Definable and measurable
D) Unpredictable with no history
Answer: C
Explanation: Insurable risks must be measurable and definite to calculate premiums.
7. The law of large numbers in insurance refers to:
A) Premiums increase as policyholder numbers rise
B) Predicting loss based on large groups
C) Restricting coverage to a few individuals
D) Insurer profits
Answer: B
Explanation: Larger numbers of similar exposures allow insurers to predict losses more
accurately.
8. What is the term for the amount an insured must pay before insurance benefits begin?
A) Deductible
B) Premium
C) Copay
D) Coinsurance
Answer: A
Explanation: A deductible is the out-of-pocket expense before the insurer pays.
9. What type of insurance covers bodily injury or property damage caused by accidents?
A) Life insurance
B) Liability insurance
C) Health insurance
D) Disability insurance
Answer: B
Explanation: Liability insurance protects against claims from third-party damages.
10. What is the name of the person or entity covered under an insurance policy?
A) Beneficiary
B) Insured
C) Insurer
D) Producer
Answer: B
Explanation: The insured is the individual whose life, health, or property is covered by
the policy.
11–20: Health Insurance Concepts
11. A policy that pays a fixed amount for each day of hospitalization is called:
A) Comprehensive health insurance
B) Hospital indemnity insurance
2026 2027 GRADED A+
,3|Page
C) Disability income insurance
D) Life insurance
Answer: B
Explanation: Hospital indemnity policies pay a set amount per day, regardless of actual
costs.
12. Coinsurance is defined as:
A) A flat fee paid to a provider
B) The portion of medical costs shared between insurer and insured
C) The amount paid before coverage starts
D) A premium discount
Answer: B
Explanation: Coinsurance is usually expressed as a percentage that the insured pays after
the deductible.
13. What is the main purpose of a copayment?
A) To reduce overuse of medical services
B) To fund insurance company profits
C) To pay the full cost of treatment
D) To avoid paying premiums
Answer: A
Explanation: Copayments encourage responsible use of healthcare resources.
14. The maximum amount an insured must pay out-of-pocket in a policy year is called:
A) Premium
B) Deductible
C) Stop-loss or out-of-pocket maximum
D) Coinsurance
Answer: C
Explanation: The out-of-pocket maximum limits total expenses paid by the insured in a
year.
15. Which type of health insurance plan requires referrals to see specialists?
A) PPO
B) HMO
C) POS
D) Indemnity plan
Answer: B
Explanation: HMOs require primary care physician referrals to access specialists.
16. Medicaid is primarily designed to provide health coverage for:
A) High-income individuals
B) Low-income individuals and families
C) All adults over 65
D) Private employers
Answer: B
Explanation: Medicaid assists low-income populations with healthcare costs.
17. Medicare Part A primarily covers:
A) Prescription drugs
B) Hospitalization
C) Outpatient physician visits
2026 2027 GRADED A+
, 4|Page
D) Dental services
Answer: B
Explanation: Part A covers inpatient hospital, skilled nursing, and some home health
services.
18. Medicare Part B covers:
A) Prescription drugs
B) Physician services and outpatient care
C) Hospitalization
D) Vision and dental
Answer: B
Explanation: Part B pays for outpatient and physician services, preventive care, and
durable medical equipment.
19. In group health insurance, the employer usually:
A) Pays all premiums
B) Shares premium costs with employees
C) Is the insured
D) Has no involvement
Answer: B
Explanation: Employers typically share the cost of premiums with employees.
20. COBRA allows:
A) Immediate Medicare enrollment
B) Continuation of group health coverage after leaving a job
C) Medicaid enrollment
D) Life insurance conversion
Answer: B
Explanation: COBRA provides temporary continuation of employer-sponsored coverage
after termination.
21–30: Accident Insurance
21. Accident insurance primarily covers:
A) Death only
B) Injury resulting from unforeseen events
C) Chronic illnesses
D) Elective procedures
Answer: B
Explanation: Accident insurance provides benefits for injuries caused by accidents.
22. Which of the following is an example of a disqualifying hazard in accident insurance?
A) Injuries from sports
B) Injuries from war or military service
C) Slip-and-fall at home
D) Car accident
Answer: B
Explanation: Acts of war are typically excluded from accident coverage.
2026 2027 GRADED A+
