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Arkansas Health Insurance Study
Questions
At what point must a life insurance applicant be informed of their right that fall under the Fair Credit Reporting Act? - answer upon completion of the application Who elects the governing body of a mutual insurance company? - answer policyholders An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the - answer Fair Credit Reporting Act What type of reinsurance contract involves two companies automatically sharing their risk exposure? - answer Treaty The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called - answer Reserves Which statement is TRUE regarding a group accident and health policy issued to an employer? *Neither the employer or employee are policy owners *The employer is issued a certificate of coverage and each employee receives a policy * The employer receives the policy and each employee is issued a certificate *Both the employer and employee are policy owners. - answerThe employer receives the policy and each employee is issued a certificate. G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is *Business Overhead Expense * Disability Income *Key Employee Life * Contributory - answerBusiness Overhead Expense-- this policy's purpose is to cover certain overhead expenses that continue when the business own is disabled. How does group insurance differ from individual insurance? - answerGroup insurance differs from individual insurance in that it provided coverage at a lower cost. The difference between group insurance and blanket health policies is - answerBlanket health policies do not issue certificates. Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that used the "accidental means" definition? *double indemnity
*benefits are taxable * more restrictive *less restrictive - answerLess restrictive. A policy that uses "accidental bodily injury" definition of an accident is less restrictive than the one that uses the "accidental means" definition. Which of the following characteristics is associated with a large group disability income policy? *no waiting periods *no medical underwriting *no elimination periods * no limit of benefits - answerNo medical underwriting. A large group disability income policy can be distinguished by no medical underwriting. Which contract permits the remaining partners to buy-out the interest of a disabled business partner? - answerA disability buy-sell plan allows the remaining partners to buy out the interest of the disabled business partner. An insurance company would MOST likely pay benefits under Accidental Death and Dismemberment policy who which of the following losses? *loss of life due to a heart attack *loss of eyesight due to an accidental injury *loss of the spleen due to an accidental injury
- partial paralysis due to a stroke - answerLoss of eyesight due to an accidental injury. XYZ Company pays the entire premium for its group health plan. The MINIMUM percentage of eligible employees that must be covered is *25% *50% *75% or *100% - answerMost noncontributory health plans require 100% participation by eligible employees. P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period? * Authorize for payroll deductions * Agree to a physical examination *Sign an enrollment card * Register with her state of residency - answerA new employee must sign an enrollment card during the open enrollment period. A medical care provider which typically delivers health services at its own local medical facility is know as a *Health Maintenance Organization * Regional Provider *Multiple Employer Trust *Preferred Provider Organization - answerHealth Maintenance Organization. HMO's traditionally provide services to its members at its own local health care facilities. Which type of provider is know for stressing preventative medical care? *Multiple Employer Welfare Arrangements (MEWA) * Major medical provider *Health Maintenance Organizations (HMO's) *Preferred Provider Organizations (PPO's) - answerThe health provider that stresses preventative medical care is know as a Health Maintenance Organization. Which of the following BEST describes how a Preferred Provider Organization (PPO) is less restrictive than a Health Maintenance Organization (HMO)? *Typically not subject to deductibles *Not regulated by the federal government *More benefits available *More
Which of the following health insurance policy provisions specifies the health care services a policy will provide? *Insuring clause *Usual, Customary and Reasonable clause *Consideration Clause *Benefit clause - answerThe Insuring Clause identifies the specific type of health care services that are covered by a policy. Which of the following provisions specifies how long a policy owner's health coverage will remain in effect if the policy owner does not pay the premium when it is due? *Grace Period * Consideration *Waiver of Premium * Reinstatement - answerThe Grace Period is the additional period of time after a premium payment is due that will allow the policy to remain in force in the event of nonpayment. The provision that defines to whom the insurer will pay benefits to is called *Entire Contract *Proof of Loss *Claim Forms *Payment of Claims - answerThe Payment of Claims provision in a Health Insurance policy states to whom claims will be paid. With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period? * Gives the policy owner additional time to pay past due premiums *Gives the policy owner additional time to file a lawsuit *Gives the policy owner additional time to file a claim *Gives the policy owner additional time to provide proof of loss - answerGives the policy owner additional time to pay any past due premiums-- the purpose of the Grace Period is to give the policy owner time to pay any past due premiums. Which of these is considered a mandatory provision? *Payment of Claims *Insurance with Other Insurers *Misstatement of Age *Change of Occupation - answerPayment of Claims is considered a mandatory provision and directs where the claim benefits will go. The others are considered optional provisions. If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best describes this policy is called *noncancellable *conditionally renewable *cancellable *guaranteed renewable - answerNoncancellable. A noncancellable policy is one which the insurance company cannot cancel and which premiums cannot be increased. What is the purpose of the Time of Payment of Claims provision? * Requires the insured to wait 60 days after submitting Proof of Loss before filing a lawsuit *Prevents delayed claim payments made by the insurer *Requires a probation period for each claim filed by the insured *Protects the insurer from frivolous lawsuits. - answerThe purpose of the Time of Payment of Claims provision is to prevent the insurance company from delaying claim payments. T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provision that
limits the time period during which the company may dispute a claim's validity is called. *Insuring * Time Limit on Certain Defenses * Grace Period *Free Look - answerThe Time Limit on Certain Defenses (Incontestability) provision limits the time during which the insurance company may challenge the validity of an insurance claim on the basis of a misstatement made on the insured's application. P is a Major Medical policy owner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim? *Claim will be denied and policy terminated *Claim will be partially paid * Claim will be paid
- Claim will be denied - answerThe claim will be denied. If a person is insured while committing an illegal act, health insurance will not cover the expense of the injury. Which health policy clause specifies the amount of benefits to be paid? *Insuring *Consideration *Free-look *Payment mode - answerInsuring. In an Accident and Health policy, the insuring clause states the amount of benefits to be paid. An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to *issue the policy only when the initial premium check has cleared * determine if the applicant is insurable by investigating family health history *issue the policy on a standard basis * determine if the applicant is an acceptable risk by completing standard underwriting procedures - answerWith a conditional receipt, the insurance company will complete standard underwriting procedures before making a decision about whether to insure the applicant. Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy? *Issue the policy with a diabetes exclusion *Issue the policy with an altered Time of Payment of Claims provision *Issue the policy with a rating *Decline the applicant - answerThe correct answer is "Issue the policy with an altered Time of Payment of Claims provision". The insurance company may take all of these actions EXCEPT issue the policy with an altered Time of Payment of Claims provision. Which of the following are NOT managed care organizations? *Point-of-Service plan (POS) *Preferred Provider Organization (PPO) *Medical Information Bureau (MIB) *Health Maintenance Organization (HMO) - answerMedical Information Bureau (MIB) is the only entity that is not a managed health care organization. Which of the following statements about the classification of applicants is INCORRECT? *Substandard applicants are never declined by underwriters *Substandard applicants are occasionally declined by underwriters *Preferred risk applicants typically have better premium rates than standard risk applicants *An applicant can be classified as
Which of the following is an example of defamation? *a pamphlet listing a competitor's financial rating *a brochure including an untrue statement regarding a competitor's ability to pay claims *A verbal statement of a competitor's complaint ratio *A truthful estimate of the dividends - answerAn example of defamation would be issuing a brochure that contains untrue statements regarding a competitor's ability to pay claims. Inducing or attempting to induce an insured person through misrepresentation to lapse, forfeit or surrender insurance is *rolling over *rebating *twisting *coercion - answerTwisting is inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance is considered twisting. Which of the following actions by an insurance company is considered an unfair claims settlement practice? *Requiring an insured to give a statement under oath *Requiring the insured to submit a proof of loss statement before paying a claim *Requesting a third-party arbitrator to resolve a disagreement with a claimant *Denying an insured's claim without indicating the basis of denial under the policy - answerDenying an insured's claim without indicating the basis of denial under the policy is considered an unfair claim settlement practice. An agent who tells a client that dividends are guaranteed may be guilty of *fraud *rebating *misrepresentations *slander - answerMisrepresentation. An agent who tells a client that dividends are guaranteed may be guilty of misrepresentation. A stock insurance company is owned by its *directors *stockholders *agents *insureds - answerA stock insurance company is owned by its stockholders. An agent who tells claimants that their rights may be impaired if they fail to complete a release form within a given period of time could be guilty of *defamation *rebating *coercion *discrimination - answerIn this situation, the agent may be guilty of coercion. A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of *coercion *fraud *rebating *boycotting - answerA creditor who requires a debtor to obtain insurance from a particular company or agent as a condition of the loan is guilty of coercion. A certificate of authority does which of the following? *Authorizes the insurance company to transact business in AR *Gives the commissioner the authority to make insurance laws in AR *Authorizes the agent to sell insurance *Authorizes the customer to complete a free medical exam - answerAuthorizes the insurance company to transact business in Arkansas. A certificate of authority authorizes the insurance company to transact business in Arkansas. A foreign company operating in Arkansas is a company incorporated or organized under the laws of *Arkansas *Florida *Canada *Europe - answerFlorida. Foreign insurance
company is a company whose home office is located in another state. Therefore, a company chartered in Florida would be a foreign company in Arkansas. An alien insurance company is defined as one formed in *AR *Florida *New Mexico *Europe - answerEurope. Alien insurance company is a company that is charted and organized in any country other than the US. Therefore, a company chartered in Europe would be an alien company in Arkansas. In AR, an insurance company must do which of the following to terminate a producer's appointment? *Notify the commissioner within 30 days *Notify the Agent within 30 days *Notify the commissioner within 15 days *Notify the policy holders within 30 days - answerNotify the commissioner within 30 days. In AR, an insurance company must notify the commissioner within 30 days to terminate a producer's appointment. All of the following are requirements to become an insurance producer in the state of AR except: *Be at least 18 years of age *Completed a Prelicensing course *Passed the state exam for the line of authority sought *Graduate High School - answerAll of these are requirements to become an insurance producer in the state of AR except graduate high school. If a producer knowingly violates a cease and desist order issued by the Arkansas Commissioner for unfair trade practices, the producer may receive which of the following penalties for each violation? - answer$10,000 for each violation not to total more than $50,000. If a producer knowingly violates a cease and desist order issued by the Arkansas Commissioner for unfair trade practices, the producer may receive a penalty of $10,000 for each violation, not total more than $50,000. In Arkansas, the Commissioner may place on probation, suspend, revoke, refuse to renew, or deny a license for all of the following reasons EXCEPT: *Forging a name to an insurance document or application * Filing bankruptcy *Failing to comply with a court order imposing child support * Failing to pay state income tax. - answerIn AR,the Commissioner may place on probation, suspend, revoke refuse to renew, or deny a license for all of these reasons EXCEPT filing bankruptcy. In Arkansas, the minimum number of days the insurance company must allow for a grace period on a life policy is *10 days *15 days *20 days *30 days - answer30 days. IN AR the minimum number of days the insurance company must allow for a grace period on a life policy is 30 days. Replacement is involved in all of the following situations EXCEPT when * Depleting Cash value in an existing policy and applying for a new one *Taking a reduced paid up option for a policy and applying for a new one *Maintaining an existing policy and
In AR, a producer who moves to a new address must notify the Commissioner of the address changes within how many days? *15 days *30 days *45 days *60 days - answer30 days. In AR, a producer who moves to a new address must notify the Commissioner of the address change within 30 days. What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits? *1 *2 *3 *4 - answer2. A qualified Long Term Car policy must stipulate that the insured be incapable of performing at least two of the ADL's without assistance for at least 90 days to qualify for benefits. If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses? *Long-term care *Indemnity *Medicare Supplement *Medicaid - answerMedicare Supplement. IN this situation, a Medicare Supplement policy would provide the subscriber the best coverage for excess charges. Which of the following will a Long Term Care plan typically provide benefits for? *disability income *death *unemployment *home health care - answerHome health care. A Long Term Policy will typically pay for home health care. The individual most likely to buy a Medicare Supplement policy would be a(an) *unemployed 64-year old female *62-year old male covered by Medicaid *68-year old male covered my Medicare *uninsured 60-year old male - answer68-year old male. Medicare Supplement are available to those covered by Medicare. Long Term Care policies will usually pay for eligible benefits using which of the following methods? *Delayed *Fee for service *Expense incurred *Respite - answerExpense incurred. Most long-term care policies pay on a reimbursement (or expense-incurred) basis, up to the policy limits. Which of the following health insurance policy provisions specifies the health care services a policy will provide? *Insuring clause *Usual, Customary, and Reasonable clause *Consideration clause *Benefit Cls. - answerInsuring Clause. The insuring clause identifies the specific type of health care services that are covered by that policy. S filed a written Proof of Loss for a Disability Income claim on September 1. The insurance company did not respond to the claim. S can take legal action against the insurer beginning *Sept. 21 * Oct 16 *Nov 1 *Dec 1 - answerNovember 1. The insured must wait 60 days after written proof of loss before legal action can be brought against the company.
Which of the following statements describes what an Accident and Health policy owner may NOT do? *file a covered claim *assign ownership *cancel coverage *adjust the premium payments - answerAdjust the premium payments. The owner of an Accident and Health policy may not change the premium amount. The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is *Grace Period *Physical Exam and Autopsy * Entire Contract *Time Limit on Certain Defenses - answerTime Limit on Certain Defenses. This provision limits the period during which an insurer can deny a claim based on a misstatement made by the insured. What must the policy owner provide to the insurer for validation that a loss has occurred? *Proof of Coverage * Proof of Claim *Proof of Loss *Proof of Payment - answerProof of Loss statement must be provided to an insurance company to show that a loss actually occurred. What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy? *Premiums may increase at time of renewal *Premiums may increase at any time *Policy may be renewed at the discretion of the insured *Policy may be amended by insurer at any time - answerPremiums may increase at time of renewal. A Conditionally Renewable Health Insurance policy can increase premiums at time of renewal. M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force? * 10 days *30 days *45 days *60 days - answer45 days. Health insurance will automatically be placed back in force if the insurer fails to notify an applicant within 45 days that the reinstatement application was denied. With Optionally Renewable Health policies, the insurer may *renew the policy only if no claims have been filed the previous year *renew the policy only with the insured's consent *review the policy whenever they please and determine whether or not to renew it *review the policy annually and determine whether or not to renew it - answerWith an Optionally Renewable policy, the insurance company may review the policy annually and choose whether or not to renew it. If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best describes this policy is called *noncancellable *conditionally renewable *cancellable *guaranteed renewable - answerNoncancellable. A noncancellable policy is one which the insurance company cannot cancel and which premiums cannot be increased.
