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Questions and Answers
In forming an insurance contract, when does acceptance usually occur?
In forming an insurance contract, when does acceptance usually occur?
When an insurer approves a prepaid application.
Because an insurance policy is a legal contract, it must conform to the state contracts which require all of the following elements except?
Because an insurance policy is a legal contract, it must conform to the state contracts which require all of the following elements except?
In insurance, an offer is usually made when?
In insurance, an offer is usually made when?
The application is submitted.
Under the conditions, a contract between an insurer and prospective insured can be legal if the applicant has been convicted of a felony.
Under the conditions, a contract between an insurer and prospective insured can be legal if the applicant has been convicted of a felony.
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Which of the following is not an essential element of an insurance contract?
Which of the following is not an essential element of an insurance contract?
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In terms of parties to a contract, which of the following does not describe a competent party?
In terms of parties to a contract, which of the following does not describe a competent party?
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An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. What term best describes what the insurer has violated?
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. What term best describes what the insurer has violated?
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Which of the following is not consideration on the part of an insured?
Which of the following is not consideration on the part of an insured?
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When an insured makes truthful statements on the application for the insurance and pays the required premium, it is known as which of the following?
When an insured makes truthful statements on the application for the insurance and pays the required premium, it is known as which of the following?
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An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
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What best describes MIB?
What best describes MIB?
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What are the members of the Medical Information Bureau required to report?
What are the members of the Medical Information Bureau required to report?
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An agent makes a mistake on the application and then corrects his mistakes by physically entering the necessary information. Who must then initial the change?
An agent makes a mistake on the application and then corrects his mistakes by physically entering the necessary information. Who must then initial the change?
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An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?
An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?
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If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or the reporting agency have to comply?
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or the reporting agency have to comply?
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If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
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Which of the following is true regarding underwriting for a person with HIV?
Which of the following is true regarding underwriting for a person with HIV?
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Which of the following reports will provide the underwriter with the information about a consumer's credit?
Which of the following reports will provide the underwriter with the information about a consumer's credit?
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Alison wants to buy a health insurance policy. She returns her completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?
Alison wants to buy a health insurance policy. She returns her completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?
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An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit is denied?
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit is denied?
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Which of the following is not the consideration in a policy?
Which of the following is not the consideration in a policy?
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What is a material misrepresentation?
What is a material misrepresentation?
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When delivering a policy, which of the following is an agent's responsibility?
When delivering a policy, which of the following is an agent's responsibility?
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Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following except?
Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following except?
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Whose responsibility is it to determine if all the questions on the application have been answered?
Whose responsibility is it to determine if all the questions on the application have been answered?
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Which of the following includes information regarding a person's credit, character, reputation, and habits?
Which of the following includes information regarding a person's credit, character, reputation, and habits?
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Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
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If an applicant does not receive his or her policy, who would be held responsible?
If an applicant does not receive his or her policy, who would be held responsible?
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The following would provide an underwriter with information concerning an applicant's health history?
The following would provide an underwriter with information concerning an applicant's health history?
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Which of the following entities can legally bind coverage?
Which of the following entities can legally bind coverage?
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Which of the following is not true of a major medical health insurance policy?
Which of the following is not true of a major medical health insurance policy?
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Each point represents $10.00, which means that $2,000 of his surgery will be covered by his insurance plan. What system is Todd's insurance company using?
Each point represents $10.00, which means that $2,000 of his surgery will be covered by his insurance plan. What system is Todd's insurance company using?
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In basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?
In basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?
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If an insured is not required to pay a deductible, what kind of coverage does he/she have?
If an insured is not required to pay a deductible, what kind of coverage does he/she have?
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Another term used to describe 'no deductible' is?
Another term used to describe 'no deductible' is?
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What is the typical deductible for basic surgical expense insurance?
What is the typical deductible for basic surgical expense insurance?
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Which of the following would basic medical expense coverage not cover?
Which of the following would basic medical expense coverage not cover?
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Not covered under basic hospital expense coverage?
Not covered under basic hospital expense coverage?
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Which of the following best describes the 'first dollar coverage' principle in basic medical insurance?
Which of the following best describes the 'first dollar coverage' principle in basic medical insurance?
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Which of the following is not true regarding basic surgical expense coverage?
Which of the following is not true regarding basic surgical expense coverage?
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Don has both a basic and a major medical policy. He quickly exhausts his basic expense policy. What must Don do before his major policy can pick up where the basic expense policy left off?
Don has both a basic and a major medical policy. He quickly exhausts his basic expense policy. What must Don do before his major policy can pick up where the basic expense policy left off?
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In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point?
In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point?
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What is the elimination period?
What is the elimination period?
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Bethany injures herself in England. Bethany owns a general disability policy. What will be the extent of benefits that she receives?
Bethany injures herself in England. Bethany owns a general disability policy. What will be the extent of benefits that she receives?
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Which of the following would not be considered a limited coverage policy?
Which of the following would not be considered a limited coverage policy?
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Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service?
Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service?
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As it pertains to group health insurance, COBRA stipulates that?
As it pertains to group health insurance, COBRA stipulates that?
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Benefits periods for individual short-term disability policies will usually continue from?
Benefits periods for individual short-term disability policies will usually continue from?
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Which of the following statements is not correct concerning the COBRA Act of 1985?
Which of the following statements is not correct concerning the COBRA Act of 1985?
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Who chooses a primary care physician in HMO?
Who chooses a primary care physician in HMO?
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Which of the following is a feature of a disability buyout plan?
Which of the following is a feature of a disability buyout plan?
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An HSA holder who is 65 years old decides to use the money in the account for a nonhealth expense. Which of the following is true?
An HSA holder who is 65 years old decides to use the money in the account for a nonhealth expense. Which of the following is true?
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Which of the following would be an example of a limited accident and health insurance policy?
Which of the following would be an example of a limited accident and health insurance policy?
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Which type of hospital policy pays a fixed amount each day that the insured is in a hospital?
Which type of hospital policy pays a fixed amount each day that the insured is in a hospital?
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To be eligible under HIPAA regulation, for how long should an individual converting to an individual health plan have been covered under the previous group plan?
To be eligible under HIPAA regulation, for how long should an individual converting to an individual health plan have been covered under the previous group plan?
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Which of the following is not covered by health HMO?
Which of the following is not covered by health HMO?
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Which of the following is available to employers of all sizes?
Which of the following is available to employers of all sizes?
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Which of the following is true of a PPO?
Which of the following is true of a PPO?
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If an employee terminates, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days?
If an employee terminates, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days?
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Roland had $500 in his health reimbursement account when he quit his job. What happens to that money?
Roland had $500 in his health reimbursement account when he quit his job. What happens to that money?
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This arrangement specifies who will purchase the disabled partner's interest in the event he or she becomes disabled.
This arrangement specifies who will purchase the disabled partner's interest in the event he or she becomes disabled.
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Which of the following would be an example of limited accident and health insurance policy?
Which of the following would be an example of limited accident and health insurance policy?
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Which of the following is a feature of a disability buyout plan?
Which of the following is a feature of a disability buyout plan?
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What is the goal of HMO?
What is the goal of HMO?
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Which of the following is not true regarding basic surgical expense coverage?
Which of the following is not true regarding basic surgical expense coverage?
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Study Notes
Insurance Contracts
- Acceptance occurs when the insurer approves a prepaid application.
- Essential elements of a legal insurance contract include offer, acceptance, and consideration; conditions are not required.
- An offer in insurance is typically made upon submission of the application.
- Legal contracts require that both parties meet certain conditions to be enforceable, such as no felony convictions.
Consideration in Insurance
- Consideration involves the binding force of a contract; if an insurer neglects to pay a legitimate claim, it may violate consideration.
- An insured's promise to submit timely claims is not considered valid consideration.
- When an insured provides truthful statements and pays the required premium, it is known as consideration.
Agent Responsibilities
- An agent must ensure all application questions are answered and must collect payment upon policy delivery.
- If an agent makes corrections on an application, the applicant must initial those changes.
- The old insurance policy must remain in force until the new policy is issued during replacement.
Medical Information Bureau (MIB)
- The MIB is a nonprofit organization that retains underwriting information for life and health insurance applicants.
- Its members must report adverse medical information concerning individuals.
Reporting and Consumer Disclosure
- Insurers must notify consumers within 3 days about obtaining an investigative consumer report.
- If a consumer requests additional information regarding a report, the insurer has 5 days to comply.
Policy Types and Coverages
- Major medical policies are not designed to pay on a first dollar basis.
- In basic expense policies, after exhausting limits, the insured must pay a corridor deductible before major medical coverage starts.
- First dollar coverage does not require an insured to pay deductibles.
Health Insurance Specifications
- Under HIPAA, individuals converting to a health plan must have been covered under a group plan for 18 months.
- A general disability policy does not cover losses due to war or overseas residence.
- Limited coverage policies, such as dread disease policies, cover specific risks and are different from major medical expense insurance.
Group Health Insurance
- COBRA mandates that group coverage for terminated employees must be extended for some time at their own expense.
- Conversion provisions allow employees to continue health coverage under an individual policy if requested within 31 days post-termination.
Health Reimbursement Accounts (HRA)
- HRAs allow employers to reimburse employees for qualified medical expenses and are available to employers of all sizes.
Disability Buyout Plans
- Disability buyout plans specify who will purchase a disabled partner’s interest, offering lump-sum benefit options for those who become disabled.
Special Coverage Situations
- Health Maintenance Organizations (HMOs) prioritize early detection through regular check-ups and generally do not cover elective services.
- When using funds from a Health Savings Account (HSA) for non-health expenses, tax penalties apply.
Final Considerations
- Key terms and definitions related to insurance, medical history, and underwriting decisions, such as material misrepresentation, significantly influence coverage eligibility and claims processing.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on the key concepts from Chapters 1 and 2 of insurance. These flashcards cover important terms and definitions that are essential to understanding insurance contracts and their elements. Perfect for students wanting to reinforce their learning!
