NC - HEALTH INSURANCE - PRACTICE EXAM QUESTIONS
CORRECT ANSWERS _2025 WELL UPDATED
If an insurer accepts premium payments by credit card, who is responsible for paying the fees
charged by a credit card company?
a)Policyowners, as part of their premium
b)Insured making payment
c)Credit card company
d)Insurer accepting payment - CORRECT ANSWERS-d)Insurer accepting payment
Credit card payment fees are the responsibility of the insurer. In fact, it is one of the conditions
for permitting the insurer to accept payments by credit card.
Which of the following is NOT true of a major-medical health insurance policy?
a)It is designed to pay on a first dollar of expense basis.
b)It usually has a maximum benefit amount.
c)The benefits are subject to deductibles.
d)It is designed to cover hospital and medical expenses of a catastrophic nature. - CORRECT
ANSWERS-a)It is designed to pay on a first dollar of expense basis.
A major medical policy usually has deductibles and a copayment requirement. Basic medical,
but not major medical, expense policies pay on a first dollar basis.
When is a child eligible for coverage on a parent's policy?
a)From the moment of birth
b)30 days after birth
c)45 days after birth
d)60 days after birth - CORRECT ANSWERS-a)From the moment of birth
,Every policy that provides illness benefits for minor children on their parent's policy must provide
benefits beginning at the moment of birth.
Which of the following is correct regarding the taxation of group medical expense premiums and
benefits?
a)Premiums are not tax deductible and benefits are not taxed.
b)Premiums are tax deductible and benefits are taxed.
c)Premiums are tax deductible and benefits are not taxed.
d)Premiums are not tax deductible and benefits are taxed. - CORRECT ANSWERS-
c)Premiums are tax deductible and benefits are not taxed.
Premiums paid by employers for Group Medical Expense insurance are tax deductible for the
employer as a business expense. Also, policy benefits paid out to employees are not taxable as
income to the employee.
Todd has been informed that he has a hernia which requires repair. When Todd researches the
cost, he learns that his insurance plan will cover 200 points worth of surgical expenses. Each
point represents $10, which means that $2000 of his surgery will be covered by his insurance
plan. What system is Todd's insurance company using?
a)Basic Surgical
b)Point-based medical
c)Conversion factor
d)Relative value - CORRECT ANSWERS-d)Relative value
In a relative-value approach, a surgical procedure is assigned an amount of points relative to
the maximum coverage allowed for a given surgery.
A client has a new individual disability income policy with a 20-day probationary period and a
30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days.
How many days of disability benefits will the policy pay?
, a)10 days
b)15 days
c)25 days
d)45 days - CORRECT ANSWERS-b)15 days
A probationary period refers to the amount of time that coverage is not available for illness-
related disabilities, so it would not apply to a broken leg. The elimination period, however, is the
time that must elapse between the onset of the disability and when benefits will start being paid.
In this case, the individual is considered disabled for 45 days, and the benefits will start to be
paid after 30 days. So, the client will receive benefits for 15 days.
An insured misstated her age on an application for an individual health insurance policy. The
insurance company found the mistake after the contestable period had expired. The insurance
company will take which of the following actions regarding any claim that has been issued?
a)Adjust the claim benefit to reflect the insured's true age
b)Deny any claims and cancel the policy
c)Deny paying a claim based on misrepresentation
d)Pay the full amount of a claim because the contestable period has ended - CORRECT
ANSWERS-a)Adjust the claim benefit to reflect the insured's true age
The Misstatement of Age provision says that if a client has misstated her age, whether
intentional or unintentional, they will adjust the benefit being paid. It doesn't matter when the
mistake was found.
When an individual is covered under two health insurance policies that have duplicate benefits
which could make a claim for benefits because of an injury or illness profitable, it is called
a)Pro-rata coverage.
b)Overinsurance
c)Double indemnity coverage.
d)Fraternal coverage. - CORRECT ANSWERS-b)Overinsurance
CORRECT ANSWERS _2025 WELL UPDATED
If an insurer accepts premium payments by credit card, who is responsible for paying the fees
charged by a credit card company?
a)Policyowners, as part of their premium
b)Insured making payment
c)Credit card company
d)Insurer accepting payment - CORRECT ANSWERS-d)Insurer accepting payment
Credit card payment fees are the responsibility of the insurer. In fact, it is one of the conditions
for permitting the insurer to accept payments by credit card.
Which of the following is NOT true of a major-medical health insurance policy?
a)It is designed to pay on a first dollar of expense basis.
b)It usually has a maximum benefit amount.
c)The benefits are subject to deductibles.
d)It is designed to cover hospital and medical expenses of a catastrophic nature. - CORRECT
ANSWERS-a)It is designed to pay on a first dollar of expense basis.
A major medical policy usually has deductibles and a copayment requirement. Basic medical,
but not major medical, expense policies pay on a first dollar basis.
When is a child eligible for coverage on a parent's policy?
a)From the moment of birth
b)30 days after birth
c)45 days after birth
d)60 days after birth - CORRECT ANSWERS-a)From the moment of birth
,Every policy that provides illness benefits for minor children on their parent's policy must provide
benefits beginning at the moment of birth.
Which of the following is correct regarding the taxation of group medical expense premiums and
benefits?
a)Premiums are not tax deductible and benefits are not taxed.
b)Premiums are tax deductible and benefits are taxed.
c)Premiums are tax deductible and benefits are not taxed.
d)Premiums are not tax deductible and benefits are taxed. - CORRECT ANSWERS-
c)Premiums are tax deductible and benefits are not taxed.
Premiums paid by employers for Group Medical Expense insurance are tax deductible for the
employer as a business expense. Also, policy benefits paid out to employees are not taxable as
income to the employee.
Todd has been informed that he has a hernia which requires repair. When Todd researches the
cost, he learns that his insurance plan will cover 200 points worth of surgical expenses. Each
point represents $10, which means that $2000 of his surgery will be covered by his insurance
plan. What system is Todd's insurance company using?
a)Basic Surgical
b)Point-based medical
c)Conversion factor
d)Relative value - CORRECT ANSWERS-d)Relative value
In a relative-value approach, a surgical procedure is assigned an amount of points relative to
the maximum coverage allowed for a given surgery.
A client has a new individual disability income policy with a 20-day probationary period and a
30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days.
How many days of disability benefits will the policy pay?
, a)10 days
b)15 days
c)25 days
d)45 days - CORRECT ANSWERS-b)15 days
A probationary period refers to the amount of time that coverage is not available for illness-
related disabilities, so it would not apply to a broken leg. The elimination period, however, is the
time that must elapse between the onset of the disability and when benefits will start being paid.
In this case, the individual is considered disabled for 45 days, and the benefits will start to be
paid after 30 days. So, the client will receive benefits for 15 days.
An insured misstated her age on an application for an individual health insurance policy. The
insurance company found the mistake after the contestable period had expired. The insurance
company will take which of the following actions regarding any claim that has been issued?
a)Adjust the claim benefit to reflect the insured's true age
b)Deny any claims and cancel the policy
c)Deny paying a claim based on misrepresentation
d)Pay the full amount of a claim because the contestable period has ended - CORRECT
ANSWERS-a)Adjust the claim benefit to reflect the insured's true age
The Misstatement of Age provision says that if a client has misstated her age, whether
intentional or unintentional, they will adjust the benefit being paid. It doesn't matter when the
mistake was found.
When an individual is covered under two health insurance policies that have duplicate benefits
which could make a claim for benefits because of an injury or illness profitable, it is called
a)Pro-rata coverage.
b)Overinsurance
c)Double indemnity coverage.
d)Fraternal coverage. - CORRECT ANSWERS-b)Overinsurance
