Life & Health Insurance Exam Prep questions
and answers 2026\2027 A+ Grade
Basic Medical Expense policies
- correct answer 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 answer -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 answer -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 answer -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 answer 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 answer -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 answer 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 answer Policyowners obtain medical treatment from whatever source they want and submit
their charges to their insurer for reimbursement (actual amount).
Service Based Contracts
- correct answer -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 answer -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 answer 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 answer 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 answer 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 answer 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 answer -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 answer - 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 answer -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 answer A separate deductible for each separate illness or accident.
and answers 2026\2027 A+ Grade
Basic Medical Expense policies
- correct answer 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 answer -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 answer -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 answer -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 answer 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 answer -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 answer 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 answer Policyowners obtain medical treatment from whatever source they want and submit
their charges to their insurer for reimbursement (actual amount).
Service Based Contracts
- correct answer -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 answer -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 answer 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 answer 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 answer 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 answer 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 answer -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 answer - 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 answer -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 answer A separate deductible for each separate illness or accident.
