Life & Health Insurance Exam Prep – Coverage, Policies, and Licensing 2026 –
Study and Practice Guide
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.
Study and Practice Guide
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.
