Life & Health Insurance Exam Prep Questions &
Answers Well Elaborated to Score A+
Basic Medical Expense policies - 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 - 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 - 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 - 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) - 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 - 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 - 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 - Answer Policyowners obtain medical treatment from whatever source they want and
submit their charges to their insurer for reimbursement (actual amount).
Service Based Contracts - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - Answer A separate deductible for each separate illness or accident.
Stop Loss - Answer Max amount the insured is required to pay out of pocket: After the stop loss amount
is reached by the insured, in a calendar year, the company will pay 100% of the remaining covered
expenses.
-calculated by adding both deductibles and coinsurance amounts.
Comprehensive major medical - Answer Major Medical and Basic Medical are written together.
Corridor deductible - Answer Occurs in the middle of the hospital stay, and bridges the gap from the
basic to the major medical plan.
Pre-Existing Condition - Answer -To Prevent avoid adverse selection.
-A is a medical condition for which an insured sought medical attention, treatment, or advice for
symptoms or for which should have sought medical advice/treatment in the previous 6 months.
Answers Well Elaborated to Score A+
Basic Medical Expense policies - 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 - 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 - 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 - 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) - 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 - 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 - 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 - Answer Policyowners obtain medical treatment from whatever source they want and
submit their charges to their insurer for reimbursement (actual amount).
Service Based Contracts - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - Answer A separate deductible for each separate illness or accident.
Stop Loss - Answer Max amount the insured is required to pay out of pocket: After the stop loss amount
is reached by the insured, in a calendar year, the company will pay 100% of the remaining covered
expenses.
-calculated by adding both deductibles and coinsurance amounts.
Comprehensive major medical - Answer Major Medical and Basic Medical are written together.
Corridor deductible - Answer Occurs in the middle of the hospital stay, and bridges the gap from the
basic to the major medical plan.
Pre-Existing Condition - Answer -To Prevent avoid adverse selection.
-A is a medical condition for which an insured sought medical attention, treatment, or advice for
symptoms or for which should have sought medical advice/treatment in the previous 6 months.
