Life & Health Insurance Exam Prep 2024
Basic Medical Expense policies -CORRECT ANS-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 ANS--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 ANS--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 ANS--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 ANS-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 ANS--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 ANS-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 ANS-Policyowners obtain medical treatment from whatever source they
want and submit their charges to their insurer for reimbursement (actual amount).
Service Based Contracts -CORRECT ANS--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 ANS--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 ANS-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 ANS-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 ANS-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 ANS-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 ANS--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 ANS-- 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 ANS--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 ANS-A separate deductible for each separate illness or accident.
Stop Loss -CORRECT ANS-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 -CORRECT ANS-Major Medical and Basic Medical are written together.
Corridor deductible -CORRECT ANS-Occurs in the middle of the hospital stay, and bridges the gap from
the basic to the major medical plan.
Pre-Existing Condition -CORRECT ANS--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.
-For individual policies, the exclusion can not exceed 24 months, for group policies 12 months, and for
late enrollees in group plans, 18 months.
Basic Medical Expense policies -CORRECT ANS-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 ANS--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 ANS--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 ANS--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 ANS-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 ANS--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 ANS-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 ANS-Policyowners obtain medical treatment from whatever source they
want and submit their charges to their insurer for reimbursement (actual amount).
Service Based Contracts -CORRECT ANS--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 ANS--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 ANS-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 ANS-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 ANS-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 ANS-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 ANS--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 ANS-- 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 ANS--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 ANS-A separate deductible for each separate illness or accident.
Stop Loss -CORRECT ANS-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 -CORRECT ANS-Major Medical and Basic Medical are written together.
Corridor deductible -CORRECT ANS-Occurs in the middle of the hospital stay, and bridges the gap from
the basic to the major medical plan.
Pre-Existing Condition -CORRECT ANS--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.
-For individual policies, the exclusion can not exceed 24 months, for group policies 12 months, and for
late enrollees in group plans, 18 months.
