UTAH HEALTH INSURANCE EXAM QUESTIONS WITH CORRECT ANSWERS

UTAH HEALTH INSURANCE EXAM QUESTIONS WITH CORRECT ANSWERS “Insurance - CORRECT ANSWER Transfer of risk." "Types of risk - CORRECT ANSWER Pure and Speculative" "Morale Hazard - CORRECT ANSWER Through carlessness or irresponsible actions an increase in the possibilty of a loss. (Example: Not cutting down a tree branch that might fall on your house because you have insurance if it does)" "Perils - CORRECT ANSWER causes of loss insured against in an insurance policy" "Avoidance - CORRECT ANSWER Eliminating exposure to a loss (not driving so you won't get in a car accident)" "retention - CORRECT ANSWER Planned assumption of risk through the use of deductibles, co-payments, or self-insurance." "reduction - CORRECT ANSWER Actions such as installing smoke detectors to reduce the risk of loss from fire or getting an annual physical to help prevent/detect health problems early." "Ceding Insurer - CORRECT ANSWER The company transferring risk in a reinsurance arrangement." "assuming insurer - CORRECT ANSWER reinsurer or company who is taking over the risk" "Stock Companies - CORRECT ANSWER -Owned by stockholders -nonparticipating (policy holders DO NOT share in profits or losses)" "Foreign Insurer - CORRECT ANSWER An insurance company that is incorporated in another state." "Alien Insurer - CORRECT ANSWER An insurance company that is incorporated outside the United States." "Who does an agent represent? - CORRECT ANSWER The INSURER (insurance company) not the insured." "Express Authority - CORRECT ANSWER The authority granted to an agent by means of the agent's written contract.." "Parts of a contract - CORRECT ANSWER Offer, acceptance, consideration, and legal purpose" "Consideration - CORRECT ANSWER Exchanging something of value" "Insured's Consideration - CORRECT ANSWER 1. A truthful and complete application 2. Premium Payment" "Insurer's Consideration - CORRECT ANSWER Promise to pay qualifying claims" "Acceptance - CORRECT ANSWER UNDERWRITER approves a prepaid application. (An agent/producer CANNOT bind coverage, but they can accept an application)" "Legal Purpose - CORRECT ANSWER Insurable interest and consent 1. Must be of age (18+) 2. Cannot be high 3. Cannot be drunk 4. Must be mentall competent" "indemnity - CORRECT ANSWER Allows the insured to collect only to the extent of financial loss and not gain financially. (Reimbursement)" "Utmost good faith - CORRECT ANSWER An obligation to act in complete honesty and to disclose all relevant facts." "Representations - CORRECT ANSWER Are statements that are believed to be true, but are not guaranteed to be true. Example: If someone is asked if they have smoked in the past ten years, but they can't remember if it has been a full ten years since they quit, but they say yes anyway." "Misrepresentations - CORRECT ANSWER Untrue statements on the application that could void the contract." "Material Misrepresentation - CORRECT ANSWER A statement that, if discovered, would alter the underwriting decision of the insurance company." "Fraud - CORRECT ANSWER An intentional material misrepresentation. (A lie)" "Warranty - CORRECT ANSWER An absolutely true statement upon which the validity of the insurance policy depends." "Types of limited policies - CORRECT ANSWER 1. Accident only 2. travel accident 3. dread disease (ex. cancer, heart disease) 4. Accidental Death and Dismemberment" "Principal Sum (AD&D) - CORRECT ANSWER The full amount is paid out for permanent and total deafness, blindness, loss of speech, and dismemberment OR when death occurs within 90 days of an accident." "Capital Sum (AD&D) - CORRECT ANSWER A percentage of the full (principal) amount is paid in the case of loss of 1 limb, one eye, or one ear." "hospital indemnity policy - CORRECT ANSWER pays stipulated daily, weekly, or monthly cash benefits during hospital confinement (per day amount)" "Credit Disability Insurance - CORRECT ANSWER Issued to those who are in debt to a creditor. Allows their debt to that specific creditor to be paid off when they become disabled." "Outline of Coverage - CORRECT ANSWER 1. Must provide full and fair disclosure to the applicatant. 2. Must be delivered at the time of application OR delivery of the policy" ""Notice to the Applicant" - CORRECT ANSWER This informs the applicant that a credit report will be ordered concerning his/her past history." "The application is the main source of what? - CORRECT ANSWER Underwriting information" "What three signatures are required on every insurance application? - CORRECT ANSWER 1. Proposed insured's signature 2. The Policyowner (if different than insured) 3. The agent's signature" "Best two ways to correct a mistake on the application? - CORRECT ANSWER 1. Start over 2. Draw a line through it and have the proposed insured initial next to the correct answer." "Insurability Conditional Receipt - CORRECT ANSWER This is given to an applicant when they pay the premium at the time of application. It provides temporary coverage throughout the underwriting process." "How can a policy be delivered? - CORRECT ANSWER 1. By an agent whenever possible 2. By certified mail" "Utah Individual Health Insurance Application - CORRECT ANSWER Streamlines the application process by submitting application to multiole insurers at once." "Producer Report - CORRECT ANSWER ONLY the agent is involved in completing this. Asks questions about the length of time that the applicant has known the agent, an estimate of the applicants net worth and income, and whether the agent knows of any reason that the contract should not be issued. DOES NOT BECOME PART OF THE ENTIRE CONTRACT." "Attending Physician Statement - CORRECT ANSWER The applicants doctor completes a form about the applicants medical history." "Investigative Consumer (Inspection) Report - CORRECT ANSWER Includes info about applicants general reputation, personal habits, and mode of living. BASED ON INTERVIEWS WITH APLICANTS ASSOCIATES, FRIENDS, AND NEIGHBORS." "How soon does an applicant have to be notified about an investigative consumer report? - CORRECT ANSWER within 3 days" "If the customer wants more info about the investigative consumer report, how long do we have to get it to them? - CORRECT ANSWER 5 days" "What are the three risk classifications? - CORRECT ANSWER 1. Preferred 2. Standard 3. Substandard" "Preferred risk - CORRECT ANSWER People who are in better health that qualify for a premium discount. (Example: Non-smokers)" "Standard Risks - CORRECT ANSWER People who are in average health and qualify for the normal insurance rates." "Substandard Risk - CORRECT ANSWER People who are in poor health or reflect an increased risk of loss. May be covered by the insurance company, but will usually have to pay a higher premium." "Statement of Good Health - CORRECT ANSWER If the first premium is not paid yet while the application is going through underwriting, the agent must obtain a statement signed by the insured testifying that they have continued to be in good health before the policy can be approved." "What must the agent compare before replacing an applicant's current insurance with new insurance? - CORRECT ANSWER 1. Plan benefits 2. Renewability Provisions 3. Coverage for pre-existing conditions" "Grace Period - CORRECT ANSWER Must be at least 10 days. Claims will still be paid in this time." "Reinstatement - CORRECT ANSWER Reinstatement is automatic if a representative accepts a premium from the insured. If a reinstatement application is required, coverage is automatically reinstated after 45 days if the insurance company doesn't approve or deny it." "When Will Accidents be covered after reinstatement of a health policy? - CORRECT ANSWER Immediately" "When will sickness be covered after reinstatement of a health policy? - CORRECT ANSWER After a 10 day probationary period to protect against adverse selection." "Notice of Claim - CORRECT ANSWER Notice from the insured to the insurance company is required within 20 days of a loss." "Claim forms - CORRECT ANSWER The insurance company (insurer) must send claim forms to the insured within 15 days." "How long does the insured have to wait before taking legal action against an insurance company for unpaid claims? - CORRECT ANSWER At least 60 days." "When can the insured no longer take legal actions against an insurance company for unpaid claims? - CORRECT ANSWER After 3 years have passed." "Can an irrevocable beneficiary be changed? - CORRECT ANSWER Only upon written consent from the beneficiary." "Misstatement of age - CORRECT ANSWER The benefits will be adjusted to reflect the insureds actual age." "Illegal Occupation Provision - CORRECT ANSWER Insureds claim will be denied if they were injured while committing an illegal act." "Intoxicants and Narcotics Provision - CORRECT ANSWER The insurer is not liable for any claims that result while the insured is intoxicated or under the influence of drugs." "Right to Examine Provision (Free Look Period) - CORRECT ANSWER Allows the insured a period of several days to look over the policy, and if dissatisfied for any reason, return it for a full refund. (10 days for normal plans, 30 days for senior plans)" "Renewability clause - CORRECT ANSWER States the insurers duty when a policy comes up for renewal. The insured has the right to cancel at any time always." "Noncancellable renewability - CORRECT ANSWER The insurance company cannot cancel the policy or increase the premiums. Insured has the right to renew for the life of the contract." "Guaranteed Renewability - CORRECT ANSWER The insurance company cannot cancel the policy (except for non-payment), but they can increase the premium every year on the anniversary date of the policy." "What two types of policies must always be guaranteed renewable? - CORRECT ANSWER Medicare supplements and Long term care policies" "Conditionally Renewable - CORRECT ANSWER Insurance company may cancel the policy only at renewal for CERTAIN CONDITIONS THAT ARE STIPULATED IN THE CONTRACT." "Optionally Renewable - CORRECT ANSWER Can be cancelled by the insurance company for ANY reason on the ANNIVERSARY OR PREMIUM DUE DATE. The premium can be increased." "Term (cancellable, nonrenewable) - CORRECT ANSWER Health insurance for a specific period of time. CANNOT be renewed. Example: for a vacation" "Income Replacement Contracts - CORRECT ANSWER -Makes up for reduced income due to a partial disability or illness -Example: Would pay to make up the difference in wages if an ophthalmologist could no longer perform surgery due to partial vision loss." "Presumptive Disability - CORRECT ANSWER -Automatically qualifies the insured for full disability income benefits. -Total blindness, total deafness, total loss of speech, loss of two or more limbs." "INDIVIDUAL Disability income insurance - CORRECT ANSWER Applied for by an individual instead of a group. Premiums ARE NOT tax deductible and benefits are NOT taxed." "Elimination Period - CORRECT ANSWER A waiting period from the start of the injury or illness to the time the insurance company will pay for the disability income benefits. -Basically a deductible measured in days instead of dollars -Usually anywhere from 30 to 180 days" "Benefit Period - CORRECT ANSWER Length of time over which the monthly disability benefit payments will last for each disability after the elimination period. -Usually 1 yr, 2 yrs, 5 yrs, or to age 65. THE LONGER THE BENEFIT PERIOD THE HIGHER THE PREMIUM." "Social Insurance Supplement - CORRECT ANSWER This supplements social security disability." "How long is the waiting period for social security disability? - CORRECT ANSWER 5 months" "Partial Disability - CORRECT ANSWER -The benefit will typically pay 50% of the total disability benefit, and is limited to a certain time period." "return of premium rider - CORRECT ANSWER Provides a premium refund of a certain percentage of premiums at certain times" "Cash surrender value - CORRECT ANSWER this rider creates a cash value of around 70% of the premiums paid in excess of claims. Usually only available at the termination of the contract." "How many years can you stay on short term disability? - CORRECT ANSWER up to 2 years" "Group Long-Term Disability - CORRECT ANSWER Lower wage employees receive 2/3 or 66% of their previous income. Higher paid employees get 50% of their previous income. Usually the benefit period stops at age 65 when they qualify for social security." "Disability Buy-Sell Policy - CORRECT ANSWER This provides enough cash for one owner to buy the other owners shares in the even that the other owner dies. -Usually has an extremely long elimination period. -One large lump-sum benefit" "Key Employee Policy - CORRECT ANSWER Purchased by the EMPLOYER on the life of the key employee. -The key employee is the insured, but the EMPLOYER is the owner of the policy -The employer pays the premium AND receives the benefit in the even that the key employee dies -Covers the expense of hiring and training a replacement" "Certificate of Coverage - CORRECT ANSWER Individuals that are covered under a group medical plan receive this as their evidence of coverage." "Association Group - CORRECT ANSWER A group can buy insurance under these conditions: 1. Must be organized for a purpose OTHER THAN to buy insurance. 2. Must have at least 100 members 3. Group must have been active for at least two years 4. must have a constitution and by-laws 5. Must hold AT LEAST annual meetings" "Creditor insurance - CORRECT ANSWER Protects the lending institution from losing money when a debtor dies." "Multiple Employer Trust - CORRECT ANSWER Two or more employers get together to buy insurance (usually small businesses that don't qualify on their own)" "Multiple Employer Welfare Association (MEWA) - CORRECT ANSWER similar to MET but the employers pool their funds together and self-insure" "To qualify for group health insurance, how many employees must be in the group? - CORRECT ANSWER 50 or more" "Continuation of Coverage under COBRA - CORRECT ANSWER Employers with 20 or more employees must extend group health coverage to terminated employees." "How long can a person be covered under COBRA? - CORRECT ANSWER Up to 18 months" "How long does a terminated employee have to apply for COBRA benefits? - CORRECT ANSWER up to 60 days after termination" "What percentage of the premium charge can an employer collect from a terminated employee for COBRA coverage? - CORRECT ANSWER 102% (2% goes towards the employer's administrative costs for the plan)" "How long can dependents be covered under COBRA in the case of death or divorce? - CORRECT ANSWER up to 36 months" "Utah Mini COBRA - CORRECT ANSWER employees who participate in group DISABILITY are entitled to have an individual policy on the same basis of eligibility" "Deductible - CORRECT ANSWER the amount the insured must pay before the insurance will pay anything -higher deductible=lower monthly premium" "Coinsurance - CORRECT ANSWER cost sharing (example 80/20)" "Stop-loss feature - CORRECT ANSWER Out of pocket max (OOPM). Once the insured has paid a certain amount in covered medical expense throughout the year, the insurance pays 100% of all covered claims." "HMO Plan - CORRECT ANSWER -Managed Care plan (controls costs) -emphasis on preventative care -limited choice of providers -members are called subscribers -Primary care physician acts as a gatekeeper -must have a referral to see a specialist -doctors are paid on a pre-paid basis -provide their benefits in the form of services -copays -based on geographic location -MUST provide emergency care and in-patient hospital care in or out of the network." "Utah Net Care - CORRECT ANSWER for people who can't afford COBRA. Can Provide coverage for up to 12 months." "PPO - CORRECT ANSWER -Offer a wider selection of providers than HMO's -prearranged discounts with providers -health care providers are paid on a fee-for-service basis -deductibles and co insurance apply -Members can go out of network, but will receive a reduced benefit -Most PPO's will pay out of network emergency care in full" "Open Panel PPO - CORRECT ANSWER PPO that CAN treat outside patients that are not members of the PPO" "Closed panel PPO - CORRECT ANSWER providers CANNOT treat patients that are not members of the PPO" "Point-of-Service Plan - CORRECT ANSWER -Combination of an HMO and PPO -Doctors are paid of a fee-per-member (capitation) basis -Offers a greater provider selection than HMO's -Controlled by a primary care physician, but the member doesn't need a recommendation to see a specialist -Members will pay more if they go out of network -Doctors are paid on a fee for service basis" "Preventative Care - CORRECT ANSWER -annual physical exams, mammograms, etc -living a healthier lifestyle -promoted by managed care plans to reduce costs" "Home Healthcare - CORRECT ANSWER Alternative to hospital care. Patient stays home and is periodically visited by a healthcare provider." "Hospice Care - CORRECT ANSWER In-home care to make the terminally ill comfortable. No measures to cure the condition, just control pain." "Prospective Review (Precertification process) - CORRECT ANSWER physician submits claim forms in advance to determine how much the patients insurance will pay" "Concurrent Review - CORRECT ANSWER The insurance company will monitor the insured's hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned." "How long can children stay on their parents insurance because of the affordable care act? - CORRECT ANSWER 26 years old" "How long does a parent have to prove that their child is disabled once they reach age 26 to keep them on their insurance? - CORRECT ANSWER 31 days" "How long do parents have to notify their insurance company about the birth of a child? - CORRECT ANSWER 31 days to get coverage" "When is a newborn covered? - CORRECT ANSWER At the moment of birth (as long as their parents notify the insurance company within 31 days)" "HIPPA - CORRECT ANSWER -Eliminated pre-existing condition restrictions under healthcare plans -Regulates group and individual health plans -applies to employers with 2 or more employees -guarantees renewability for individual policies" "Requirements to switch from group coverage to individual health coverage under HIPPA - CORRECT ANSWER -have 18 months creditable health coverage -have been covered under a group plan in most recent insurance -Used up any COBRA -not eligible for medicare or Medicaid -not have any other health insurance -apply within 63 days of losing prior coverage" "Patient Protection and Affordable Care Act (PPACA) - CORRECT ANSWER -Mandates increase in preventative, educational, and community-based healthcare services -set up private insurance market -hold insurance companies accountable by keeping premiums low, preventing denials of care and allowing applicants with pre-existing conditions to obtain coverage -Extend coverage for adult children to age 26 -eliminated lifetime benefit limits" "Eligibility for coverage under the affordable care act? - CORRECT ANSWER -must be a us citizen -must live in the us -cannot be currently incarcerated -individuals covered under medicare are not eligible" "insurers may not establish rules for eligibility based on: - CORRECT ANSWER 1. health status 2. medical condition 3. claims experience 4. receipt of healthcare 5. medical history 6. genetic information 7. evidence of insurability 8. Disability 9. or any other health-status related factor" "What factors can an insurance company base premium rates on? - CORRECT ANSWER 1. Geographic location 2. family composition (single or family enrollment) 3. Age 4. Tobacco Use" "Guaranteed Issue - CORRECT ANSWER Insurance Companies must accept any eligible applicant under group coverage." "How much of preventative care MUST be covered? - CORRECT ANSWER 100% (because of the affordable care act)" "Who qualifies for medicare? - CORRECT ANSWER -Age 65 -ESRD (kidney failure) -entitled to social security disability benefits for 2 years -Has ALS or lou Gehrig's disease" "Medicare Part A - CORRECT ANSWER Covers hospital care, skilled nursing, home health care, and hospice care. Those who are fully insured don't have to pay a premium." "When can you enroll in medicare parts A & B? - CORRECT ANSWER initial enrollment: 3 months before and 3 months after 65th b-day General enrollment: between jan 1st and march 31st each year Special enrollment period: any time during the year if the individual or his/her spouse is still employed and covered under a group plan" "How many days does medicare part A cover for inpatient hospital stays? - CORRECT ANSWER 90 days total (-subject to a deductible -60 days are covered at 100% -copay after 60 days)" "When is blood covered under medicare part A? - CORRECT ANSWER After the first 3 pints" "How many days does medicare part A cover for skilled nursing facility stays? - CORRECT ANSWER up to 100 days total (-must follow a 3+ day hospital stay to be covered -First 20 days are covered 100%)" "Medicare part B - CORRECT ANSWER -Partially funded by premiums, partially funded by general revenues of the federal gov -80/20 coinsurance -Covers doctor services, outpatient surgery, diagnostic tests, x-rays, home health visits, durable medical equipment, etc -covers limited prescription drugs" "Medicare Part C (Medicare Advantage Plans) - CORRECT ANSWER -Must be enrolled in medicare parts A & B to qualify for this type of plan -May cover extra things like vision, hearing, dental, etc. -HMO or PPO plans -Usually provides prescription drug coverage" "Medicare Advantage Special Needs Plan - CORRECT ANSWER this includes people who have both medicare and Medicaid, who reside in a nursing home, or have certain chronic medical conditions." "Medicare Part D - CORRECT ANSWER Medicare Prescription drug coverage. Funded by a monthly premium has a deductible Once the benefit limit is reached, a gap called the "donut hole" occurs. Once out of the donut hole, the insured reaches catastrophic coverage (plan will cover 95% of prescription drug costs at this time)" "Medicare Supplements - CORRECT ANSWER -Supplement medicare insurance -issued by private insurance companies -All plans (A through N), must have the same coverage -Can sign up for 6 months after getting medicare part B -Must have parts A & B to purchase this insurance -All plans must cover part A coinsurance, part A hospice care coinsurance, part A hospital costs up to an additional 365 days after part a benefits are used up, part b coinsurance, the first 3 pints of blood" "When must a buyers guide be given to an applicant? - CORRECT ANSWER At the time of application" "When must an outline of coverage be given for medicare plans? - CORRECT ANSWER At the time of application" "Medicare SELECT plan - CORRECT ANSWER medicare supplement policy that contains restricted network provisions" "OBRA requires: - CORRECT ANSWER -large group health plans (100 employees or more) must provide primary coverage for disabled individuals under age 65 who are not retired. -employer health plans must provide primary coverage for people with ESRD (kidney failure) for 30 months" "Medicaid - CORRECT ANSWER -State and federally funded -for low income people and families -covers: physicians services, inpatient hospital care, outpatient hospital care, skilled nursing home services, laboratory and x-ray services, home health care, family planning, prescriptions, dental, private duty nursing, eyeglasses, check-ups, medical supplies/equipment." "Long Term Care Policies - CORRECT ANSWER -Must Provide coverage for at least 12 months -must be unable to perform some activities of daily living to be eligible for benefits (eating, bathing, dressing, etc)" "Skilled Care - CORRECT ANSWER Daily nursing and rehabilitative care that can only be provided by medical personnel in an institutional setting" "Intermediate Care - CORRECT ANSWER Occasional nursing or rehabilitative care provided for stable conditions that require daily medical assistance on a less frequent basis than skilled nursing care. Ordered by a physician, and skilled medical personnel would deliver or monitor this type of care. This is done in a patients home, or an intermediate-care setting, or in the patient's home" "Home Health Care - CORRECT ANSWER Care provided by skilled nursing or other professional services in one's home. Can be done by RN, LPN, vocational nurse, or community-based organizations." "Adult Day Care - CORRECT ANSWER Care provided for functionally impaired adults on less than a 24 hr basis." "Respite Care - CORRECT ANSWER Care designed to provide relief to the family caregiver." "How long is the elimination period for a long term care policy usually? - CORRECT ANSWER 30 days or more" "How long is the benefit period for a long term care plan usually? - CORRECT ANSWER 2 to 5 years (the longer the benefit period, the higher the premium)" "Long term care insurance pays - CORRECT ANSWER a specific fixed dollar amount per day, regardless of the actual cost of care." "Guarantee of insurability option - CORRECT ANSWER allows the insured to periodically increase benefit levels without providing evidence of insurability" "Requirements to be licensed as a producer in utah - CORRECT ANSWER -at least 18 yrs old -satisfies any applicable education, examination, and training requirements -pays applicable fees -has not committed an act that is grounds for license denial, suspension or revocation -is deemed competent and trustworthy" "When may a producer add surplus lines of authority? - CORRECT ANSWER if they have been insurance producers in Utah or another stat in substantially the same license class for at least 3 years of the 4 years immediately before applying to add surplus lines." "Nonresident Producer - CORRECT ANSWER -a person who is not a resident of Utah may be licensed as a nonresident producer" "Consultants - CORRECT ANSWER -must be licensed for 3 of the past 4 years to become a consultant -Offers advice to the public about insurance policies for a fee" "Adjusters - CORRECT ANSWER engage in insurance adjusting on behalf of an insurer, policyholder, or claimant." "How often must you renew your health insurance license? - CORRECT ANSWER Every 2 years" "How soon before your license expires can you renew it? - CORRECT ANSWER You can renew it up to 90 days before it expires" "How many hours of continuing education do you need to renew your license? - CORRECT ANSWER 24 hours" "How many of your continuing education hours need to be ethics courses? - CORRECT ANSWER 3 hours" "How long do you have to reinstate a lapsed license? - CORRECT ANSWER Up to 1 year after it expires" "Who do you need to notify if you are doing business under an assumed name other than your legal name? - CORRECT ANSWER the commissioner" "How soon must you notify the commissioner of a change of address or phone number? - CORRECT ANSWER within 30 days" "How long do you have to notify the commissioner of any legal actions taken against you? - CORRECT ANSWER 30 days" "Who is the commissioner appointed by? - CORRECT ANSWER The governor" "What does the commissioner do? - CORRECT ANSWER -regulated internal affairs of the department of insurance -enforces the state insurance laws -regulates insurance rates (does NOT set insurance rates, the insurance companies do that)" "How often must the commissioner examine domestic and former insurer? - CORRECT ANSWER At least once every 5 years" "How long must an insurer keep records for the commissioner to examine? - CORRECT ANSWER 3 years" "Who monitors the solvency and financial strength of insurance companies? - CORRECT ANSWER The commissioner AND the department of insurance" "How long is the waiting period in Utah before an insurance company can make a rate change effective? - CORRECT ANSWER 30 days" "How long is the waiting period for a SPECIFIC RISK rate increase before the change become effective? - CORRECT ANSWER 10 days" "If the commissioner prohibits the use of a specific form, how long does the insurance company have to discontinue it? - CORRECT ANSWER 15 days" "How long must an insurance company keep records of discontinued forms? - CORRECT ANSWER 5 years" "A producer must be ____ to conduct business - CORRECT ANSWER appointed" "How long does an insurer have to notify the commissioner of a producer appointment? - CORRECT ANSWER 15 days" "How long does an insurer have to notify the commissioner of termination of a producer appointment? - CORRECT ANSWER 30 days" "Controlled business - CORRECT ANSWER is the practice of selling insurance only to friends and family. Commissions from controlled business within the past 12 months MUST NOT exceed 50% of all producer commissions for that year. -A producer cannot be licensed for the sole purpose of conducting controlled business" "When can a former licensee apply for a new license when their license has been revoked by the commissioner? - CORRECT ANSWER 5 years" "How long can the commissioner put a licensee on probation? - CORRECT ANSWER 24 months" "What is the fine for violating the insurance code for an individual? - CORRECT ANSWER $2,500" "Individuals may receive a fine for up to ________ for a crime without a specific penalty regarding to insurance - CORRECT ANSWER $5,000" "Rebating - CORRECT ANSWER Any gift of value over $100 given to an applicant as an inducement to buy." "Contracts issued by unauthorized insurers would be deemed - CORRECT ANSWER illegal" "Fair Credit Reporting Act - CORRECT ANSWER Protects consumers against the circulation of inaccurate or obsolete personal or financial information." "If an application is denied based on a credit report, what does the consumer have the right to? - CORRECT ANSWER The right to know where the report came from and what was in the report." "What is the max jail time for insurance activities that impact interstate commerce? - CORRECT ANSWER 10 years and 15 if the activity jeopardized the security of the accompanied insurer." "Applicants for a health insurance license who have a past conviction related to dishonesty, breach of trust, etc must obtain ___________ to be licensed - CORRECT ANSWER a 1033 waiver" "Gramm-Leach-Bliley Act - CORRECT ANSWER stipulates that in general, an insurance company may not disclose nonpublic information to a nonaffiliated third party" "The National Do Not call registry was established by - CORRECT ANSWER The federal trade commission (FTC)" "The Do Not call registry protects consumers from calls from - CORRECT ANSWER telemarketers" "Permitted calling hours? - CORRECT ANSWER 8 am to 9 pm" "Organizations must consult the DO not call registry every - CORRECT ANSWER 31 days" "Essential benefits for health insurance plans include: - CORRECT ANSWER hospitalization, maternity, emergency services, wellness, preventative services, and chronic disease management" "Metal Levels and Coverage Under the affordable care act - CORRECT ANSWER Bronze: covers 60% Silver: covers 70% Gold: covers 80% Platinum: covers 90%" "Who can apply for catastrophic coverage? - CORRECT ANSWER young adults under age 301" "A limited policy that only covers certain diseases like cancer or heart disease - CORRECT ANSWER dread disease policy" "Utah Health Exchange - CORRECT ANSWER Provides employers with a free or low cost method for employees to purchase health insurance using pre-tax dollars" "Pure Risk - CORRECT ANSWER A chance of loss or no loss, but no chance of gain. The ONLY type of insurable risk." "Speculative Risk - CORRECT ANSWER Chance of loss or gain. CANNOT be insured. (Example: Buying stock in the stock market)" "Types of Hazards - CORRECT ANSWER Physical, Moral and Morale" "Physical Hazard - CORRECT ANSWER A physical condition that increases the chance of loss." "Moral Hazard - CORRECT ANSWER Dishonesty or character defects in an individual that increase the frequency or severity of loss (Example: Applicant lies on insurance application)" "Transfer - CORRECT ANSWER Transferring the risk of loss to another company or entity. Insurance is the most common way to transfer risk." "To be insurable, a risk must be - CORRECT ANSWER -due to chance -Definite and measurable -Statistically predictable -NOT catastrophic -Large loss exposure (large pool of randomly selected people/risks)" "Adverse Selection - CORRECT ANSWER Tendency for poorer than average risks to seek insurance." "Reinsurance - CORRECT ANSWER Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability." "Mutual Companies - CORRECT ANSWER -Owned by the policyowners -Participating (ploicyowners are entitled to dividends) -Dividends are NOT guaranteed" "Fraternal Benefit Societies - CORRECT ANSWER Must be nonprofit, have a lodge system (ie. religious organization), representative form of government and offer insurance to its members only." "Certificate of Authority - CORRECT ANSWER License for insurance company to do business. This allows insurers to be considered ADMITTED or AUTHORIZED." "Domestic Insurer - CORRECT ANSWER An insurance company that conducts business in the state of incorporation." "Implied Authority - CORRECT ANSWER the authority that the agent has that is not specifically listed in their contract, but is assumed to have to conduct business. (Required to be able to conduct business). Example: collecting premiums" "Apparent Authority - CORRECT ANSWER A third party's reasonable belief that an agent has authority to act on the principal's behalf. Based on the actions words, etc of the principal. Example: Using business cards or brochures" "Fiduciary Responsibility - CORRECT ANSWER -An ethical and legal obligation to perform a person's duties in a trustworthy manner. -Money related -Must not commingle funds -Forwarding premiums to the insurer/principal in a timely manner is an example of acting in a fiduciary capacity" "Contract of Adhesion - CORRECT ANSWER Take it or leave it agreements, where the insured has no say in the contract terms and conditions." "Aleatory Contract - CORRECT ANSWER A contract where the values exchanged may not be equal but depend on an uncertain event" "Personal Contract - CORRECT ANSWER A contract between an individual and an insurer." "unilateral contract - CORRECT ANSWER Only ONE of the parties is legally bound (the insurance company)." "Conditional Contract - CORRECT ANSWER Certain conditions must be met in order for policy to pay out." "Ambiguities in Contract of Adhesion - CORRECT ANSWER Will always be interpreted in favor of the insured NOT the insurance company." "Concealment - CORRECT ANSWER intentional withholding of material information" "Waiver - CORRECT ANSWER Voluntary relinquishment of a known legal right" "Estoppel - CORRECT ANSWER Prevents a person from re-asserting a right after it has been waived. (Legal consequence of waiver)" "Underwriting factors for individual health plans - CORRECT ANSWER 1. Physical/health condition of the insured 2. Moral and morale hazards 3. Occupation" "Group Health insurance underwriting - CORRECT ANSWER 1. Underwrites the group as a whole 2. Evidence of insurability is NOT required." "Blanket Insurance - CORRECT ANSWER single amount of coverage applies to ANY loss of injury up to the single amount. People in the group do not fill out individual applications. Example: Summer camp or sports team." "Limited Policy Notice - CORRECT ANSWER Must be on the first page and must state that "THIS IS A LIMITED POLICY"" "Common Exclusions from coverage - CORRECT ANSWER 1. War injuries 2. Self-inflicted injuries 3. Cosmetic Surgery 4. On-the-job injuries that can be covered by workers comp 5. Injuries that occured while committing a crime" "false advertising - CORRECT ANSWER The deliberate use of false statements or deception in advertising." "Unfair Trade Practice - CORRECT ANSWER It is an unfair trade practice to make a statement about the insurers policies being backed by the Insurance Guaranty Association." "Free Look Period - CORRECT ANSWER begins when the policy is delivered and allows them time to look over the policy. If they don't like/agree to the terms or coverage they may return it for a full premium refund. 10 days for most plans. 30 days for senior plans." "Risks Cannot be declined based on - CORRECT ANSWER 1. Blindness 2. Deafness 3. Genetic characteristics 4. Marital Status 5. Sexual Orientation 6. National Origin/race" "Underwriting Considerations - CORRECT ANSWER 1. Gender 2. Occupation 3. Physical Condition 4. Avocations 5. Moral and more hazards 6. Financial status of applicant" "Medical Information Bureau - CORRECT ANSWER Reports on previous insurance information. Reports include coded information from any other applications that have been submitted. Information found this way CANNOT BE USED (in itself) TO DECLINE A RISK." "HIV Consent - CORRECT ANSWER Insurer must first obtain the applicant's WRITTEN CONSENT. Underwriting for HIV or AIDS is allowed as long as it is not unfairly discriminatory. AND ADVERSE UNDERWRITING DECISION IS NOT PERMITTED IF BASED SOLEY ON THE PRESENCE OF SYMPTOMS. An actual confirmed diagnosis is required to decline an applicant." "Genetic Information and Non-Discrimination Act of 2008 - CORRECT ANSWER Insurance companies MAY NOT request an applicant for insurance or a blood relative of an applicant to provide genetic information or to take a genetic test for underwriting or for any other reason." "Errors and Omissions Liability Insurance - CORRECT ANSWER If a producer unknowingly engages in misrepresentation, this protects the agent from legal fines. Errors and omissions situations occur most often in the sales interview and policy delivery." "Uniform Individual Accident and Sickness Policy Provisions Law - CORRECT ANSWER ANY provisions that the insurance company would like to reword must be favorable to the policyholder." "Entire Contract - CORRECT ANSWER 1. Signed application 2. Policy 3. Riders and amendments" "Who can make changes to a policy? - CORRECT ANSWER ONLY an executive officer of the company." "Time limit on certain defenses - CORRECT ANSWER No statement or misstatement made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years. EXCEPT FOR FRAUD. If the applicant knowingly committed fraud, this can be used at any time to deny a claim." "Time of payment of Claims - CORRECT ANSWER This provision specifies that claims are to be paid immediately upon written proof of loss. (Usually 60 days, 45 days, or 30 days)." "How often must disability income insurance be paid? - CORRECT ANSWER The benefits must be paid AT LEAST once per month." "Payment of Claims - CORRECT ANSWER Who the claim payments are to be made to. All benefits are payable to the insured while he or she is living." "Who are claims paid to if the insured has died? - CORRECT ANSWER The beneficiary. If no beneficiary has been named, then the funds will go to the deceased's estate." "Physical Examination and Autopsy - CORRECT ANSWER The insurer can conduct an autopsy at its own expense as often as may be reasonably necessary while a claim is pending. This is a REQUIRED provision." "Insuring Clause - CORRECT ANSWER -On the first page of the insuring agreement. -Identifies who will be insured -Identifies the insurance company -States what kind of loss is covered" "Consideration Clause - CORRECT ANSWER Something of value is exchanged between the insurer and the insured" "What is the insureds consideration? - CORRECT ANSWER A full and true application and a premium payment" "What is the Insurers (insurance company) consideration? - CORRECT ANSWER Promise to pay claims" "Subrogation - CORRECT ANSWER The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss." "Own Occupation policy - CORRECT ANSWER this policy will provide disability income benefits when the insured is unable to perform the duties of his/her OWN occupation. (more liberal definition when it comes to distributing benefits)" "Any Occupation - CORRECT ANSWER Will only provide disability income benefits when the insured is unable to perform the duties of ANY job which the insured is suited to by education, training, or experience. (Stricter when it comes to distributing benefits)" "How long does the own occupation policy apply before the any occupation policy kicks in? - CORRECT ANSWER 24 months" "Which occupation policy (own or any) is more liberal when it comes to paying benefits? - CORRECT ANSWER The own occupation policy." "Probationary Period - CORRECT ANSWER -when a policy is first issued, the time the plan will not cover illness. -This DOES NOT apply to accidents. Accidents are covered automatically. -Helps prevent adverse selection" "Accidental bodily injury definition - CORRECT ANSWER -Damage to the body was unintended -Whether you meant to do the thing that caused the injury or not, the insurance company will still pay as long as the injury was an accident. -More liberal definition, provides broader coverage" "Accidental means definition - CORRECT ANSWER -The cause of the injury must be accidental for the claim to be covered. -Stricter than accidental bodily injury" "Recurrent Disability - CORRECT ANSWER Period of time in which the recurrence of an injury or illness will be considered a continuation of a prior period of disability. -Usually somewhere between 3 to 6 months -The insured does not have to go through another elimination period in this time before coverage begins." "Waiver of premium - CORRECT ANSWER Allows the insured, when disabled, to stop paying the premiums of the disability income policy while he/she is receiving disability income benefits." "Additional Monthly Benefit - CORRECT ANSWER Provides the amount of money that social security disability would pay to the disabled for one year. (Gives the insured time to apply for social security disability and wait for the waiting period to be over). Guarantees funds during this time for covered disabilities." "Residual Disability Benefit - CORRECT ANSWER -Provides benefits for loss of income when a person returns to work after a total disability. -Will help pay for loss of earnings (example: if the disabled can't work full-time) -Makes up the difference between what they were making before and what they are making now" "Cost of Living Adjustment rider - CORRECT ANSWER Monthly benefit will increase automatically based on the cost of living/inflation" "Guaranteed Insurability Rider - CORRECT ANSWER Increased the disability income benefit level to a specified predetermined amount at certain times or on certain occasions without proof of insurability." "Relation of Earning to Insurance - CORRECT ANSWER Allows the insurance company to limit the insureds disability income benefits to his/her average income over the past 24 months." "When is someone considered fully insured for ssi benefits? - CORRECT ANSWER -After 40 quarters of working (10 years)" "When is someone considered partially insured or currently insured for ssi benefits? - CORRECT ANSWER If they have earned 6 credits working in the past 13 quarters." "How long must a disability be expected to last to qualify for ssi? - CORRECT ANSWER At least 12 months" "How are social security benefit amounts determined? - CORRECT ANSWER Based off of the highest 35 years of earnings (The lowest 5 are thrown out/deleted from the calculation)" "Who regulates workers comp? - CORRECT ANSWER regulated and offered by the states" "Master Policy - CORRECT ANSWER In group insurance, the policy that is issued to the employer." "Contributory plan - CORRECT ANSWER The employee contributes to the premium payments. At least 75% of all eligible employees must participate in this coverage to protect against adverse selection." "Noncontributory plan - CORRECT ANSWER 100% of eligible employees must be included. The employer pays for all of the monthly premium and the employee pays nothing." "how long is the annual open enrollment period for employees who previously denied group coverage? - CORRECT ANSWER 30 days once per year" "Under the affordable care act, employees who work for how many hours qualify for group insurance? - CORRECT ANSWER 30+ hours per week" "Coordination of Benefits Provision - CORRECT ANSWER When a person has coverage under more than one plan, the insurance company will coordinate befits. The primary company pays first and the secondary insurance pays the leftover covered amount." "Basic Medical Plans - CORRECT ANSWER -First-dollar coverage (no deductibles) -low dollar limits -NO out of pocket max (meaning the insured could have to pay A LOT of money in the case of a catastrophic illness or accident) -Does NOT protect against catastrophic illness and injury" "Usual, Customary, and Reasonable - CORRECT ANSWER Means that the insurance company will pay an amount for a given procedure based upon the average charge for that procedure in that specific geographic area. (If a doctor charges more than what is usual, customary, and reasonable, the extra amount will not be covered by the insurance company)" "Insureds - CORRECT ANSWER People who are covered by insurance (ie. covered under a PPO plan)" "Subscribers - CORRECT ANSWER people who sign up for pre-paid health plans (ie. people who have HMO coverage)" "Major Medical Insurance - CORRECT ANSWER -Designed to protect against catastrophic loss -Deductibles and coinsurance -Did not respond to small claims -high maximum limits -blanket coverage"