Life & Health Insurance Exam Prep
Questions and Answers
Basic Medical Expense policies - 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 - 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 - 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 - 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) - 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 - 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 - 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 - ANS-Policyowners obtain medical treatment from whatever source
they want and submit their charges to their insurer for reimbursement (actual amount).
Service Based Contracts - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - ANS-A separate deductible for each separate illness or
accident.
Stop Loss - 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 - ANS-Major Medical and Basic Medical are written
together.
Corridor deductible - ANS-Occurs in the middle of the hospital stay, and bridges the gap
from the basic to the major medical plan.
Pre-Existing Condition - 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.
Exclusions found in Basic and Major Medical - ANS--Injuries due to war or military
conflict
-Elective cosmetic surgery
-Routine Dental Care
-Eye Exams & Glasses Treatment in a Veterans Hospital or other Gov Facility
-Workers Compensation Accidents
-Claims Occurring Outside the U.S.
-Intentionally Self-Inflicted Injury
Limited Coverage - ANS-Specified Coverage policies, or Limited Coverage, are
insurance policies that limit coverage to one illness or one limiting group of coverage.
Dread Dieses (Limited Risk) - ANS-Policies provide a variety of benefits for a specific
disease such as a cancer policy or a heart disease policy. Benefits are usually paid as a
scheduled amount of indemnity for specified events or medical procedures, such as
hospital confinement or chemotherapy.
Critical Illness Plans - ANS--Pays a lump sum to the insured upon the diagnosis (&
survival) of a critical illness. The insured must survive the illness for a certain time
period (Ex 30 days).
Questions and Answers
Basic Medical Expense policies - 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 - 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 - 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 - 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) - 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 - 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 - 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 - ANS-Policyowners obtain medical treatment from whatever source
they want and submit their charges to their insurer for reimbursement (actual amount).
Service Based Contracts - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - ANS-A separate deductible for each separate illness or
accident.
Stop Loss - 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 - ANS-Major Medical and Basic Medical are written
together.
Corridor deductible - ANS-Occurs in the middle of the hospital stay, and bridges the gap
from the basic to the major medical plan.
Pre-Existing Condition - 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.
Exclusions found in Basic and Major Medical - ANS--Injuries due to war or military
conflict
-Elective cosmetic surgery
-Routine Dental Care
-Eye Exams & Glasses Treatment in a Veterans Hospital or other Gov Facility
-Workers Compensation Accidents
-Claims Occurring Outside the U.S.
-Intentionally Self-Inflicted Injury
Limited Coverage - ANS-Specified Coverage policies, or Limited Coverage, are
insurance policies that limit coverage to one illness or one limiting group of coverage.
Dread Dieses (Limited Risk) - ANS-Policies provide a variety of benefits for a specific
disease such as a cancer policy or a heart disease policy. Benefits are usually paid as a
scheduled amount of indemnity for specified events or medical procedures, such as
hospital confinement or chemotherapy.
Critical Illness Plans - ANS--Pays a lump sum to the insured upon the diagnosis (&
survival) of a critical illness. The insured must survive the illness for a certain time
period (Ex 30 days).
