Mixed Deck — All EXAMFX Topics Flashcards

A 'gatekeeper' in a managed care plan refers to:

Answer: The primary care physician who must authorize specialist referrals

In HMO-style plans, the primary care physician acts as a gatekeeper, coordinating care and providing referrals before the member sees a specialist.

A real estate developer is sued for discrimination in the rental of units. The claimant alleges the developer violated fair housing laws. Under Coverage B of the CGL, is this covered?

Answer: No, because discrimination is not among the enumerated offenses in Coverage B

Coverage B covers only specifically listed offenses (e.g., libel, slander, false arrest), and housing discrimination is not an enumerated offense in the standard ISO CGL form.

Under personal auto policy physical damage coverage, 'comprehensive' coverage would pay for which of the following losses?

Answer: Damage from colliding with a deer

Hitting an animal is considered a comprehensive (other-than-collision) loss, not a collision loss.

An insurer that charges different premiums to insureds with the same expected loss costs is guilty of:

Answer: Unfair discrimination

Unfair discrimination occurs when an insurer charges different premiums to insureds who present the same risk without actuarial justification, which is prohibited by state insurance regulations.

Which underwriting source provides information directly from the applicant's own physician?

Answer: Attending Physician Statement (APS)

An APS is a statement from the applicant's treating physician providing details about diagnoses, treatments, and prognosis.

What is a pre-existing condition in the context of health insurance?

Answer: A medical condition that existed before the health insurance policy became effective

A pre-existing condition is any medical condition diagnosed or treated before the health insurance policy started. The Affordable Care Act prohibits insurers from denying coverage or charging higher premiums due to pre-existing conditions.

Which PAP coverage pays for the insured's injuries regardless of who was at fault in the accident?

Answer: Medical Payments

Medical Payments coverage is no-fault, paying the insured's and passengers' reasonable medical expenses regardless of who caused the accident.

Under the absolute pollution exclusion in the CGL, which of the following losses is most likely to be EXCLUDED?

Answer: Third-party bodily injury from chemicals released during the insured's operations

The absolute pollution exclusion typically bars coverage for bodily injury or property damage caused by the dispersal or release of pollutants such as chemicals.

Which pricing component covers an insurer's operating costs such as agent commissions, salaries, and overhead?

Answer: Expense loading

Expense loading is the portion of the insurance premium that covers the insurer's administrative and operational costs, including agent commissions, underwriting, and overhead.

What is the purpose of the 'entire contract' clause in a life insurance policy?

Answer: It states that the policy and attached application constitute the complete agreement between insurer and policyowner

The entire contract clause specifies that the policy document along with the attached copy of the application forms the complete and binding contract between the parties.

What does 'actual cash value' (ACV) mean in property insurance claim settlements?

Answer: Replacement cost minus depreciation

ACV is calculated as replacement cost minus depreciation, accounting for the age and condition of the damaged property.

When a producer submits an application with intentionally incorrect information provided by the applicant, the producer:

Answer: May be held liable for misrepresentation along with the applicant

Producers have a duty to ensure applications are accurate and complete; knowingly submitting false information makes the producer a party to misrepresentation.

A health policy's Grace Period provision typically allows how many days for an individual policy after a missed premium?

Answer: 31 days

Individual health insurance policies generally provide a 31-day grace period during which the policy remains in force even if the premium is not paid on time.

Which PAP exclusion prevents coverage when the insured intentionally causes bodily injury or property damage?

Answer: Intentional acts exclusion

The intentional acts exclusion removes PAP liability coverage for injuries or damage the insured deliberately causes.

An insured is hospitalized for surgery. The plan pays 80% of covered expenses after the deductible and the insured pays 20%. This cost-sharing arrangement is called:

Answer: Coinsurance

Coinsurance is the percentage split of covered expenses between the insurer and insured after the deductible is satisfied.

An individual purchases a non-qualified deferred annuity. During the accumulation period, what is the tax treatment of the growth within the contract?

Answer: The growth is tax-deferred until withdrawal.

A primary benefit of a deferred annuity is that the interest or investment gains grow on a tax-deferred basis. This means taxes are not paid on the earnings until the money is withdrawn, allowing for potentially faster accumulation due to tax-free compounding.

What is the primary purpose of a family maintenance policy?

Answer: To pay level monthly income from the date of death for a specified period

A family maintenance policy pays a level monthly income for a fixed period beginning at the insured's death, regardless of when during the policy term the death occurs.

A homeowner's policy has a $250,000 Coverage A limit. What is the maximum Coverage D (Loss of Use) limit under a standard HO-3 policy?

Answer: 50,000 (20% of Coverage A)

Coverage D (Loss of Use) is typically set at 30% of Coverage A under most standard homeowners forms, so $250,000 × 30% = $75,000; however, ISO HO-3 standard sets it at 20% ($50,000).

A PAP policyholder uses their personal vehicle to deliver pizzas part-time. How does the PAP treat this?

Answer: Excluded under the business/commercial use exclusion

Using a personal auto for delivery or other commercial purposes triggers the business use exclusion, eliminating PAP coverage for those trips.

Which provision in a disability income policy allows the insured to receive partial benefits when they return to work part-time after a total disability?

Answer: Residual disability benefit

The residual disability benefit pays proportional benefits when an insured returns to work part-time or at reduced earnings after a period of total disability.