AAPC Insurance Policies & Contracts 1

Question 1

What is the primary purpose of an insurance policy?

Accepted Answer

To provide financial protection against covered risks

Answer

To act as a savings account

Answer

To guarantee profit for the insurer

Answer

To cover only administrative fees

Question 2

Which part of an insurance policy lists the benefits and services covered?

Accepted Answer

Benefits section

Answer

Exclusions

Answer

Premium summary

Answer

Deductible list

Question 3

What is a deductible in an insurance contract?

Accepted Answer

Out-of-pocket amount before insurance pays

Answer

Monthly premium

Answer

Total claim amount

Answer

Co-payment

Question 4

What is the purpose of exclusions in an insurance policy?

Accepted Answer

To identify services not covered by the policy

Answer

To lower coverage costs

Answer

To increase premium rates

Answer

To add more services

Question 5

What is a preauthorization requirement?

Accepted Answer

An upfront approval needed for certain services

Answer

A post-service billing requirement

Answer

An agreement to cancel the policy

Answer

A waiver of payment responsibility

Question 6

What is a premium in insurance terms?

Accepted Answer

The regular payment to keep insurance coverage active

Answer

An out-of-pocket medical expense

Answer

A late payment penalty

Answer

An optional service fee

Question 7

What does 'assignment of benefits' mean in insurance?

Accepted Answer

The provider receives payments directly from the insurer

Answer

The patient receives all payments

Answer

The employer covers all costs

Answer

The patient must pay in full first

Question 8

What is the difference between an HMO and a PPO plan?

Accepted Answer

PPO allows more provider choice without referrals

Answer

HMO is more flexible than PPO

Answer

PPO requires referrals for all services

Answer

HMO covers out-of-network care freely

Question 9

Why is it important to review an insurance policy annually?

Accepted Answer

To ensure coverage matches changing needs

Answer

To increase premiums automatically

Answer

To cancel coverage early

Answer

To avoid claim submission