FREE Life and Health Insurance Guide Exam Questions and Answers

Question 1

Which of the following legislation was made by the National Association of Insurance Commissioners (NAIC) to set up standard provisions for all individual health insurance policies?

Accepted Answer

The Uniform Individual Accident and Sickness Policy Provisions Law

Answer

The National Association of Insurance Commissioners (NAIC) developed the Uniform Individual Accident and Sickness Policy Provisions Law. This legislation established a set of standard provisions that must be included in all individual health insurance policies, ensuring consistency and consumer protection across different insurers and states. It aims to standardize policy language and requirements.

Question 2

When an insured person switches to a more dangerous employment, some individual health insurance policies have provisions that allow insurers to modify medical plan premiums. This provision is known as:

Accepted Answer

The “Change of Occupation” provision

Answer

The 'Change of Occupation' provision in individual health insurance policies allows the insurer to adjust benefits or premiums if the insured changes to a more hazardous or less hazardous occupation. If the new occupation is more dangerous, the insurer may reduce benefits or increase premiums to reflect the increased risk. This provision ensures the policy accurately reflects the insured's risk profile.

Question 3

A company is an "Applicable Large Employer (ALE)" if:

Accepted Answer

Had an average of 50 or more combined full-time or full-time equivalent employees during the prior calendar year

Answer

Under the Affordable Care Act (ACA), an employer is considered an 'Applicable Large Employer (ALE)' if they had an average of 50 or more full-time employees (including full-time equivalent employees) during the prior calendar year. This definition is crucial because ALEs are subject to specific requirements, such as the employer shared responsibility provisions, which mandate offering affordable health coverage to full-time employees.

Question 4

The employer is financially liable for the payment of claims to covered persons under a self-funded health plan. Which of these would reduce financial risks associated with high plan utilization?

Accepted Answer

Stop-loss insurance

Answer

Stop-loss insurance is designed to protect self-funded employers from catastrophic financial losses due to unexpectedly high healthcare claims. It sets a limit on the amount the employer will pay out of pocket, either per individual claim or in total for the plan year. This transfers the risk of very high plan utilization and large claims to an insurance company, significantly reducing the employer's financial exposure.

Question 5

Companies that offer an employer-sponsored medical insurance plan must cover all dependents under the age of:

Accepted Answer

26

Answer

The Affordable Care Act (ACA) mandates that health insurance plans, including employer-sponsored ones, must allow young adults to remain on their parents' health insurance until they turn 26 years old. This provision applies regardless of whether the dependent is married, a student, or financially dependent. It aims to expand health coverage for young adults who might otherwise lack insurance.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

FREE Life and Health Insurance Guide Exam Questions and Answers