Life & Health Insurance Exam Life and Health Insurance Assessment 3 — Questions and Answers
Question 1: A group health plan that self-funds its claims but uses an insurance company for administrative services is known as an:
- HMO arrangement
- ASO (Administrative Services Only) plan (Correct answer)
- Indemnity plan
- POS plan
Correct answer: ASO (Administrative Services Only) plan
An ASO arrangement means the employer self-funds claims while an insurer provides administrative services such as claims processing.
Question 2: Under the ACA, the annual open enrollment period for individual marketplace health plans typically ends on:
- November 15
- December 15 (Correct answer)
- January 31
- March 31
Correct answer: December 15
The ACA marketplace open enrollment generally closes on December 15 for coverage starting January 1 of the following year.
Question 3: A universal life insurance policy differs from whole life primarily because it offers:
- Lower premiums with no cash value
- Flexible premiums and adjustable death benefits (Correct answer)
- Coverage only to age 65
- Fixed premiums with no investment component
Correct answer: Flexible premiums and adjustable death benefits
Universal life provides flexibility by allowing policyowners to vary premium amounts and adjust the death benefit within policy limits.
Question 4: The coordination of benefits (COB) provision in group health insurance is designed to:
- Allow insureds to choose their primary carrier
- Prevent overpayment when a person is covered by more than one plan (Correct answer)
- Extend coverage after job loss
- Convert group coverage to individual coverage
Correct answer: Prevent overpayment when a person is covered by more than one plan
COB rules determine which plan pays first (primary) and which pays second (secondary) to avoid total reimbursement exceeding actual expenses.
Question 5: Which of the following best describes a 'nonforfeiture option' in a whole life policy?
- The insurer's right to cancel coverage
- Options the policyowner may use if premiums are not paid (Correct answer)
- A provision waiving premiums during disability
- A rider that extends the term of coverage
Correct answer: Options the policyowner may use if premiums are not paid
Nonforfeiture options (cash surrender, reduced paid-up, extended term) protect the policyowner's accumulated cash value if premiums lapse.
Question 6: Under the ACA's essential health benefits, which of the following must all qualified health plans cover?
- Cosmetic surgery and dental implants
- Emergency services and maternity care (Correct answer)
- Long-term care and custodial services
- Elective procedures and alternative medicine
Correct answer: Emergency services and maternity care
ACA-qualified plans must cover 10 essential health benefits including emergency services, maternity care, mental health, and preventive care.
Question 7: A producer who gives a portion of their commission to an insured as an incentive to purchase a policy is committing:
- Twisting
- Misrepresentation
- Rebating (Correct answer)
- Churning
Correct answer: Rebating
Rebating is the illegal practice of returning part of the premium or commission to the insured as an inducement to buy a policy.
Life & Health Insurance Exam Life and Health Insurance Assessment 3
A group health plan that self-funds its claims but uses an insurance company for administrative services is known as an: