Life & Health Insurance Exam Life and Health Insurance Random 4 — Questions and Answers
Question 1: Which of the following is NOT a characteristic of group life insurance as compared to individual life insurance?
- A master policy is issued to the employer
- Individual evidence of insurability is generally not required
- Each insured receives their own separate policy (Correct answer)
- Coverage is often term insurance
Correct answer: Each insured receives their own separate policy
In group life insurance, a master policy is issued to the group sponsor and individual members receive certificates of coverage, not separate policies.
Question 2: The 'coordination of benefits' (COB) provision in health insurance is designed to:
- Guarantee that all healthcare providers accept the same payment
- Prevent a claimant from collecting more than 100% of covered expenses when insured under multiple plans (Correct answer)
- Allow insureds to choose which plan pays first in all situations
- Require all plans to pay equal shares of any claim
Correct answer: Prevent a claimant from collecting more than 100% of covered expenses when insured under multiple plans
COB provisions ensure that when a person is covered by more than one health plan, total benefit payments do not exceed the actual cost of the claim.
Question 3: Under a long-term care (LTC) insurance policy, which trigger most commonly qualifies an insured to receive benefits?
- Being hospitalized for more than 3 consecutive days
- Inability to perform 2 or more Activities of Daily Living (ADLs) (Correct answer)
- Reaching age 65 without a prior LTC claim
- A physician's recommendation for skilled nursing care only
Correct answer: Inability to perform 2 or more Activities of Daily Living (ADLs)
Most LTC policies pay benefits when the insured cannot perform 2 or more of the 6 standard ADLs (bathing, dressing, eating, toileting, transferring, continence).
Question 4: An insured dies 20 days after the premium due date without having paid the premium. The life insurance policy has a 31-day grace period. What happens?
- The claim is denied because the premium was unpaid at death
- The insurer pays the full death benefit minus the overdue premium (Correct answer)
- The insurer pays the full death benefit with no deduction
- The policy reinstates automatically and pays the full benefit
Correct answer: The insurer pays the full death benefit minus the overdue premium
Since the insured died within the grace period, the policy was still in force; the insurer pays the full death benefit but deducts the outstanding premium from the proceeds.
Question 5: Which of the following describes a 'participating' life insurance policy?
- A policy that allows the insured to participate in premium setting
- A policy issued by a stock insurer with guaranteed premiums
- A policy that may pay dividends to policyholders from company surplus (Correct answer)
- A policy in which the beneficiary participates in claim decisions
Correct answer: A policy that may pay dividends to policyholders from company surplus
Participating policies, typically issued by mutual insurers, may return a portion of surplus earnings to policyholders in the form of dividends.
Question 6: A Medicare Advantage plan enrollee who receives an unexpected large medical bill should first:
- Pay the bill immediately to avoid collection action
- File a grievance or appeal with the Medicare Advantage plan (Correct answer)
- Contact the Social Security Administration for assistance
- Switch to Original Medicare to have the bill covered
Correct answer: File a grievance or appeal with the Medicare Advantage plan
Medicare Advantage enrollees have the right to file a formal appeal or grievance with their plan if they believe a claim was incorrectly denied or a bill is incorrect.
Question 7: Which settlement option provides a life insurance beneficiary with equal installment payments over a fixed number of years, regardless of when the beneficiary dies?
- Life income option
- Fixed amount option
- Fixed period option (Correct answer)
- Interest only option
Correct answer: Fixed period option
The fixed period settlement option pays equal installments over a specified number of years; if the beneficiary dies before the period ends, payments continue to a secondary beneficiary or the estate.
Life & Health Insurance Exam Life and Health Insurance Random 4
Which of the following is NOT a characteristic of group life insurance as compared to individual life insurance?