8

Question 1

Which of the following BEST describes how pre-admission certifications are used?

Used to help process claims
Used to prevent nonessential medical costs
Used to assist in underwriting
Used to minimize hospital lawsuits

Answer 1

The correct answer is “Used to prevent nonessential medical costs”. Pre-admission certification is used to prevent unnecessary medical costs.

Question 2

Pre-hospitalization authorization is considered an example of:

Major Medical insurance
PPO care
managed care
Medicaid

Answer 2

The correct answer is “managed care”. Pre-hospitalization authorization is the insurer’s approval of an insured entering a hospital. Many health policies require this as part of an effort to manage costs.

Question 3

Which of these terms accurately defines an underwriter’s assessment of information on a health insurance application?

Inspection report
Warranty review
Risk classification
Insurable interest

Answer 3

The correct answer is “Risk classification”. Underwriting, another term for risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates.

Question 4

What is being delivered during a policy delivery?

Insurance contract to the proposed insured
A binding receipt to the proposed insured
Policy summary sheet and disclosure material to the proposed insured
Application and initial premium to the insurer

Answer 4

The correct answer is “Insurance contract to the proposed insured”. Policy delivery refers to the delivery of the insurance contract to the applicant.

Question 5

M applies for a health insurance policy and pays the initial premium. When the agent completes the application, a conditional receipt is left with the applicant. The insurance company’s underwriting department request’s M’s medical records and determines that M has had asthma for many years. All of the following are probable underwriting outcomes, EXCEPT:

Attach a rider excluding specified coverages
Approve with a higher premium
Deny coverage
Changing the policy’s provisions

Answer 5

The correct answer is “Changing the policy’s provisions”. All of these would be acceptable underwriting outcomes EXCEPT for “Changing the policy’s provisions”.

Question 6

Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?

Issue the policy with a diabetes exclusion
Decline the applicant
Issue the policy with an altered Time of Payment of Claims provision
Issue the policy with a rating

Answer 6

The correct answer is “Issue the policy with an altered Time of Payment of Claims provision”. The insurance company may take all of these actions EXCEPT issue the policy with an altered Time of Payment of Claims provision.

Question 7

D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D MUST

request that the insurer issue the policy with a rating
correct the information and have the prospect initial the change
receive a verbal acknowledgement from prospect of the mistake made
correct the information with no further action from prospect necessary

Answer 7

The correct answer is “correct the information and have the prospect initial the change “. If an agent makes an error on an insurance application the agent must correct the information and have the applicant initial the changes.

Question 8

Consumer reports requested by an underwriter during the application process of a health insurance policy can be used to determine:

overall health of the applicant
if applicant is a tobacco user
probability of making timely premium payments
driving history

Answer 8

The correct answer is “probability of making timely premium payments”. The purpose of these reports is to provide a picture of an applicant’s general character and reputation, mode of living, finances, and any exposure to abnormal hazards.

Question 9

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?

$6,000
$14,000
$20,000
$0