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Question 1

If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?

Medicare Supplement
Medicaid
Indemnity
Long-term care

Answer 1

The correct answer is “Medicare Supplement”. In this situation, a Medicare Supplement policy would provide the subscriber the best coverage for excess charges.

Question 2

The individual most likely to buy a Medicare Supplement policy would be a(n):

68-year old male covered by Medicare
uninsured 60-year old male
62-year old male covered by Medicaid
unemployed 64-year old female

Answer 2

The correct answer is “68-year old male covered by Medicare”. Medicare Supplements are available to those covered by Medicare.

Question 3

Which Long Term Care insurance statement is true?

Can only be offered to individuals under the age of 70
Benefits are usually payable for alcohol rehabilitation
Inflation protection is usually not offered
Pre-existing conditions must be covered after the coverage has been in force for six months

Answer 3

The correct answer is “Pre-existing conditions must be covered after the coverage has been in force for six months”. Pre-existing conditions are those for which medical advice or treatment was recommended by or received from a health provider within 6 months preceding the effective date of an individual long-term care policy.

Question 4

A “reimbursement policy” pays what amount of covered Long-Term Care expenses?

All expenses regardless of the policy limits
The usual, customary, and reasonable expenses regardless of the policy limits
Actual covered expenses up to the daily maximum
A daily dollar amount regardless of the actual incurred expenses

Answer 4

The correct answer is “Actual covered expenses up to the daily maximum”. A “reimbursement policy” pays the actual covered expenses up to the daily maximum.

Question 5

Medicare Part B does NOT cover:

medical equipment rental
occupational therapy
inpatient hospital services
physician and surgeon services

Answer 5

The correct answer is “inpatient hospital services”. Medicare Part B is a voluntary program designed to provide supplementary medical insurance to cover physician services, medical services, and supplies not covered under Part A.

Question 6

Nursing home benefits must be provided for at least 12 consecutive months in which of the following types of policies?

Critical Illness
Long-Term Care
Medicare Supplements
Blanket custodial

Answer 6

The correct answer is “Long-Term Care”. Long-Term Care policies are designed to provide nursing home benefits on an extended basis of at least twelve consecutive months.

Question 7

What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits?

4
3
1
2

Answer 7

The correct answer is “2”. A qualified Long Term Care policy must stipulate that the insured be incapable of performing at least two of the ADL’s without assistance for at least 90 days to qualify for benefits.

Question 8

What does a Guaranteed Insurability rider provide a Disability Income policyowner?

The ability to periodically increase the amount of coverage without evidence of insurability
The guarantee that the policy will never be cancelled
The guarantee that the premiums will never increase
The ability to periodically increase the amount of coverage only with evidence of insurability

Answer 8

The correct answer is “The ability to periodically increase the amount of coverage without evidence of insurability”. A Guaranteed Insurability rider allows the insured to periodically increase the amount of benefits payable under the policy.

Question 9

When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?

Presumptive disability
Residual disability
Waiver of premium
Recurring disability

Answer 9

The correct answer is “Residual disability”. A residual amount benefit is based on the proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income.

Question 10

When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?

Recurrent Disability
Repeat Disability
Residual Disability
Presumptive Disability

Answer 10

The correct answer is “Recurrent Disability”. In this situation, the insurer will provide the same benefits without a new elimination period under the Recurrent Disability benefit.

Question 11

Which of these statements concerning an individual Disability Income policy is TRUE?

Benefits are normally taxable
Premiums are normally tax-deductible
Age of the insured determines the amount of the benefits
Normally includes an Elimination period

Answer 11

The correct answer is “Normally includes an Elimination period”. Disability Income policies typically contain an Elimination period.

Question 12

An individual Disability Income insurance applicant may be required to submit all of the following information, EXCEPT:

gross income
medical history
spouse’s occupation
occupation

Answer 12

The correct answer is “spouse’s occupation”. In this situation, a spouse’s occupation is not necessary for the application.

Question 13

In the event of an illness, a(n) _______ _______ policy would reimburse an insured for loss of earnings.

Family Income
Medicare Supplement
Earnings Indemnity
Disability Income

Answer 13

The correct answer is “Disability Income”. A Disability Income policy would reimburse an insured for loss of earnings due to sickness.

Question 14

K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?

Indemnity
Major Medical
Disability Income
Travel

Answer 14

The correct answer is “Disability Income”. Disability Income would reimburse an insured for loss of earnings if the insured became sick.

Question 15

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a:

treaty insurer
risk assumption group
captive insurer
risk retention group

Answer 15

The correct answer is “risk retention group”. A group-owned insurer whose primary activity consists of assuming and spreading the liability risks of its members is called a risk retention group.

Question 16

M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?

Earned, but unpaid benefits
A lump sum of six times the monthly benefit
Nothing
$2,000

Answer 16

The correct answer is “Earned, but unpaid benefits”. In this situation, any earned but unpaid benefits will be paid.

Question 17

N is covered under an individual Disability policy with a 30-day Elimination period and a monthly benefit of $500. N is totally disabled for 3 1/2 months. N’s total benefit received on this claim is:

$1,750
$1,500
$2,000
$1,250

Answer 17

The correct answer is “$1,250”. After the 30-day Elimination period has been satisfied, the total benefit paid on this claim is $1,250 ($500+$500+$250).

Question 18

Who elects the governing body of a mutual insurance company?

policyholders
stockholders
bondholders
chairman of the board

Answer 18

The correct answer is “policyholders”. The governing body of a mutual insurance company is elected by the policyholders.

Question 19

When a policy pays dividends to its policyholders, it is said to be

participating
nonparticipating
profitable
mutual

Answer 19

The correct answer is “participating”. A participating policy is one in which insurance policies pay out dividends to the policyholders.

Question 20

V is insured under an individual Disability Income policy with a 30-day Elimination period. On July 1, he is involved in an accident and temporarily disabled. He returns to work on December 1. How many months of benefit are payable?

6 months
4 1/2 months
5 months
4 months

Answer 20

The correct answer is “4 months”. After the 30-day Elimination period has been satisfied, there will be 4 months of benefit payments.

Question 21

D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits?

Residual Benefit clause
Concurrent Benefit clause
Waiver Benefit clause
Guaranteed Benefit clause

Answer 21

The correct answer is “Residual Benefit clause”. A residual amount benefit is based on the proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income.

Question 22

T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?

Due to the policy not being post-claim underwritten, the insurer must continue to pay this claim
Claim will be rejected because of this criminal act, but no recovery of payments will be made
Claim will be denied but the policy will remain in force without further premium payments due to the insured’s total disability
The insurer will rescind the policy, deny the claim, and recover all payments made

Answer 22

The correct answer is “The insurer will rescind the policy, deny the claim, and recover all payments made.” In this situation, the insurer will rescind the policy, deny the claim, and recover all payments made.

Question 23

What is the elimination period of an individual disability policy?

Time period after the policy issue date in which the provisions are still contestable
The point in time when benefits are no longer payable
Time period a disabled person must wait before benefits are paid
Time period an insured must wait before coverage begins

Answer 23

The correct answer is “Time period a disabled person must wait before benefits are paid”. The elimination period of an individual disability insurance policy refers to the amount of time a disabled person must wait before benefits are paid.

Question 24

A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?

Cost of Living Adjustment rider
Waiver of Premium rider
Guaranteed Insurability Option rider
Extended Term rider

Answer 24

The correct answer is “Guaranteed Insurability Option rider”. If a physician wants to ensure he can increase the benefit for his disability policy as his practice and income grow, he would want to include a Guaranteed Insurability Option rider.

Question 25

Which of the following will a Long Term Care plan typically provide benefits for? death home health care unemployment disability income

Answer 25

The correct answer is "home health care". A Long Term Care policy will typically pay for home health care.