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62 Cards in this Set

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  • Back
How is an insurance company able to protect such a large number of people who could potentially suffer a loss?
The transfer of the possibility of a loss (risk) to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.
What is the difference between a stock company and a mutual company?
A stock com­pany is respon­si­ble for mak­ing money for the stock hold­ers where as a Mutu­al owned com­pany is respon­si­ble for mak­ing money for the Pol­icy Hold­ers.
What is the difference between an insurer that is authorized and one that is unauthorized?
An authorized insurer is authorized or admitted into the state as a legal insurer. Insurers who aren't approved to do business in the state are unauthorized or non admitted.
What is a contract and it's purpose?
A contract is an agreement between two or more parties enforceable by law. The purpose of the contract must be legal, and not against public policy.
Describe the concept of consideration on the part of the insured and how it differs from consideration on the part of the insurer.
Consideration on the part of the insured is the submission of premium and the representations made in the contract. Consideration on the part of the insurer is the promise to cover a loss as per the contract agreement
What does representation mean, and how does it differ from warranty?
Representations are statements believed to be true to the best of ones knowledge but not guaranteed to be true.Warranties are absolutely true statements on which the validity of the insurance policy depends.
If the insured intentionally answers any question on the insurance application untruthfully, and the information is material to the insurance, what type of statements are these? Can they void a contract?
If the insured intentionally answers any of the question untruthfully, these statements are considered misrepresentations.. and they can void the contract.
Who generally fills out the application?
The agent and a medical examiner ( if applicable) on the basis of information received from the application on the life or health of the proposed insured.
Who is required to sign the application?
The Agent
The Applicant
The proposed insured ( if different than the applicant)
What is an attending physicians statement and when is it required?
An attending physicians statement is a source of information filled out by the applicants doctor which provides accurate information on the applicants medical history. It is required when an underwiter deems it necessary.
How can an insurance company use the information it obtains from the MIB?
An insurance company can use the information it obtains from the MIB to compare information they have collected on a potential insured with information other insurers may have discovered.
What is the purpose of the Fair Credit Reporting Act?
The Fair Credit Reporting act established procedures that consumer reporting agencies must follow in order to ensure that records are confidntial, accurate, relevant, and properly used.
What is the difference between consumer report and an investigative consumer report?
The difference between a consumer report and an investigative consumer report is that the information in an investigative report is obtained through an investigation and interviews with associates, friends, and neighbors of the consumer. Unlike ordinary consumer reports, these can't be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested.
What must the producer do if the premium doesn't accompany the application?
Upon delivery, the agent must collect the premium and obtain a statement of continued good health from the applicant before releasing the policy
Who is responsible for delivering the policy to the insured and collecting the premium?
The Agent is responsible to deliver the policy and to collect any premium that may be due at the time of delivery.
Explain the concept of coverage on a first dollar basis?
First dollar coverage usually doesn't require the insured to pay a deductible. Commonly grouped into what are commonly referred to as Medical Expense Insurance, the basic medical coverages usually have more limited coverage than the Major Medical Policies.
What coverages are provided by a Major Medical expense policy?
Comprehensive coverage for hospital expenses, catastrophic medical expense protection, and benefits for prolonged injury or illness.
Why do HMOs encourage members to get regular checkups?
HMOs encourage members to get regular checkups to attempt to reduce the cost of health care by utilizing preventive care. It helps catch diseases in the earliest stages when they have the greatest chance of success for treatment.
What is a primary care physician?
The physician who provides primary care; "the primary care physician acts as a gatekeeper to the medical system".The main doctor a person would go to.
Explain the gatekeeper concept?
The Primary care Physician (gatekeeper) must refer a member to see a specialist in order for it to be covered under an HMO.
How does a POS plan differ from a traditional HMO?
The POS plan is like a combination of the HMO and PPO plans. You are required to designate an in-network physician to be your primary health care provider (just like with an HMO). Unlike an HMO however you may go out-of-network if you choose, but in doing so, you will have to pay most of the cost yourself, unless a primary care physician refers you to that specific doctor.
What is the purpose of a Health Savings Account?
To help individuals save for qualified health expenses that they, their spouse, or dependents incure.
Once a disability policy is paying a claim, how long will it pay?
Until the insured is able to return to work or normally a maximum of 2 years.
How long does an elimination period usually last? State your answer in terms of a range.
The elimination period found in most insurance policies range from 30 to 180 days.
What is a probationary period? How is it different from an elimination period?
A waiting period often 10 to 30 days in which benefits will not be paid for sickness related disabilities. Doesn't replace an elimination period but is in addition to it. It only applies to sickness related disabilities, and does not apply to injury.
What is the purpose of a buy-sell agreement?
A buy-sell agreement specifies how a business will pass between owners when one of the owners dies or becomes disabled
Describe the taxation of premiums and benefits in a disability buyout agreement.
Premiums in a buy-sell agreement are not tax deductible, and the benefits are not taxable.
What is the purpose of key person disability insurance?
Key man disability insurance is designed to protect the business in the unfortunate event that a key employee or executive suffers a disabling accident, injury or illness.
With key person insurance, who pays the premium, who is the beneficiary and the insured?
The business pays the premium and is also the insured as well as the beneficiary.
In what ways can accidental death and dismemberment coverage be written?
Accidental Death &Dismemberment (AD&D) can be written as a rider or as a separate policy.
Under Accidental Death and Dismemberment coverage,when would the capital amount be paid? When would the principal amount be paid?
The capital benefit amount is paid when there is a loss of sight or accidental dismemberment. The principal amount is paid in the event of accidental death.
How do Limited Risk and Special Risk policies differ from each other?
The limited risk policy defines the specific risk in which accidental death and dismemberment benefits will be paid. The special Risk policy will cover unusual types of risks, not normally covered by AD&D policies.
Where is skilled nursing care generally provided?
Skilled nursing care is normally provided in an institutional setting.
Describe an individual who would be a candidate for custodial care. Who would provide it?
Someone who needs assistance with eating,dressing, or bathing which can be provided by non medical personnel such as relatives or home health care workers
Who would be eligible for adult day care? What services would be provided?
Adult day care is provided for functionally impaired adults on a less than 24 hour basis. Transportation to and from the facility,and a variety of health, social and related services are included. Meals are usually included as well.
What types of groups are eligible for group insurance?
Employer sponsored and association sponsored.
How is underwriting unique for group policies, as opposed to individual policies?
Underwriting is unique in that every eligible member of the group must be covered regardless of physical condition, age, sex, or occupation.
How is the cost of a group policy determined?
By the ratio of males to females, and the average age of the group.
What is required for eligibility in a group policy?
In order to be eligible for group insurance, the group must be formed for another purpose other than obtaining group insurance.
When is the group policy cost reevaluated, and for what purpose?
The group cost is reevaluated annually and for the purpose of adjusting the premium cost based on prior claims, age, gender of the group etc.
How many people must an association group have in order to purchase insurance?
At least 100
What are the requirements for terminated employees to convert the group health insurance to an individual plan without evidence of insurability?
The terminated employee must initiate the option to convert from group to individual policy during the conversion period, which is within 31 days of termination of employment.
Under COBRA, when are dependents covered and for how long?
Dependents are covered when an employee is terminated.The coverage is for 18 months.For events such as death of the employee, divorce or legal separation, the period is 36 months for the dependents.
Name at least 3 criteria that would make an individual eligible for HIPAA.
Have 18 months of continuous creditable health care coverage...
Have been covered under a group plan in most recent insurance...
Have used up any COBRA or state continuation coverage...
Not eligible for medicare or medicaid...
Not have any other health insurance...
Apply for individual health insurance within 63 days of losing prior coverage.
How are dread disease policies different from other types of policies?
Dread disease or limited risk policy provides a variety of benefits for a specific disease such as cancer policy or heart disease policy. Benefits are usually paid as a scheduled, fixed dollar amount of indemnity for specific medical events or procedures, such as hospital confinement or chemotherapy.
With group health insurance, who provides coverage?
Employer or other group sponsor.
What is included in the "entire contract"?
The health insurance policy, together with a copy of the signed application and attached riders and amendments constitutes the entire contract
Who has the authority to change a policy provision?
Only an executive officer of the company.
What are the grace periods for an individual policy?
No less than 7 days for weekly pay policies (industrial policies)10 days for monthly pay policies, and 31 days for all other modes.Coverage will continue in force during the grace policy.
If a premium has not been paid by the end of the grace period, what will happen to the policy?
The policy will lapse (terminate).
When an individual needs to file a health insurance claim, what are their responsibilities?
Submit proof of loss within 90 days or as soon as reasonably possible.
Which provision states to whom the claims are to be paid?
The Insuring Clause states who the claim is paid to.
If the insured misstates their age how will the benefits get paid?
If an insured misstated their age at the time of the application, the benefits paid under the policy would be adjusted to what the premium paid would have been purchased at the correct age.
Who decides which optional provisions are included in a policy?
The insurance company.
In what specific way could changing to a more dangerous occupation affect a persons insurance policy?
If an insured makes a change to a more hazardous occupation, upon claim, the benefits will be reduced to that which premiums paid would have purchased assuming the more hazardous position.
What is identified in the insuring clause?
The basic agreement between the insurance company and the insured. It identifies the insured and the insurance company and the kind of loss that is covered.
Where is the consideration clause usually located in the policy?
On the first page of the contract. Makes it clear that both parties to the contract must give some valuable consideration.
What are usual, reasonable and customary charges based on?
The average charge for a procedure based upon the average charge for that procedure
in that specific geographic area.
Which rider will allow the insured to purchase additional amounts of disability income coverage without evidence of insurability?
Guaranteed Insurability Rider
What is the difference between a guaranteed renewable and noncancelable policy?
The guaranteed renewable policy is almost the same as a noncancelable policy with the exception of the insurer being able to increase the policy premium on the policy anniversary date.
Which renewable provision gives the insured the right to renew the policy for the life of the contract but allows the insurer to alter premiums?
Guaranteed renewable
What is the difference between a conditionally renewable policy and one who's renewability is optional?
The difference is that in an optionally renewable policy the insurer may cancel the policy for any reason on certain homogeneous classes (not individuals within a class).