CA Life & Health Exam Prep 2

All of the following are true about group health insurance except

• It has fewer limitations on benefits than individual insurance

• All participants are insured under a single master contract

• All members of the insured group must be covered

• It is rated on a group basis

Answer explanation

Under contributory group plans, only 75% of the eligible members must be covered.

A contributory group plan is just an employer plan, meaning that the employer is contributing to the premiums. In order to get the policy, there must only be 75% participation.

A type of insurance that provides a death benefit and benefits for a permanent loss of sight or limbs is known as a

• Medical expense insurance

• Disability income insurance

• Life insurance with coinsurance

• Accidental death and dismemberment insurance

Answer explanation

Just remember that if you lose your limbs you are dismembered :D, "accidental death and dismemberment!"

Medical expense is for health care costs. Disability is if you're hurt and unable to work.. and life insurance is only if you die.

In health insurance policies, a preexisting conditions is one that

• An insurer puts forth as a prerequisite to acceptance of the risk

• An applicant suspects already exists when completing the application

• An applicant received medical advice or treatment for prior to applying

• An insurer requires the applicant to agree to before it issues a policy

Answer explanation

A preexisting condition is one for which an applicant received medical advice or treatment prior to applying for coverage.

Pretty much.. it's documented and on file that you've been diagnosed with the condition.

A self-funded health care plan may be a practical alternative to insurance for an employer if

• Claim costs are fairly predictable

• Claim costs are generally unpredictable

• The employer cannot afford to buy insurance

• The employer is engaged in a high-risk industry

Answer explanation

Self funding may be a realistic alternative to traditional insurance if claim costs are predictable.

Self funding is the group paying out claims as they come in, so if they have predictable claims costs then they know what to expect.

It is illegal for an agent to pay, allow, give, offer, or promise to a prospective insurance buyer any return of premiums, any special favor or advantage, or anything of value not specified in the insurance contract, as an inducement to buy insurance. This illegal practice is known as

• Twisting

• Rebating

• Coercion

• Defamation

Answer explanation

This is an example of rebating. The term rebating in insurance refers to a practice of giving money back to a policyholder in order to incentivize or “induce” a sale.

Small employers, who might not otherwise qualify for a group health insurance plan, may be able to obtain similar low-cost benefits for their employees by joining a

• Health Care Service Organization

• Health Maintenance Organization

• Preferred Provider Organization

• Multiple Employer Trust

Answer explanation

A multiple employer trust allows small employers to join together in order to obtain health care benefits for their employees at a reasonable cost.

Blue Cross and Blue Shield are

• Health maintenance organizations

• Prepaid Health care service organizations

• Administrative Service organizations

• Preferred provider organizations

Answer explanation

These are examples of prepaid health care service organizations.

You can eliminate the PPO and HMO options from the answers because we know that these carriers accept both of these coverages.

All of the following are common characteristics of disability income insurance except

• The policies do not have any exclusions

• Each contract defines the disabilities it covers

• Benefits are usually paid in periodic installments

• Disabilities caused by an accidental injury or illness are covered

Answer explanation

All insurance policies have exclusions

A residual disability benefit provides an income benefit if an insured

• Has exhausted all partial disability benefits

• Has exhausted all temporary disability benefits

• Returns to work and cannot earn as much as earned before the disability

• Is receiving no other benefits during a waiting period

Answer explanation

We know that residual means "Something that is left after a process has been completed".. so this is for when the insured returns to work and is unable to earn as much as before.

All of the following are true about a coordination of benefits provision in group health insurance policies except:

• It establishes which plan pays first

• It is designed to prevent overcompensation for incurred losses

• It coordinates benefits under all available group and individual policies

• It limits benefits when insurance is provided under more than one plan

Answer explanation

Coordination of benefits provisions applies only to group insurance plans. Any benefits under individual policies are not affected.