Insurance Fundamentals: Types, Concepts, and Practices, Exams of Health sciences

Download Insurance Fundamentals: Types, Concepts, and Practices and more Exams Health sciences in PDF only on Docsity! 1 [Date] New York Life Accident and Health Insurance Exam QUESTIONS GRADED A 1. Accelerated Benefits - answers>Riders attached to life insurance policies which allow death benefits to be used to cover nursing or convalescent home expenses. 2. Accident - answers>An unplanned, unforeseen event which occurs suddenly and at an unspecified place. Accident Insurance - A type of insurance that protects the insured against loss due to accidental bodily injury. 3. Accidental Bodily Injury - answers>Unplanned, unforeseen traumatic injury to the body. 4. Accidental Death and Dismemberment (AD&D) - answers>An insurance policy which pays a specified amount or a specified multiple of the insured's benefit if the insured dies, loses his/her sight, or loses two limbs due to an accident. 5. Accidental Death Benefits - answers>A policy rider that states that the cause of death will be analyzed to 2 [Date] determine if it complies with the policy description of accidental death. 6. Accidental Death Insurance - answers>An insurance policy that provides payment if the insured's death is the result of an accident. 7. Accumulation Period - answers>The time over which the annuitant makes payments or investments in an annuity, and when those payments earn interest tax deferred. 8. Acquired Immunodeficiency Syndrome (AIDS) - answers>An infectious and incurable disease caused by the human immunodeficiency virus (HIV). 9. Activities of Daily Living (ADLs) - answers>Activities individuals must do every day such as moving about, getting dressed, eating, bathing, etc. 10. Actual Cash Value (ACV) - answers>The required amount to pay damages or for property loss, which is calculated based on the property's current replacement value minus depreciation. 5 [Date] 20. Agent - answers>An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer. 21. Agent's Authority - answers>Special powers granted to an agent by his or her agency contract. Aleatory - A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss. 22. Alien Insurer - answers>An insurance company that is incorporated outside the United States. Alzheimer's Disease - A disease that causes the victim to become dysfunctional due to degeneration of brain cells causing severe memory loss. 23. Ancillary - answers>Additional, miscellaneous services provided by a hospital, such as x-rays, anesthesia, and lab work, but not hospital room and board expenses. 24. Annual Statement - answers>A detailed financial report that an insurance company must submit every 6 [Date] year to the insurance department of state(s) in which it conducts business. 25. Annuity - answers>A contract that provides income for a specified period of years, or for life. 26. Apparent Authority - answers>The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. 27. Applicant - answers>A person making application for, or offering him/herself or another to be insured under an insurance contract. 28. Application - answers>A document that provides information for underwriting purposes. After the policy is issued, any unanswered questions are considered waived by the insurer. 29. Approved Amount - answers>The amount Medicare determines to be reasonable for a service that is covered under part B of Medicare. 7 [Date] 30. Assignment (Life) - answers>The transfer of ownership rights of a life insurance policy from one person to another. 31. Assignment (Health) - answers>A claim to a provider or medical supplier to receive payments directly from Medicare. 32. Attained Age - answers>The age of the insured at a determined date. 33. Attending Physician's Statement (APS) - answers>A statement usually obtained from the applicant's doctor. 34. Authorized (Admitted) Insurer - answers>An insurance company authorized and licensed to transact business in a particular state. 35. Avoidance - answers>A method of dealing with risk by deliberately keeping away from it (e.g. if a person wanted to avoid the risk of being killed in an airplane crash, he/she might choose never to fly in a plane). 10 [Date] 46. Buy-Sell Agreement - answers>A legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled. 47. Buyer's Guide - answers>A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision. 48. Cafeteria Plan - answers>A selection of health care benefits from which an employee may choose the ones that he/she needs. 49. Capital Amount - answers>A percentage of the principal amount of a policy paid to the insured if he/she suffered the loss of an appendage. 50. Carriers - answers>Organizations that process claims and pay benefits in an insurance policy 51. Cash Value - answers>The amount to which a policyowner is entitled if the policy is surrendered before maturity. 11 [Date] 52. Cease and Desist Order - answers>A demand of a person to stop committing an action that is in violation of a provision. 53. Certificate - answers>A statement (or booklet) that confirms that a policy has been written and that describes the coverage in general. 54. Certificate of Authority - answers>A document that authorizes a company to start conducting business and 55. specifies the kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate. - answers> 56. Certificate of Insurance - answers>A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided. 57. Claim - answers>A request for payment of the benefits provided by an insurance contract. 12 [Date] 58. Coercion - answers>An unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance. 59. Coinsurance - answers>An agreement between an insurer and insured in which both parties are expected to pay a certain portion of the potential loss and other expenses. 60. Coinsurance Clause - answers>A provision that states that the insurer and the insured will share the losses covered by the policy in a proportion agreed upon in advance. 61. Commingling - answers>A practice in which a person in a fiduciary capacity illegally mixes his/her personal funds with funds he/she is holding in trust. 62. Commission - answers>The payment made by insurers to agents or brokers for the sale and service of policies. 15 [Date] 71. Contributory - answers>A group insurance plan that requires the employees to pay part of the premium. Controlled Business - An entity that obtains and possesses a license solely for the purpose of writing business on the owner, immediate family, relatives, employer and employees. 72. Convertible - answers>A policy that may be exchanged for another type of policy by contractual provision, at the option of the policyowner, and without evidence of insurability (i.e. term life changed to a form of permanent life). 73. Coordination of Benefits - answers>A provision that helps determine the primary provider in situations where an insured is covered by more than one policy, thus avoiding claims overpayments. 74. Co pay - answers>An arrangement in which an insured must pay a specified amount for services "up front" and the provider pays the remainder of the cost. 75. Countersignature - answers>The act of signing an insurance policy by a licensed resident agent. 16 [Date] 76. Coverage - answers>The inclusion of causes of loss (perils) which are covered within a scope of a policy. Credit Life Insurance - A special type of coverage written to pay off the balance of a loan in the event of the death of the debtor. 77. CSO Table - answers>(The Commissioner's Standard Ordinary Table) A mortality table used in life insurance that mathematically predicts the likelihood of death. 78. Custodial Care-Care that is rendered to help an insured complete his/her activities of daily living. - answers> 79. Death Benefit - answers>The amount payable upon the death of the person whose life is insured. 80. Decreasing Term - answers>A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy. 17 [Date] 81. Deductible - answers>The portion of the loss that is to be paid by the insured before any claim benefits may be paid by the insurer. 82. Defamation - answers>An unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation. 83. Dependent - answers>A person who relies on another for support and maintenance. 84. Director (Commissioner, Superintendent) - answers>The head of the state department of insurance. 85. Disability - answers>A physical or mental impairment, either congenital or resulting from an injury or sickness. 86. Disability Income Insurance - answers>Health insurance that provides periodic payments to replace an insured's income when he/she is injured or ill. 20 [Date] 98. Endorsement - answers>A form changing the provisions of and attached to a life insurance policy (also known as a rider). 99. Endow - answers>to reach the maturity date or time at which the face amount equals cash values. 100. Enrollment Period - answers>The amount of time an employee has to sign up for a contributory group health plan. 101. Errors and Omissions Policy (E&O) - answers>A professional liability insurance that protects the insurer from claims by the insured for errors or oversights on the part of the insurer. 102. Estoppel - answers>A legal impediment to denying a fact or restoring a right that has been previously waived. 103. Excess Charge - answers>The difference between the Medicare approved amount for a service or supply and the actual charge. 21 [Date] 104. Excess Insurance - answers>Insurance that pays over and above or in addition to basic policy limits. 105. Exclusions - answers>Causes of loss, exposures, conditions, etc. listed in the policy for which the benefits will not be paid. 106. Executory Contract - answers>A contract which has not yet been fulfilled by one or both parties that promises action in the event of a specified future occurrence. 107. Expiration - answers>The date specified in the policy as the date of termination. 108. Explanation of Benefits (EOB) - answers>A statement that outlines what services were rendered, how much the insurer paid, and how much the insured was billed. 109. Explanation of Medicare Benefits - answers>A statement sent to a Medicare patient indicating how the Medicare claim will be settled. 22 [Date] 110. Exposure - answers>A unit of measure used to determine rates charged for insurance coverage. 111. Express Authority - answers>The authority granted to an agent by means of the agent's written contract. 112. Extended Care Facility - answers>A facility which is licensed by the state to provide 24 hour nursing care. 113. Extension of Benefits - answers>A provision that allows coverage to continue beyond the policy's expiration date for employees who are not actively at work due to disability or who have dependents hospitalized on that date. This coverage continues only until the employee returns to work or the dependent leaves the hospital. 114. Face - answers>The first page of a policy. 115. Fair Credit Reporting Act - answers>A federal law that established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant a properly used 25 [Date] 125. Group Disability Insurance - answers>A type of insurance that covers a group of individuals against loss of pay due to accident or sickness. 126. Group Health Insurance - answers>Health coverage provided to members of a group. 127. Group Life - answers>Life insurance provided for members of a group. 128. Hazard - answers>A circumstance that increases the likelihood of a loss. 129. Hazard, Moral - answers>The effect of a person's reputation, character, living habits, etc. on his/her insurability. 130. Hazard, Morale - answers>The effect a person's indifference concerning loss has on the risk to be insured. 131. Hazard, Physical - answers>A type of hazard that arises from the physical characteristics of an individual, 26 [Date] such as a physical disability due to either current circumstance or a condition present at birth. 132. Health Insurance - answers>Protection against loss due to sickness or bodily injury. 133. Health Maintenance Organization (HMO) - answers>A prepaid medical service plan in which specified medical service providers contract with the HMO to provide services. The focus of the HMO is preventive medicine. 134. Health Reimbursement Accounts (HRAs) - answers>Plans that allow employers to set aside funds for reimbursing employees for qualified medical expenses. 135. Health Savings Accounts (HSAs) - answers>Plans designed to help individuals save for qualified health expenses. 27 [Date] 136. Home Health Agency - answers>An entity certified by the insured's health plan that provides health care services under contract. 137. Home Health Care - answers>Type of care in which part-time nursing or home health aide services, speech therapy, physical or occupational therapy services are given in the home of the insured. 138. Home Health Services - answers>A covered expense under Part A of Medicare in which a licensed home health agency provides home health care to an insured. 139. Hospice - answers>A facility for the terminally ill that provides supportive care such as pain relief and symptom management to the patient and his/her family. Hospice care is covered under Part A of Medicare. 140. Hospital Confinement Rider - answers>An optional disability income rider that waives the elimination period when an insured is hospitalized as an inpatient. 30 [Date] company and the insured, usually located on the first page of the policy. 151. Integrated LTC Rider - answers>A rider that is added to a life insurance policy to pay long-term care benefits. The amount of benefits available for LTC depends upon the life insurance benefits available; however, the benefits paid toward LTC will reduce the life insurance policy's benefits. 152. Intentional Injury - answers>An act that is intended to cause injury. Self-inflicted injuries are not covered under accident insurance; intentional injuries inflicted on the insured by another are covered. 153. Intermediaries - answers>Organizations that process inpatient and outpatient claims on individuals by hospitals, skilled nursing facilities, home health agencies, hospices and certain other providers of health services. 154. Intermediate Care - answers>A level of care that is one step down from skilled nursing care; provided under the supervision of physicians or registered nurses. 31 [Date] 155. Investigative Consumer Report - answers>Similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. 156. Issue Age - answers>The individual's age when a policy is issued. 157. Joint Life - answers>A single policy that is designed to insure two or more lives. 158. Juvenile Life - answers>Any life insurance written on the life of a minor. 159. Lapse - answers>Termination of a policy because the premium has not been paid by the end of the grace period. 160. Law of Large Numbers - answers>A principle stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss. 32 [Date] 161. Legal Reserve - answers>The accounting measurement of an insurer's future obligations to pay claims to policyowners. 162. Level Premium - answers>A policy premium that remains the same over the period of time premiums are paid. 163. Life Expectancy - answers>Average number of years remaining for a person of a given age to live, as shown on the mortality table. 164. Limited-Pay Whole Life - answers>A variation of whole life insurance that charges a level annual premium and provides a level, guaranteed death benefit to the insured's age 100 and will endow for the face amount if the insured lives to age 100. Limited-pay life is designed so that the premiums for coverage will be completely paid-up well before age 100. 165. Limited Policies - answers>Health insurance policies that cover only specific accidents or diseases. 35 [Date] covered expenses up to a high limit whether the insured is in or out of the hospital. 176. Maturity Date -The date when the face amount of the life insurance becomes payable. Medicaid - answers>A medical benefits program jointly administered by the individual states and the federal government. 177. Medical Expense Insurance - answers>A type of insurance that pays benefits for medical, surgical, and hospital costs. 178. Medical Information Bureau (MIB) - answers>An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to this database for underwriting purposes. 179. Medical Savings Account - answers>An employer- funded account linked to a high deductible medical insurance plan. 36 [Date] 180. Medicare - answers>The United States federal government plan for paying certain hospital and medical expenses for persons who qualify. 181. Medicare Supplement Insurance - answers>A type of individual or group insurance that fills the gaps in the protection provided by Medicare, but that cannot duplicate any Medicare benefits. 182. Medigap - answers>Medicare supplement plans issued by private insurance companies that are designed to fill some of the gaps in Medicare. 183. Misrepresentation - answers>A false statement or lie that can render the contract void. 184. Mode of Payment - answers>The method of premium payment, whether annually, semiannually, quarterly, or monthly. 185. Morbidity Rate - answers>The ratio of the incidence of sickness to the number of well persons in a given group of people over a given period of time. 37 [Date] 186. Morbidity Table - answers>A table showing the incidence of sickness at specified ages. Mortality Table -A table showing the probability of death at specified ages. 187. Multiple-Employer Trust (MET) - answers>A group of small employers who do not qualify for group insurance individually, formed to establish a group health plan or self-funded plan. 188. Multiple Employer Welfare Association (MEWA) - answers>Any entity of at least two employers, other than a duly admitted insurer, that establishes an employee benefit plan for the purpose of offering or providing accident and sickness or death benefits to the employees. 189. Mutual Companies - answers>Insurance organizations that have no capital stock, but are owned by the policyholders. 190. Natural Premium - answers>The amount of premium that must be collected from each member of a group composed of the same age, sex and risk in order to pay 40 [Date] continuation of group health care coverage from 18 to 29 months for qualified beneficiaries who are disabled at the time of qualification. 201. Option - answers>A choice of ways of receiving policy dividends, nonforfeiture values, death benefits, or cash values. 202. Oral Surgery - answers>Operative treatment of the mouth such as extractions of teeth and related surgical treatment. 203. Orthodontics - answers>A special field in dentistry which involves treatment of natural teeth to prevent and/or correct dental anomalies with braces or appliances. 204. Out-of-Pocket Costs - answers>Amounts an insured must pay for coinsurance and deductibles before the insurer will pay its portion. 41 [Date] 205. Over Insurance - answers>An excessive amount of insurance that would result in overpayment to the insured in the event of a loss. 206. Paid-Up Insurance - answers>A policy on which all premiums have been paid but which has not matured due either to death or endowment. 207. Parol - answers>Legal term that distinguishes oral statements from written statements. 208. Parol Evidence Rule - answers>A rule that states a contract may not be altered without written consent of both parties; in other words, the contract may not be altered by an oral agreement. 209. Partial Disability - answers>Ability to perform some, but not all, of the duties of the insured's occupation as a result of injury or sickness. 210. Participating Policies (Par) - answers>Insurance that pays dividends to policyholders. 42 [Date] 211. Payment of Claims - answers>A provision that specifies to whom claims payments are to be made. 212. Payor Benefit - answers>A rider found in juvenile policies which waives the premiums if the person paying them (often the parent) is disabled or dies while the child is still a minor. 213. Peril - answers>The cause of a possible loss. 214. Periodontics - answers>A specialty of dentistry that involves treatment of the surrounding and supporting tissue of the teeth such as treatment for gum disease. 215. Permanent Disability - answers>Disability from which the insured does not recover. 216. Permanent Life Insurance - answers>A general term used to refer to various forms of whole life insurance policies that remain in effect to age 100 so long as the premium is paid. 45 [Date] the conditions that will automatically qualify the insured for full disability benefits. 228. Primary Beneficiary - answers>The person who is named as first to receive benefits from a policy. 229. Primary Policy - answers>A basic, fundamental insurance policy which pays first with respect to other outstanding policies. 230. Principal Amount - answers>The full face value of a policy. 231. Private Insurance - answers>Insurance furnished by nongovernmental insuring organizations. 232. Pro Rata Cancellation - answers>Termination of an insurance policy, with an adjustment of the premium charge in proportion to the exact coverage that has been in force. 46 [Date] 233. Probationary Period - answers>The period of time between the effective date of a health insurance policy and the date coverage for all or certain conditions begins. 234. Proceeds - answers>The amount payable by the insurance company, usually in at the insured's death or when the policy matures. 235. Producer - answers>Insurance agent or broker. 236. Proof of Loss - answers>A claim form that a claimant must submit after a loss occurs. 237. Prosthodontics - answers>A special area of dentistry that involves the replacement of missing teeth with 238. artificial devices like bridgework or dentures. - answers> 239. Provider - answers>Any group or individual who provides health care services. 47 [Date] 240. Pure Protection - answers>Insurance whereby premiums are paid for protection in the event of death or disability, not for cash value accumulation. 241. Qualified Plan - answers>A retirement plan that meets the IRS guidelines for receiving favorable tax treatment. 242. Rate Service Organization - answers>An organization that is formed by, or on behalf of, a group of insurers to develop rates for those insurers, and to file the rates with the insurance department on behalf of its members. They may also act as a collection point for actuarial data. 243. Rebating - answers>Any inducement offered in the sale of insurance products that is not specified in the policy. 244. Reciprocal Exchange - answers>An unincorporated group of individuals who mutually insure one another, each separately assuming a share of each risk. 50 [Date] 254. Respite Care - answers>A type of temporary health or medical care provided either by paid workers who come to the home or by a nursing facility where a patient stays to give a caregiver a short rest. 255. Restorative Care - answers>An area of dentistry that involves treatments that restore functional use to natural teeth such as fillings or crowns. 256. Retention - answers>A method of dealing with risk by intentionally or unintentionally keeping a portion of it for the insured's account; the amount of responsibility assumed but not reinsured by the insurance company. 257. Rider - answers>Any supplemental agreement attached to and made a part of the policy indicating the policy expansion by additional coverage, or a waiver of a coverage or condition. 258. Right to Return (aka Free Look) - answers>A period of time, usually required by law, during which a policyowner may inspect a newly issued individual life or health insurance policy for a stated number of days and 51 [Date] surrender it in exchange for a full refund of premium if not satisfied for any reason. 259. Risk - answers>Uncertainty as to the outcome of an event when two or more possibilities exist. 260. Risk, Pure - answers>The uncertainty or chance of a loss occurring in a situation that can only result in a loss or no change. 261. Risk Retention Group - answers>A liability insurance company owned by its members, which are exposed to similar liability risks by virtue of being in the same business or industry. 262. Risk, Speculative - answers>The uncertainty or chance of a loss occurring in a situation that involves the opportunity for either loss or gain. 263. Risk, Standard - answers>An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle. 52 [Date] 264. Risk, Substandard - answers>An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium. 265. Rollover - answers>Withdrawing the money from a qualified plan and placing it into another qualified plan. Secondary Beneficiary -The person who is named to receive benefits upon the death of the 266. insured if the (primary) first-named beneficiary is no longer alive or does not collect all the benefits due to his/her own death. - answers> 267. Service Plans - answers>Insurance plans where the health care services rendered are the benefits instead of monetary benefits. 268. Settlement Options - answers>Choices available to the insured/owner for distribution of insurance proceeds. 269. Sharing - answers>A method of dealing with risk for a group of individual persons or businesses with the same 55 [Date] the insured from a third party who may have caused the loss. 280. Substandard Risk - answers>An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium. 281. Superintendent (Commissioner, Director) - answers>The head of the state department of insurance. 282. Supplemental Illustration - answers>An illustration furnished in addition to a basic illustration that may be presented in a different format than the basic illustration, but may only depict a scale of nonguaranteed elements that is permitted in a basic illustration. 283. Surrender - answers>An act of giving up a life policy, in which the insurer will pay the insured the cash value the policy has built up. 284. Term Insurance - answers>Insurance that provides protection for a specific period of time. 56 [Date] 285. Terminally Ill - answers>A patient who is expected to die within an amount of time specified in the policy. 286. Tertiary Beneficiary - answers>The third in line to receive the benefits of a life insurance policy. 287. Total Disability - answers>A condition which does not allow a person to perform the duties of any occupation for payment as a result of injury or sickness. 288. Transfer - answers>A basic principle of insurance under which the risk of financial loss is assigned to another party. 289. Twisting - answers>A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage. 290. Underwriter - answers>A person who evaluates and classifies risks to accept or reject them on behalf of the insurer. 57 [Date] 291. Underwriting - answers>The process of reviewing, accepting or rejecting applications for insurance. 292. Unearned Premium - answers>The portion of premium for which policy protection has not yet been given. 293. Unilateral Contract - answers>A contract that legally binds only one party to contractual obligations after the premium is paid. 294. Universal Life - answers>A combination of a flexible premium and adjustable life insurance. 295. Utmost Good Faith - answers>The fair and equal bargaining by both parties in forming the contract, where the applicant must make full disclosure of risk to the company, and the insurance company must be fair in underwriting the risk. 296. Valued Contract - answers>A contract that pays a stated amount in the event of a loss (disability insurance/life insurance).