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UTAH HEALTH INSURANCE EXAM QUESTIONS WITH CORRECT ANSWERS
“Insurance - CORRECT ANSWER Transfer of risk."
"Types of risk - CORRECT ANSWER Pure and Speculative"
"Morale Hazard - CORRECT ANSWER Through carlessness or irresponsible actions an increase
in the possibilty of a loss. (Example: Not cutting down a tree branch that might fall on your house because you have insurance if it does)"
"Perils - CORRECT ANSWER causes of loss insured against in an insurance policy"
"Avoidance - CORRECT ANSWER Eliminating exposure to a loss (not driving so you won't get in
a car accident)"
"retention - CORRECT ANSWER Planned assumption of risk through the use of deductibles, co-
payments, or self-insurance."
"reduction - CORRECT ANSWER Actions such as installing smoke detectors to reduce the risk
of loss from fire or getting an annual physical to help prevent/detect health problems early."
"Ceding Insurer - CORRECT ANSWER The company transferring risk in a reinsurance
arrangement."
"assuming insurer - CORRECT ANSWER reinsurer or company who is taking over the risk"
"Stock Companies - CORRECT ANSWER -Owned by stockholders
-nonparticipating (policy holders DO NOT share in profits or losses)"
"Foreign Insurer - CORRECT ANSWER An insurance company that is incorporated in another
state."
"Alien Insurer - CORRECT ANSWER An insurance company that is incorporated outside the
United States."
"Who does an agent represent? - CORRECT ANSWER The INSURER (insurance company) not
the insured."
"Express Authority - CORRECT ANSWER The authority granted to an agent by means of the
agent's written contract.."
"Parts of a contract - CORRECT ANSWER Offer, acceptance, consideration, and legal purpose"
"Consideration - CORRECT ANSWER Exchanging something of value"
"Insured's Consideration - CORRECT ANSWER 1. A truthful and complete application
- Premium Payment"
"Insurer's Consideration - CORRECT ANSWER Promise to pay qualifying claims"
"Acceptance - CORRECT ANSWER UNDERWRITER approves a prepaid application.
(An agent/producer CANNOT bind coverage, but they can accept an application)"
"Legal Purpose - CORRECT ANSWER Insurable interest and consent
- Must be of age (18+)
- Cannot be high
- Cannot be drunk
- Must be mentall competent"
"indemnity - CORRECT ANSWER Allows the insured to collect only to the extent of financial
loss and not gain financially. (Reimbursement)"
"Utmost good faith - CORRECT ANSWER An obligation to act in complete honesty and to
disclose all relevant facts."
"Representations - CORRECT ANSWER Are statements that are believed to be true, but are
not guaranteed to be true. Example: If someone is asked if they have smoked in the past ten years, but they can't remember if it has been a full ten years since they quit, but they say yes anyway."
"What three signatures are required on every insurance application? - CORRECT ANSWER 1.
Proposed insured's signature
- The Policyowner (if different than insured)
- The agent's signature"
"Best two ways to correct a mistake on the application? - CORRECT ANSWER 1. Start over
- Draw a line through it and have the proposed insured initial next to the correct answer."
"Insurability Conditional Receipt - CORRECT ANSWER This is given to an applicant when they
pay the premium at the time of application. It provides temporary coverage throughout the underwriting process."
"How can a policy be delivered? - CORRECT ANSWER 1. By an agent whenever possible
- By certified mail"
"Utah Individual Health Insurance Application - CORRECT ANSWER Streamlines the
application process by submitting application to multiole insurers at once."
"Producer Report - CORRECT ANSWER ONLY the agent is involved in completing this. Asks
questions about the length of time that the applicant has known the agent, an estimate of the applicants net worth and income, and whether the agent knows of any reason that the contract should not be issued. DOES NOT BECOME PART OF THE ENTIRE CONTRACT."
"Attending Physician Statement - CORRECT ANSWER The applicants doctor completes a form
about the applicants medical history."
"Investigative Consumer (Inspection) Report - CORRECT ANSWER Includes info about
applicants general reputation, personal habits, and mode of living. BASED ON INTERVIEWS WITH APLICANTS ASSOCIATES, FRIENDS, AND NEIGHBORS."
"How soon does an applicant have to be notified about an investigative consumer report? -
CORRECT ANSWER within 3 days"
"If the customer wants more info about the investigative consumer report, how long do we have
to get it to them? - CORRECT ANSWER 5 days"
"What are the three risk classifications? - CORRECT ANSWER 1. Preferred
- Standard
- Substandard"
"Preferred risk - CORRECT ANSWER People who are in better health that qualify for a
premium discount. (Example: Non-smokers)"
"Standard Risks - CORRECT ANSWER People who are in average health and qualify for the
normal insurance rates."
"Substandard Risk - CORRECT ANSWER People who are in poor health or reflect an increased
risk of loss. May be covered by the insurance company, but will usually have to pay a higher premium."
"Statement of Good Health - CORRECT ANSWER If the first premium is not paid yet while the
application is going through underwriting, the agent must obtain a statement signed by the insured testifying that they have continued to be in good health before the policy can be approved." "What must the agent compare before replacing an applicant's current insurance with new
insurance? - CORRECT ANSWER 1. Plan benefits
- Renewability Provisions
- Coverage for pre-existing conditions"
"Grace Period - CORRECT ANSWER Must be at least 10 days. Claims will still be paid in this
time."
"Reinstatement - CORRECT ANSWER Reinstatement is automatic if a representative accepts a
premium from the insured. If a reinstatement application is required, coverage is automatically reinstated after 45 days if the insurance company doesn't approve or deny it."
"When Will Accidents be covered after reinstatement of a health policy? - CORRECT ANSWER
Immediately"
"When will sickness be covered after reinstatement of a health policy? - CORRECT ANSWER
After a 10 day probationary period to protect against adverse selection."
"Notice of Claim - CORRECT ANSWER Notice from the insured to the insurance company is
required within 20 days of a loss."
"What two types of policies must always be guaranteed renewable? - CORRECT ANSWER
Medicare supplements and Long term care policies"
"Conditionally Renewable - CORRECT ANSWER Insurance company may cancel the policy only
at renewal for CERTAIN CONDITIONS THAT ARE STIPULATED IN THE CONTRACT."
"Optionally Renewable - CORRECT ANSWER Can be cancelled by the insurance company for
ANY reason on the ANNIVERSARY OR PREMIUM DUE DATE. The premium can be increased."
"Term (cancellable, nonrenewable) - CORRECT ANSWER Health insurance for a specific period
of time. CANNOT be renewed. Example: for a vacation"
"Income Replacement Contracts - CORRECT ANSWER -Makes up for reduced income due to a
partial disability or illness -Example: Would pay to make up the difference in wages if an ophthalmologist could no longer perform surgery due to partial vision loss."
"Presumptive Disability - CORRECT ANSWER -Automatically qualifies the insured for full
disability income benefits. -Total blindness, total deafness, total loss of speech, loss of two or more limbs."
"INDIVIDUAL Disability income insurance - CORRECT ANSWER Applied for by an individual
instead of a group. Premiums ARE NOT tax deductible and benefits are NOT taxed."
"Elimination Period - CORRECT ANSWER A waiting period from the start of the injury or illness
to the time the insurance company will pay for the disability income benefits. -Basically a deductible measured in days instead of dollars -Usually anywhere from 30 to 180 days"
"Benefit Period - CORRECT ANSWER Length of time over which the monthly disability benefit
payments will last for each disability after the elimination period. -Usually 1 yr, 2 yrs, 5 yrs, or to age 65. THE LONGER THE BENEFIT PERIOD THE HIGHER THE PREMIUM."
"Social Insurance Supplement - CORRECT ANSWER This supplements social security
disability."
"How long is the waiting period for social security disability? - CORRECT ANSWER 5 months"
"Partial Disability - CORRECT ANSWER -The benefit will typically pay 50% of the total disability
benefit, and is limited to a certain time period."
"return of premium rider - CORRECT ANSWER Provides a premium refund of a certain
percentage of premiums at certain times"
"Cash surrender value - CORRECT ANSWER this rider creates a cash value of around 70% of
the premiums paid in excess of claims. Usually only available at the termination of the contract."
"How many years can you stay on short term disability? - CORRECT ANSWER up to 2 years"
"Group Long-Term Disability - CORRECT ANSWER Lower wage employees receive 2/3 or 66%
of their previous income. Higher paid employees get 50% of their previous income. Usually the benefit period stops at age 65 when they qualify for social security."
"Disability Buy-Sell Policy - CORRECT ANSWER This provides enough cash for one owner to
buy the other owners shares in the even that the other owner dies. -Usually has an extremely long elimination period. -One large lump-sum benefit"
"Key Employee Policy - CORRECT ANSWER Purchased by the EMPLOYER on the life of the key
employee. -The key employee is the insured, but the EMPLOYER is the owner of the policy -The employer pays the premium AND receives the benefit in the even that the key employee dies -Covers the expense of hiring and training a replacement"
"Certificate of Coverage - CORRECT ANSWER Individuals that are covered under a group
medical plan receive this as their evidence of coverage."
"Association Group - CORRECT ANSWER A group can buy insurance under these conditions:
- Must be organized for a purpose OTHER THAN to buy insurance.
- Must have at least 100 members
- Group must have been active for at least two years
- must have a constitution and by-laws
- Must hold AT LEAST annual meetings"
"Stop-loss feature - CORRECT ANSWER Out of pocket max (OOPM). Once the insured has paid
a certain amount in covered medical expense throughout the year, the insurance pays 100% of all covered claims."
"HMO Plan - CORRECT ANSWER -Managed Care plan (controls costs)
-emphasis on preventative care -limited choice of providers -members are called subscribers -Primary care physician acts as a gatekeeper -must have a referral to see a specialist -doctors are paid on a pre-paid basis -provide their benefits in the form of services -copays -based on geographic location -MUST provide emergency care and in-patient hospital care in or out of the network."
"Utah Net Care - CORRECT ANSWER for people who can't afford COBRA. Can Provide coverage
for up to 12 months."
"PPO - CORRECT ANSWER -Offer a wider selection of providers than HMO's
-prearranged discounts with providers -health care providers are paid on a fee-for-service basis -deductibles and co insurance apply -Members can go out of network, but will receive a reduced benefit -Most PPO's will pay out of network emergency care in full"
"Open Panel PPO - CORRECT ANSWER PPO that CAN treat outside patients that are not
members of the PPO"
"Closed panel PPO - CORRECT ANSWER providers CANNOT treat patients that are not
members of the PPO"
"Point-of-Service Plan - CORRECT ANSWER -Combination of an HMO and PPO
-Doctors are paid of a fee-per-member (capitation) basis -Offers a greater provider selection than HMO's -Controlled by a primary care physician, but the member doesn't need a recommendation to see a specialist -Members will pay more if they go out of network
-Doctors are paid on a fee for service basis"
"Preventative Care - CORRECT ANSWER -annual physical exams, mammograms, etc
-living a healthier lifestyle -promoted by managed care plans to reduce costs"
"Home Healthcare - CORRECT ANSWER Alternative to hospital care. Patient stays home and is
periodically visited by a healthcare provider."
"Hospice Care - CORRECT ANSWER In-home care to make the terminally ill comfortable. No
measures to cure the condition, just control pain."
"Prospective Review (Precertification process) - CORRECT ANSWER physician submits claim
forms in advance to determine how much the patients insurance will pay"
"Concurrent Review - CORRECT ANSWER The insurance company will monitor the insured's
hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned."
"How long can children stay on their parents insurance because of the affordable care act? -
CORRECT ANSWER 26 years old"
"How long does a parent have to prove that their child is disabled once they reach age 26 to keep
them on their insurance? - CORRECT ANSWER 31 days"
"How long do parents have to notify their insurance company about the birth of a child? -
CORRECT ANSWER 31 days to get coverage"
"When is a newborn covered? - CORRECT ANSWER At the moment of birth (as long as their
parents notify the insurance company within 31 days)"
"HIPPA - CORRECT ANSWER -Eliminated pre-existing condition restrictions under healthcare
plans -Regulates group and individual health plans -applies to employers with 2 or more employees -guarantees renewability for individual policies"
"Guaranteed Issue - CORRECT ANSWER Insurance Companies must accept any eligible
applicant under group coverage."
"How much of preventative care MUST be covered? - CORRECT ANSWER 100% (because of
the affordable care act)"
"Who qualifies for medicare? - CORRECT ANSWER -Age 65
-ESRD (kidney failure) -entitled to social security disability benefits for 2 years -Has ALS or lou Gehrig's disease"
"Medicare Part A - CORRECT ANSWER Covers hospital care, skilled nursing, home health care,
and hospice care. Those who are fully insured don't have to pay a premium."
"When can you enroll in medicare parts A & B? - CORRECT ANSWER initial enrollment: 3
months before and 3 months after 65th b-day General enrollment: between jan 1st and march 31st each year Special enrollment period: any time during the year if the individual or his/her spouse is still employed and covered under a group plan"
"How many days does medicare part A cover for inpatient hospital stays? - CORRECT ANSWER
90 days total (-subject to a deductible -60 days are covered at 100% -copay after 60 days)"
"When is blood covered under medicare part A? - CORRECT ANSWER After the first 3 pints"
"How many days does medicare part A cover for skilled nursing facility stays? - CORRECT
ANSWER up to 100 days total
(-must follow a 3+ day hospital stay to be covered -First 20 days are covered 100%)"
"Medicare part B - CORRECT ANSWER -Partially funded by premiums, partially funded by
general revenues of the federal gov -80/20 coinsurance -Covers doctor services, outpatient surgery, diagnostic tests, x-rays, home health visits, durable medical equipment, etc -covers limited prescription drugs"
"Medicare Part C (Medicare Advantage Plans) - CORRECT ANSWER -Must be enrolled in
medicare parts A & B to qualify for this type of plan -May cover extra things like vision, hearing, dental, etc. -HMO or PPO plans -Usually provides prescription drug coverage"
"Medicare Advantage Special Needs Plan - CORRECT ANSWER this includes people who have
both medicare and Medicaid, who reside in a nursing home, or have certain chronic medical conditions."
"Medicare Part D - CORRECT ANSWER Medicare Prescription drug coverage.
Funded by a monthly premium has a deductible Once the benefit limit is reached, a gap called the "donut hole" occurs. Once out of the donut hole, the insured reaches catastrophic coverage (plan will cover 95% of prescription drug costs at this time)"
"Medicare Supplements - CORRECT ANSWER -Supplement medicare insurance
-issued by private insurance companies -All plans (A through N), must have the same coverage -Can sign up for 6 months after getting medicare part B -Must have parts A & B to purchase this insurance -All plans must cover part A coinsurance, part A hospice care coinsurance, part A hospital costs up to an additional 365 days after part a benefits are used up, part b coinsurance, the first 3 pints of blood"
"When must a buyers guide be given to an applicant? - CORRECT ANSWER At the time of
application"
"When must an outline of coverage be given for medicare plans? - CORRECT ANSWER At the
time of application"
"Medicare SELECT plan - CORRECT ANSWER medicare supplement policy that contains
restricted network provisions"
"OBRA requires: - CORRECT ANSWER -large group health plans (100 employees or more) must
provide primary coverage for disabled individuals under age 65 who are not retired.
"Guarantee of insurability option - CORRECT ANSWER allows the insured to periodically
increase benefit levels without providing evidence of insurability"
"Requirements to be licensed as a producer in utah - CORRECT ANSWER -at least 18 yrs old
-satisfies any applicable education, examination, and training requirements -pays applicable fees -has not committed an act that is grounds for license denial, suspension or revocation -is deemed competent and trustworthy"
"When may a producer add surplus lines of authority? - CORRECT ANSWER if they have been
insurance producers in Utah or another stat in substantially the same license class for at least 3 years of the 4 years immediately before applying to add surplus lines."
"Nonresident Producer - CORRECT ANSWER -a person who is not a resident of Utah may be
licensed as a nonresident producer"
"Consultants - CORRECT ANSWER -must be licensed for 3 of the past 4 years to become a
consultant -Offers advice to the public about insurance policies for a fee"
"Adjusters - CORRECT ANSWER engage in insurance adjusting on behalf of an insurer,
policyholder, or claimant."
"How often must you renew your health insurance license? - CORRECT ANSWER Every 2
years"
"How soon before your license expires can you renew it? - CORRECT ANSWER You can renew
it up to 90 days before it expires"
"How many hours of continuing education do you need to renew your license? - CORRECT
ANSWER 24 hours"
"How many of your continuing education hours need to be ethics courses? - CORRECT
ANSWER 3 hours"
"How long do you have to reinstate a lapsed license? - CORRECT ANSWER Up to 1 year after it
expires"
"Who do you need to notify if you are doing business under an assumed name other than your
legal name? - CORRECT ANSWER the commissioner"
"How soon must you notify the commissioner of a change of address or phone number? -
CORRECT ANSWER within 30 days"
"How long do you have to notify the commissioner of any legal actions taken against you? -
CORRECT ANSWER 30 days"
"Who is the commissioner appointed by? - CORRECT ANSWER The governor"
"What does the commissioner do? - CORRECT ANSWER -regulated internal affairs of the
department of insurance -enforces the state insurance laws -regulates insurance rates (does NOT set insurance rates, the insurance companies do that)"
"How often must the commissioner examine domestic and former insurer? - CORRECT
ANSWER At least once every 5 years"
"How long must an insurer keep records for the commissioner to examine? - CORRECT
ANSWER 3 years"
"Who monitors the solvency and financial strength of insurance companies? - CORRECT
ANSWER The commissioner AND the department of insurance"
"How long is the waiting period in Utah before an insurance company can make a rate change
effective? - CORRECT ANSWER 30 days"
"How long is the waiting period for a SPECIFIC RISK rate increase before the change become
effective? - CORRECT ANSWER 10 days"
"If the commissioner prohibits the use of a specific form, how long does the insurance company
have to discontinue it? - CORRECT ANSWER 15 days"
"How long must an insurance company keep records of discontinued forms? - CORRECT
ANSWER 5 years"
"What is the max jail time for insurance activities that impact interstate commerce? - CORRECT
ANSWER 10 years and 15 if the activity jeopardized the security of the accompanied insurer."
"Applicants for a health insurance license who have a past conviction related to dishonesty,
breach of trust, etc must obtain ___________ to be licensed - CORRECT ANSWER a 1033
waiver"
"Gramm-Leach-Bliley Act - CORRECT ANSWER stipulates that in general, an insurance
company may not disclose nonpublic information to a nonaffiliated third party"
"The National Do Not call registry was established by - CORRECT ANSWER The federal trade
commission (FTC)"
"The Do Not call registry protects consumers from calls from - CORRECT ANSWER
telemarketers"
"Permitted calling hours? - CORRECT ANSWER 8 am to 9 pm"
"Organizations must consult the DO not call registry every - CORRECT ANSWER 31 days"
"Essential benefits for health insurance plans include: - CORRECT ANSWER hospitalization,
maternity, emergency services, wellness, preventative services, and chronic disease management"
"Metal Levels and Coverage Under the affordable care act - CORRECT ANSWER Bronze: covers
Silver: covers 70% Gold: covers 80% Platinum: covers 90%"
"Who can apply for catastrophic coverage? - CORRECT ANSWER young adults under age 301"
"A limited policy that only covers certain diseases like cancer or heart disease - CORRECT
ANSWER dread disease policy"
"Utah Health Exchange - CORRECT ANSWER Provides employers with a free or low cost
method for employees to purchase health insurance using pre-tax dollars"
"Pure Risk - CORRECT ANSWER A chance of loss or no loss, but no chance of gain. The ONLY
type of insurable risk."
"Speculative Risk - CORRECT ANSWER Chance of loss or gain. CANNOT be insured. (Example:
Buying stock in the stock market)"
"Types of Hazards - CORRECT ANSWER Physical, Moral and Morale"
"Physical Hazard - CORRECT ANSWER A physical condition that increases the chance of loss."
"Moral Hazard - CORRECT ANSWER Dishonesty or character defects in an individual that
increase the frequency or severity of loss (Example: Applicant lies on insurance application)"
"Transfer - CORRECT ANSWER Transferring the risk of loss to another company or entity.
Insurance is the most common way to transfer risk."
"To be insurable, a risk must be - CORRECT ANSWER -due to chance
-Definite and measurable -Statistically predictable -NOT catastrophic -Large loss exposure (large pool of randomly selected people/risks)"
"Adverse Selection - CORRECT ANSWER Tendency for poorer than average risks to seek
insurance."
"Reinsurance - CORRECT ANSWER Insurance purchased by other Insurer(s) to spread or
diversify risk; promotes industry stability."
"Mutual Companies - CORRECT ANSWER -Owned by the policyowners
-Participating (ploicyowners are entitled to dividends) -Dividends are NOT guaranteed"
"Fraternal Benefit Societies - CORRECT ANSWER Must be nonprofit, have a lodge system (ie.
religious organization), representative form of government and offer insurance to its members only."
"Certificate of Authority - CORRECT ANSWER License for insurance company to do business.
This allows insurers to be considered ADMITTED or AUTHORIZED."
