Free Accident & Health Insurance License Exam Flashcards

Many insureds contribute premiums to a pool from which covered claims are paid. A larger, sufficiently similar pool makes aggregate losses more predictable even though the timing and size of one person's claim remain uncertain.

Adverse selection is the tendency of people with greater expected loss to seek or keep more coverage. Moral hazard is changed behavior after protection exists, such as using more services because the insured bears less of the cost.

The applicant or policyholder provides the application statements and required premium; the insurer provides its contractual promise to pay covered claims or benefits. Both sides exchange something of legal value.

The parties' ultimate values may be unequal because payment depends on an uncertain event. A small premium can lead to a large covered benefit, while no claim may occur at all.

The insurer drafts the standard language and the applicant generally accepts or rejects it rather than negotiating every term. Courts commonly construe genuine ambiguity against the drafter, but clear language still controls.

It identifies the policy and any attached application, riders, or endorsements as the complete agreement. It prevents an agent's unwritten statement from silently changing the insurer's contractual obligations.

A grace period gives limited time after a premium due date while the policy generally remains in force under its terms. Reinstatement restores a policy after lapse and may require premium, an application, or evidence specified by the policy and law.

With noncancelable coverage, the insurer generally cannot cancel or raise the stated premium while timely premiums are paid through the guaranteed period. Guaranteed-renewable coverage must be renewed, but class-wide premium changes may be allowed under the contract and applicable law.

It is the amount the enrollee pays for specified covered services before the plan begins paying under its cost-sharing rules. Some services can be covered before the deductible, so the policy or Summary of Benefits and Coverage controls.

A copayment is a fixed dollar amount for a covered service; coinsurance is a percentage of an allowed covered cost. Either may apply before or after a deductible depending on plan design.

Premiums, noncovered services, most out-of-network spending, and charges above an allowed amount generally do not count. The maximum limits specified cost sharing for covered in-network benefits, not every health-related dollar spent.

An HMO generally limits nonemergency coverage to its network and may coordinate care through a primary-care provider and referrals. Exact referral and out-of-network rules depend on the plan.

A PPO usually permits covered care both inside and outside its preferred network without a primary-care referral, but the member normally pays more out of network. The schedule of benefits determines the actual difference.

An EPO generally covers nonemergency care only within its network. A POS plan commonly combines primary-care coordination with an option to use out-of-network providers at higher member cost; specific plan rules can vary.

Authorization confirms that a plan's advance-review requirement was met based on available information. Payment can still depend on active eligibility, medical necessity, coding, exclusions, limits, and the service actually delivered.

It determines which plan pays first and how the secondary plan considers the remaining covered amount. It is intended to coordinate payment without allowing recovery beyond the allowable covered expense.

An HSA is owned by the individual, is portable, and carries its balance forward if eligibility rules are met. A health FSA is an employer-established arrangement whose access, carryover, and forfeiture rules depend on the plan and federal limits.

Limited-benefit coverage pays defined amounts or for specified events rather than broadly covering medical expenses. Its benefit can be far below the actual bill and should be presented as supplemental, not comprehensive, protection.

The elimination period is the waiting time after covered disability begins before benefits become payable. The benefit period is the maximum span for which benefits may be paid while the insured remains eligible.

An own-occupation definition focuses on inability to perform the insured's stated occupation. An any-occupation definition uses inability to perform work meeting the policy's standards, often considering education, training, or experience. Exact wording controls.

It addresses a partial loss of income when an insured can work but a covered disability reduces duties, time, or earnings. The benefit formula and required income-loss percentage are policy-specific.

It treats specified severe losses, such as certain losses of sight, speech, hearing, or limbs, as total disability under the contract without the ordinary occupational test. The listed losses and benefit conditions vary by policy.

After the policy's stated conditions and waiting period are satisfied, it waives premiums while qualifying disability continues. It keeps coverage in force without turning the waived premium into an extra cash benefit.

It reimburses covered business operating expenses when an insured owner becomes disabled, helping the business continue. It is designed for expenses such as rent or employee wages, not to replace the owner's personal earnings.

SSDI uses a federal definition aimed at severe, long-term total disability and does not pay for partial or short-term disability. Private policies use their own occupational definitions, elimination periods, and benefit durations.

The contract is issued to the group policyholder, commonly an employer or association. Covered individuals receive certificates or benefit documents describing their coverage; the certificate is not a separate individually negotiated master contract.

In a contributory plan, eligible employees pay part of the premium; in a noncontributory plan, the employer pays the full required premium. Participation requirements and employer contributions are governed by the plan and applicable law.

Common eligibility rules define who may enroll, and broad participation can help limit adverse selection. Insurers may evaluate permitted group-level factors, but ACA rating rules restrict individual- and small-group premiums to specified factors and do not permit claims-experience or health-status rating; other markets remain subject to their applicable rules.

It lets qualified beneficiaries temporarily continue the same group health coverage after specified events that would otherwise cause loss of coverage. It generally applies to plans of private employers with at least 20 employees and certain state or local government plans.

The qualified beneficiary usually pays the full cost, including the portion formerly paid by the employer, plus a permitted administrative amount. An employer may subsidize it, but federal COBRA generally does not require that subsidy.

It can let an eligible person enroll outside ordinary enrollment after events such as loss of other coverage, marriage, birth, or adoption. Notice deadlines and effective-date rules apply, so the plan's instructions matter.

It explains important plan terms in understandable language, including eligibility, benefits, claims and appeals, participant rights, and circumstances causing loss of benefits. It helps participants understand the governing employer plan.

Part A is hospital insurance. It helps cover inpatient hospital care, qualifying skilled nursing facility care, hospice, and certain home health care under Medicare's conditions.

Part B is medical insurance. It helps cover physician and other provider services, outpatient care, durable medical equipment, preventive services, and certain home health care.

Medicare Advantage, or Part C, delivers Part A and Part B benefits through a Medicare-approved private plan and usually includes Part D. Networks, authorization, extra benefits, and cost sharing can differ from Original Medicare.

Part D provides outpatient prescription-drug coverage through private plans that follow Medicare rules. A beneficiary may add a stand-alone drug plan to Original Medicare or receive drug coverage through many Medicare Advantage plans.

Medigap is private insurance that helps pay specified cost sharing in Original Medicare. It is not Medicare Advantage and generally requires enrollment in Parts A and B; standardization differs in Massachusetts, Minnesota, and Wisconsin.

Medicare is federal health insurance primarily for people 65 or older and certain younger people with disabilities or conditions. Medicaid is a joint federal-state program for eligible people under state-administered income and category rules.

Every Marketplace plan covers them, and the requirement also applies broadly to non-grandfathered individual and small-group coverage. Large self-insured employer plans are not required to cover every essential-health-benefit category.

Bronze, Silver, Gold, and Platinum describe a plan's actuarial value for a standard population, not the exact percentage paid for every enrollee or service. Premiums, networks, deductibles, and other cost sharing still differ by plan.

Custodial care mainly assists with everyday personal activities, while skilled care requires licensed clinical personnel. Medicare covers limited qualifying skilled services but generally does not pay for ongoing custodial long-term care.

Eating, toileting, transferring, bathing, dressing, and continence. Federal tax law lists these six activities and requires a qualifying contract's functional determination to take at least five of them into account; mobility may still be discussed separately in care planning.

A licensed health care practitioner can certify that the individual is unable to perform at least two listed ADLs without substantial assistance for a period of at least 90 days, or needs substantial supervision because of severe cognitive impairment. The certification must have been made within the preceding 12 months.

It is a waiting period, often measured in service or calendar days as the policy specifies, that must be satisfied after benefit eligibility begins before covered benefits become payable.

It pays a stated amount tied to a covered hospital event, such as a fixed daily or admission benefit, rather than reimbursing the entire medical bill. It is limited supplemental coverage, not comprehensive major medical insurance.

Ask the applicant to provide a complete, accurate response and document it through the authorized process. The producer should not guess, conceal information, or alter an answer without the applicant's knowledge.

A fact is material if truthful disclosure would have influenced underwriting, issuance, terms, or premium. Remedies depend on the contract and applicable law; not every minor error has the same consequence.

Lawful classification uses permitted, actuarially or legally supported distinctions applied consistently. Unfair discrimination treats similar risks differently without an allowed basis or uses a prohibited factor; exact restrictions are jurisdiction-specific.

Twisting uses misleading comparisons or statements to induce a policy change. Rebating offers an unapproved value or premium inducement not stated in the contract. Definitions, exceptions, and penalties come from jurisdiction law.

Documentation shows the client's stated needs, information considered, disclosures, and reasons for the recommendation. It supports accurate service and compliance without turning a licensee into a guarantor of every future outcome.