Hawaii Health Insurance Licensing

These questions are based on the chapter snapshots and the "Know This" highlights.

There are 4 elements of an insurance contract: Considerations, Agreement, and Legal Purpose. What is the 4th element?

1. Parties

2. People Involved

3. Competent Parties

4. Family members

Competent Parties

(Chapter 1)

What does representation mean and how does it differ than a warranty?

1. A warranty is an absolutely true statement guaranteed to be true, while representations are believed to be true to the best of the applicant's knowledge.

2. Both representation and warranties are statements made by the applicant.

3. A representation is an absolutely true statement guaranteed to be true, while warranties are believed to be true to the best of the applicant's knowledge.

4. Representation means who is covered by the insurance policy.

A warranty is an absolutely true statement guaranteed to be true, while representations are believed to be true to the best of the applicant's knowledge.

(Chapter 1)

In addition to the agent/producer and policyowner, who is required to sign a health insurance application?

1. The applicant

2. The beneficiary

3. The spouse

4. The dependents

The applicant

(Chapter 1)

What is the best process for correcting an error on an application?

1. Cross-out any errors and have the applicant initial changes.

2. Start a brand new application and attach the old one to the entire contract.

3. Start a brand new application.

4. Use white-out on any errors and have the applicant initial changes.

Start a brand new application.

(Chapter 1)

What is the purpose of the Fair Credit Reporting Act? Who does it protect?

1. It protects the insurance companies from receiving fraudulent information.

2. It protects the consumer from having a bad credit score.

3. W

4. It protects the consumer’s information through HIPAA.

It protects the consumer from any inaccurate or fraudulent information circulated on their behalf, and maintains that records are kept confidential and accurate.

(Chapter 1)

What differentiates an investigative report from a consumer report?

1. An investigative report provides information about a consumer’s character, reputation, and habits, obtained through an investigation such as interviews.

2. An investigative report is the same as a consumer report.

3. An investigative report is limited to credit reports.

4. An investigative report is limited to employment records, credit reports, and public sources.

An investigative report provides information about a consumer’s character, reputation, and habits, obtained through an investigation such as interviews.

(Chapter 1)

According to the HIPAA privacy rule, what is protected health information (PHI)?

1. Individually identifiable health information in paper and electronic form.

2. Individually identifiable health information in paper, electronic, and oral form.

3. Health information used for statistics.

4. Familial identifiable health information.

Individually identifiable health information in paper, electronic, and oral form.

(Chapter 1)

In a replacement situation where a new policy replaces the current policy, how long must the current policy remain in force?

1. Until the new policy is issued.

2. Until the first premium of the new policy is paid.

3. Until the agent signs the application

4. Until the current policy expires.

Until the new policy is issued.

(Chapter 1)

What coverages are provided by a Major Medical Expense policy?

1. Comprehensive coverage for hospital expenses, catastrophic medical expense protection, and benefits for prolonged injury or illness.

2. Limited coverage, pre-existing medical coverage, and benefits for self injuries.

3. Basic coverage, catastrophic medical expense protection, and benefits for prolonged injury or illness.

4. Coverage for any sickness or illness that arises.

Comprehensive coverage for hospital expenses, catastrophic medical expense protection, and benefits for prolonged injury or illness.

(Chapter 2)

Why do HMOs encourage members to get regular checkups?

1. Because it’s free, so you might as well.

2. To get regular immunizations such as the flu shot.

3. To reduce the cost of healthcare by catching diseases in the early stages, in other words, preventive care.

4. Because the Health Maintenance Act of 1973 forces them to.

To reduce the cost of healthcare by catching diseases in the early stages, in other words, preventive care.

(Chapter 2)

What is the gatekeeper concept in relation to referrals?

1. The primary care physician (PCP) must write a referral before the member can access specialty physicians.

2. The PCP does not need to write a referral to access specialty physicians.

3. Specialty physicians write a referral for members to see their PCP.

4. The PCP writes referrals but only to specialty doctors the PCP knows.

The primary care physician (PCP) must write a referral before the member can access specialty physicians.

The PCP or gatekeeper helps to control the cost of healthcare by only making the necessary referrals.

(Chapter 2)

How does a POS plan differ from a traditional HMO?

1. An HMO acts the same as a POS.

2. A POS limits the member into using a provider in network just like an HMO.

3. An HMO allows more flexibility between in and out of network providers, in exchange for a higher premium.

4. A POS allows the member to use a provider in or out of network, and allows the member to make a different choice for each medical service that comes up, while an HMO is limited to providers in network.

A POS allows the member to use a provider in or out of network, and allows the member to make a different choice for each medical service that comes up, while an HMO is limited to providers in network.

(Chapter 2)

What is the purpose of a Health Savings Account?

1. To help save for qualified health expenses for themselves, their spouse, or dependents.

2. To save money on monthly insurance premiums.

3. To allow access to a provider out of network even if I have an HMO

4. To help save for qualified health expenses only for themselves.

To help save for qualified health expenses for themselves, their spouse, or dependents.

Must be covered by a high-deductible health plan (HDHP), not covered by any other health insurance, not eligible for Medicare, and not eligible to be claimed as a dependent.

Non-health withdrawals before age 65 = 20% penalty + tax

Non-health withdrawals after age 65 = no penalty + tax

(Chapter 2)

What is a probationary period?

1. A period of time where disability payments are paused.

2. A time deductible set from the start of disability to when benefit payments are given.

3. A waiting period in addition to the elimination period, from the policy issue date to when disability benefits to kick in.

4. A period of time to wait for benefits that can be expedited if you pay a fee.

A waiting period in addition to the elimination period, from the policy issue date to when disability benefits to kick in.

Does not apply to accidents or injury, only sickness.

(Chapter 2)

What is the purpose of the buy-sell agreement? (AKA business disability buy-out policy)

1. To specify how the business will covered between owners when one of the owners dies or becomes disabled.

2. To provide one business owner with money when the other business owner leaves

3. To cover business owners when they are a new business

4. To specify how the business will be covered when there is a new owner who comes into the business mix.

To specify how the business will covered between owners when one of the owners dies or becomes disabled.

Lump sum payment with a long elimination period of 1-2 years.

(Chapter 2)

What is the purpose of the key person disability insurance?

1. To help the business pay to find a new key person if they are unhappy with their current employee.

2. To help the business recover costs from losing their key person, as well as pay for hiring and training a replacement.

3. To help guarantee the key person will always have a job.

4. To help guarantee the key person’s spouse and dependents will be compensated should anything happen to them.

To help the business recover costs from losing their key person, as well as pay for hiring and training a replacement.

Key people are specialized employees who have skills that not everyone else can do. Example: a neurosurgeon, a baker, a language translator. Not duties such as janitor, dishwasher, or front desk person.

(Chapter 2)

With key person disability insurance, who pays the premium, who is the beneficiary, and who is the insured?

1. The key person pays the premium, is the beneficiary, and is insured.

2. The business pays the premium, the key person is the beneficiary and the insured.

3. There is no premium to pay, and the business it the beneficiary and the key person is the insured.

4. The business pays the premium, the business is the beneficiary, and the insured is the key person.

The contract is owned by the business, the premium is paid by the business, the business is the beneficiary. The insured is the key person.

The key person receives nothing from the contract but still has to give consent to be insured.

(Chapter 2)

Under the Accidental Death and Dismemberment coverage, when would the capital amount and principal amount be paid?

1. Principal amount will be paid for accidental death, the capital amount will be paid in case of dismemberment or loss of sight.

2. Capital will be paid for accidental death, the principal amount will be paid in case of dismemberment or loss of sight.

3. Principal amount will be paid at time of partial disability, capital amount will be paid at time of full disability.

4. Capital amount will be paid at time of partial disability, principal amount will be paid at time of full disability.

Principal amount will be paid for accidental death, the capital amount will be paid in case of dismemberment or loss of sight.

Principal amount is a full face amount and capital sum is a percentage.

(Chapter 2)

Long term care policies must provide coverage for a minimum of how many consecutive months?

1. 20

2. 24

3. 12

4. 10

12 consecutive months

(Chapter 2)

What is the renewability requirement for long term care policies?

1. LTC policies are nonrenewable

2. LTC policies are noncancellable

3. LTC policies are guaranteed renewable

4. LTC policies are good for one year and that’s it

LTC policies are guaranteed renewable. This means they can’t be cancelled, but the insurers do have the right to increase the premiums. Renewal is good until the insured reached age 65.

(Chapter 2)

What is included under the definition of Activities of Daily Living (ADLs)?

1. Bathing, dressing, toileting

2. Driving, eating, mobility

3. Toileting, eating, sleeping

4. Eating, talking, transferring

Bathing, dressing, toileting. Also includes: eating, transferring, mobility.

Not ADLs: sleeping, talking, driving.

(Chapter 2)

What types of groups are eligible for group insurance?

1. Employee-sponsored and association group

2. Insurer sponsored and employer-sponsored

3. Association group and self-employed groups

4. Employer-sponsored and association group

Employer-sponsored and association group

(Chapter 2)

How many members must as association have to qualify for group insurance?

1. 20

2. 10

3. 200

4. 100

100 members. Other requirements: be organized for reasons other than just buying insurance, active for at least 2 years, have a constitution/by-laws, hold at minimum annual meetings.

(Chapter 2)

How is underwriting unique for group policies, as opposed to individual policies?

1. For group policies, underwriting is less restrictive and every eligible member of the group must be covered regardless of physical condition, age, or occupation.

2. For group policies, underwriting is more restrictive and every eligible member of the group must be covered regardless of physical condition, age, or occupation.

3. For individual policies, underwriting is less restrictive and every eligible member must be covered regardless of physical condition, age, or occupation.

4. For group policies, members must fill out their own application to be considered for insurance.

For group policies, underwriting is less restrictive and every eligible member of the group must be covered regardless of physical condition, age, or occupation.

Each individual does not have a contract with the insurer.

(Chapter 2)

Under COBRA, dependents are covered during qualifying events such as death of the employee, divorce, or legal separation. How long is that coverage period extended to?

1. Up to 35 months

2. Up to 18 months

3. Up to 31 days

4. Up to 36 months

Up to 36 months

(Chapter 2)