PEARSON VUE - FIELD UNDERWRITING PROCEDURES REVIEW EXAM

Who is NOT required to sign a health insurance application?

Beneficiary

Which of the following BEST describes how pre-admission certifications are used?

Used to prevent nonessential medical costs

Which of the following involves analyzing a case before admission to determine what type of treatment is necessary?

Prospective Review

All of these are considered sources of underwriting information about an applicant, EXCEPT:

Rating Services

All of these are valid sources to obtain underwriting information about an applicant EXCEPT for a rating service (A.M. Best, Standard & Poor's).

Any changes made on an insurance application requires the initials of whom?

Applicant

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection report

An inspection report may include information obtained by a telephone call to the proposed insured.

K applies for a health insurance policy on herself and submits the initial premium with the application. She is given a receipt by the producer stating that coverage begins immediately if the application is approved. What kind of receipt was used?

Conditional

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the initial premium

In this situation, the producer should submit the application to the insurance company without the premium. However, if a premium is not paid with the application, the policy will not become valid until the initial premium is collected.

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit Reporting Act

An incomplete health insurance application submitted to an insurer will result in which of these actions?

Application will be returned to the writing producer

Which mode of payment is NOT used by health insurance policies?

Single premium

Before a health insurance policy is issued, which of these components of the contract is required?

Applicant's signature on application

P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to the

Fair Credit Reporting Act

Pre-hospitalization authorization is considered an example of:

managed care

T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable?

Benefits are taxable to T

When a disability income insurance plan is paid for entirely by the employer, the premiums are deductible to the employer. The benefits, in turn, are taxable to the recipient.

What is the initial source of underwriting for an insurance policy?

Application containing statements from the insured

Which mode of payment is NOT used by health insurance policies?

Single premium

Which of the following statements about the classification of applicants is INCORRECT?

Substandard applicants are never declined by underwriters

Which of these terms accurately defines an underwriter's assessment of information on a health insurance application?

Risk classification

Which of the following are NOT managed care organizations?

Medical Information Bureau (MIB)

Which of these would the Medical Information Bureau (MIB) identify?

Testing positive for marijuana use from a previous screening

Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company

If a customer wants to apply for an insurance policy, the agent should complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company.

Why must an Accident & Health insurance applicant answer all questions on the application?

Statements and representations on the application are part of the consideration for issuing a policy

Which of these actions should a producer take when submitting an insurance application to an insurer?

Inform insurer of relevant information not included on the application

One of the actions a producer should take when submitting an application is to advise the insurer of any other relevant information not contained in the application.

The entity whose sole purpose is sharing medical data among its member companies is called the

Medical Information Bureau (MIB)

Which of these factors do NOT play a role in the underwriting of a health insurance policy?

Marital status

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take?

Send a notice to the MIB that the applicant was declined

The MIB does not need to be notified that coverage was denied.

An insurance application may be rejected on the basis of all of these factors EXCEPT

Gender

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

M applies for a health insurance policy and pays the initial premium. When the agent completes the application, a conditional receipt is left with the applicant. The insurance company's underwriting department request's M's medical records and determines that M has had asthma for many years. All of the following are probable underwriting outcomes, EXCEPT:

Changing the policy's provisions

When an insurance application is taken by a producer, which of these statements is true?

Any changes made on the application require the applicant's initials

An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to:

determine if the applicant is an acceptable risk by completing standard underwriting procedures

With a conditional receipt, the insurance company will complete standard underwriting procedures before making a decision about whether to insure the applicant.

Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?

Issue the policy with an altered Time of Payment of Claims provision

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the:

applicant's physician

Why is an applicant's signature required on a health insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

If an agent receives a check made out to them instead of the insurance company, they should return the check to the customer and collect a new check properly made out to the insurance company.

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n):

exclusion for the medical condition

D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D MUST

correct the information and have the prospect initial the change

K completes an application for a disability policy but does not pay the initial premium. The company approves the policy standard and the agent delivers the policy. K then pays her initial premium 3 days later. At what point does K's policy take effect?

Date the initial premium is collected

P is a producer who notices 5 questions on a health application were not answered. What actions should P take?

Set up a meeting with the applicant to answer the remaining questions

Consumer reports requested by an underwriter during the application process of a health insurance policy can be used to determine:

probability of making timely premium payments

The purpose of these reports is to provide a picture of an applicant's general character and reputation, mode of living, finances, and any exposure to abnormal hazards.

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?

$0

Disability income benefits that derive from an individual policy which was paid entirely by the policyowner is not subject to federal income tax.

M completes an application for health insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect, EXCEPT:

free-look period has expired

In this situation, the policy will go into effect after all these actions occur EXCEPT the expiration of the free-look period.

Which of these do NOT constitute policy delivery?

Policy issued with a rating

Which parts of a health insurance policy are guaranteed to be true?

Warranty

Warranties are statements that are considered literally true. A warranty that is not literally true in every detail, even if made in error, is sufficient to render a policy void.

Which type of plan normally includes hospice benefits?

Managed care plans

Which type of plan normally includes hospice benefits?

Managed care plans