Maine Life & Health Insurance Exam — All Questions

A ten percent federal tax penalty generally applies to taxable withdrawals from annuities and qualified plans taken before the owner reaches age:

• a.Seventy
• b.Sixty-five, the common retirement age
• c.Fifty
• d.Fifty-nine and one-half✓

The ten percent early-distribution penalty generally applies to taxable amounts withdrawn before age 59 1/2, on top of ordinary income tax, to discourage using retirement-oriented products for early spending. Ages 65, 70, and 50 are not the general threshold (65 is a common retirement/Medicare age, and required minimum distributions begin later). The 59 1/2 figure is one of the most frequently tested numbers in life and annuity taxation.

Accelerated death benefits paid to an insured who has been certified as terminally ill are generally:

• a.Received free of federal income tax✓
• b.Taxed at capital gains rates
• c.Deductible by the insured
• d.Fully taxable as ordinary income to the insured

Accelerated death benefits paid because an insured is terminally ill are generally treated like a tax-free death benefit and received income-tax-free, which lets the insured use the money for care without a tax burden. They are not fully taxable, not taxed as capital gains, and not deductible. This favorable treatment (subject to certain limits for chronically ill insureds) reflects the policy goal of helping seriously ill insureds access their benefits early.

The two broad categories of health insurance are:

• a.Property coverage and casualty coverage, a separate branch of insurance entirely
• b.Fixed coverage and variable coverage
• c.Life insurance and annuities
• d.Medical expense coverage and disability income coverage✓

Health insurance divides into medical expense coverage, which pays for care such as hospital, physician, and surgical services, and disability income coverage, which replaces part of the income lost when the insured cannot work. Life insurance and annuities are separate product lines. Property and casualty is a different branch of insurance entirely. Fixed and variable describe how certain life and annuity products are invested, not health insurance categories. Recognizing these two purposes, paying medical bills versus replacing income, frames all health coverage.

Basic medical expense coverage differs from major medical coverage mainly because basic coverage typically:

• a.Provides first-dollar benefits with no deductible but has relatively low limits✓
• b.Is designed for catastrophic costs, which is actually the role of major medical rather than basic coverage
• c.Carries very high lifetime limits
• d.Requires a large annual deductible

Basic medical expense plans historically paid 'first dollar' benefits, meaning they began paying with little or no deductible, but they had relatively low benefit limits for specific services. Major medical, by contrast, provides broad, high-limit protection after a deductible and coinsurance, and is meant to handle large or catastrophic costs. So basic coverage is characterized by low limits and first-dollar payment, not high limits or a large deductible. The two are often combined so basic pays first and major medical covers the excess.

A 'calendar-year' deductible in a medical plan means the insured must satisfy the deductible:

• a.Once during each year, after which the plan begins paying its share✓
• b.Only once in the insured's entire lifetime, after which it would never apply again
• c.Fresh at the start of every month
• d.Separately for each different illness

A calendar-year (or annual) deductible must be met once during each year; once the insured's covered costs reach that amount, the plan pays its share for the rest of the year, and the deductible resets the following year. A deductible applied to each separate illness is a per-cause deductible. It is not a one-time lifetime deductible, and it does not reset monthly. The calendar-year structure is the most common deductible design in medical expense plans.

A 'family deductible' provision in a medical plan generally:

• a.Requires every family member to meet a separate deductible with no overall cap, no matter how many of them have already met their own deductibles
• b.Doubles the plan's coinsurance percentage
• c.Eliminates the out-of-pocket maximum entirely
• d.Caps the total deductible a family must meet, often once two or three members have each met the individual deductible✓

A family deductible sets an aggregate limit so that once a specified number of family members (commonly two or three) have each satisfied the individual deductible, the family deductible is considered met and no further deductibles apply for the year. It does not require every member to meet a full deductible with no cap, does not change coinsurance, and does not remove the out-of-pocket maximum. The provision protects larger families from stacking up multiple full deductibles.

The 'coordination of benefits' (COB) provision in group health insurance is designed to prevent:

• a.The insured from ever filing a claim
• b.The insurer from paying any benefits at all whenever a person happens to be enrolled under more than one group plan
• c.The plan from covering preventive services
• d.The insured from collecting more than 100 percent of covered expenses when covered by two plans✓

Coordination of benefits applies when a person is covered by more than one group plan; it establishes which plan pays first (primary) and which pays second (secondary) so that the total reimbursement does not exceed 100 percent of the actual covered expenses. It does not bar filing claims, block preventive care, or stop the insurer from paying. COB exists to prevent duplicate payment and the profit motive that could arise from being over-reimbursed by multiple plans.

Individual disability income policies typically limit the benefit to roughly 60 percent of the insured's earned income in order to:

• a.Comply with Medicare requirements
• b.Preserve the insured's incentive to return to work and avoid overinsurance✓
• c.Match the way property insurance works
• d.Reduce the insurer's advertising costs, which has nothing to do with how benefit limits are set

Disability income benefits are capped at a portion of income (often around 60 percent) because disability benefits are generally received income-tax-free when the individual paid the premiums, so replacing too much income could leave the insured better off not working, creating a moral hazard. The limit is not about advertising costs, Medicare, or property insurance. Keeping the benefit below full pay maintains the insured's motivation to recover and return to work.

Under a 'presumptive disability' provision in a disability income policy, the insured is automatically presumed totally disabled upon:

• a.The loss of sight, hearing, speech, or the use of two limbs✓
• b.Catching a common cold
• c.Voluntarily changing employers for a better-paying position
• d.Missing a single day of work

A presumptive disability provision automatically deems the insured totally disabled, and pays full benefits without the usual proof, upon certain severe losses such as loss of sight, hearing, speech, or the loss of use of two limbs, even if the insured could technically still work. Missing one day of work, a minor illness like a cold, or changing jobs do not qualify. The provision recognizes that these catastrophic losses are so serious that disability is presumed as a matter of course.

A 'recurrent disability' provision in a disability income policy determines:

• a.The amount of any death benefit
• b.Whether a return of the same disability soon after recovery is treated as a continuation of the prior claim rather than a new one✓
• c.How the policy's premiums are calculated at issue, based on the insured's age, occupation, and health, none of which this provision addresses
• d.The length of the free-look period

A recurrent disability provision states that if the insured recovers and then suffers the same disability again within a short specified time (often six months), it is treated as a continuation of the original disability, so a new elimination period does not have to be served. It has nothing to do with premium calculation, the free-look period, or a death benefit. The provision protects an insured from having to satisfy a fresh waiting period when the same condition quickly returns.

A residual (partial) disability benefit pays when the insured:

• a.Is totally and permanently disabled and cannot work at all in any occupation for the rest of their life
• b.Returns to work but earns less because of the disability, in proportion to the income lost✓
• c.Has fully recovered and returned to full earnings
• d.Chooses to retire early with no disability

A residual disability benefit applies when the insured can work but, due to the ongoing effects of the disability, earns less than before; the benefit is generally paid in proportion to the percentage of income lost. It is not for total permanent disability (which pays full benefits), not for full recovery with no lost income, and not for voluntary retirement. The residual benefit bridges the gap between total disability and full recovery by covering a partial loss of earnings.

To be eligible to contribute to a Health Savings Account (HSA), an individual must be covered by:

• a.A qualified high-deductible health plan (HDHP)✓
• b.Any health plan at all
• c.Medicare Part A and Part B
• d.An HMO that has no deductible of any kind whatsoever

An HSA must be paired with a qualified high-deductible health plan; the higher deductible lowers the premium, and the HSA lets the individual set aside tax-advantaged money to pay for care. It cannot be paired with just any plan, a no-deductible HMO, or Medicare (enrolling in Medicare actually ends HSA eligibility). The HDHP pairing is the defining requirement, which is why HSAs and HDHPs are always discussed together.

Contributions to a Health Savings Account (HSA) generally receive which federal tax treatment?

• a.They are tax-deductible or pre-tax, grow tax-free, and are tax-free when used for qualified medical expenses✓
• b.They are forfeited at the end of each year
• c.They can never be carried over to a future year, which is actually a limitation of a flexible spending account rather than a health savings account
• d.They are always fully taxable when contributed

HSAs offer a rare triple tax advantage: contributions are deductible or made pre-tax, the account grows tax-free, and withdrawals for qualified medical expenses are tax-free. Contributions are not taxable when made, the balance does carry over year to year, and funds are not forfeited at year-end. This favorable treatment, combined with the balance being the owner's to keep, makes the HSA a powerful savings tool alongside a high-deductible plan.

Unlike a Flexible Spending Account (FSA), unused funds in a Health Savings Account (HSA) at year-end:

• a.Are forfeited under a use-it-or-lose-it rule, which is how a flexible spending account instead works
• b.Roll over and remain the account owner's money, even if the owner changes jobs✓
• c.Are taxed at a flat fifty percent rate
• d.Automatically revert to the employer

HSA balances roll over indefinitely and belong to the account owner, who keeps them even when changing employers or health plans, so the account can grow over many years. An FSA, by contrast, is generally subject to a use-it-or-lose-it rule. HSA funds do not revert to the employer and are not taxed at a flat penalty rate simply for remaining in the account. Portability and rollover are key advantages of the HSA over the FSA.

The term 'usual, customary, and reasonable' (UCR) charge refers to:

• a.The amount a plan treats as appropriate for a service based on the prevailing fees charged in that geographic area✓
• b.The flat copayment due at a visit
• c.The plan's annual deductible
• d.The monthly premium the insured pays for the coverage, a fixed cost unrelated to how a plan decides a reasonable charge for a service

A UCR charge is the amount an insurer considers reasonable for a given service, determined by the usual fee the provider charges, the customary fees of similar providers in the same area, and what is reasonable for the situation; the plan bases reimbursement on this figure, and the insured may owe amounts a provider bills above it. UCR is not the deductible, premium, or copay. UCR limits how much a plan will recognize for out-of-network or fee-for-service charges.

A managed care 'preauthorization' (precertification) requirement means the insured or provider must:

• a.File a police report before treatment
• b.Obtain the plan's approval before certain services, such as a non-emergency hospital admission, to ensure coverage✓
• c.Wait a full year before receiving benefits
• d.Pay the entire bill up front before any care is delivered, which is not what obtaining advance approval for a service means

Preauthorization (precertification) requires that the plan review and approve certain non-emergency services, such as a planned hospital stay or a costly procedure, before they are provided, both to confirm medical necessity and to ensure the service will be covered. It is not a requirement to pay the full bill first, to wait a year, or to file a police report. Managed care plans use preauthorization to control costs and steer care to appropriate settings.

Under a 'capitation' payment arrangement, an HMO pays a network physician:

• a.A fixed amount per enrolled member per month, regardless of how many services the member uses✓
• b.Nothing until the patient files a claim
• c.A payment only at the end of the calendar year
• d.A separate fee for each individual service performed, which describes fee-for-service rather than capitation

Under capitation, the HMO pays the physician a set amount for each enrolled member per month (per capita), whether or not that member seeks care, which shifts some financial risk to the provider and encourages efficient, preventive care. It is the opposite of fee-for-service, which pays per service. It is not a claim-triggered or year-end-only payment. Capitation is a hallmark of the HMO managed care model.

In an HMO, the primary care physician often serves as a 'gatekeeper,' which means the physician:

• a.Sets the plan's annual deductible amount and the coinsurance percentage members owe
• b.Coordinates the member's overall care and provides referrals to specialists✓
• c.Owns and operates the HMO
• d.Collects the plan's monthly premiums

As a gatekeeper, the primary care physician manages the member's overall care and must generally provide a referral before the member sees a specialist, which helps the HMO control costs and avoid unnecessary services. The gatekeeper does not collect premiums, own the HMO, or set the deductible. The gatekeeper model is a defining feature of traditional HMOs and a key difference from PPOs, which usually let members self-refer to specialists.

A Point-of-Service (POS) health plan is best described as:

• a.A hybrid that blends HMO features with the option to go out of network at a higher cost✓
• b.A pure fee-for-service indemnity plan with no network
• c.A plan that provides no coverage outside a fixed network under any circumstances whatsoever
• d.A plan identical in every way to a standard HMO

A POS plan combines HMO and PPO characteristics: members typically choose a primary care physician and use the network for the lowest cost, but they may also go outside the network at the point of service by paying more. It is not a pure indemnity plan, not identical to an HMO (it allows out-of-network use), and it does provide some out-of-network coverage. The 'point of service' name reflects that the member decides in or out of network each time care is needed.

Many disability income policies include a waiver of premium feature that:

• a.Doubles the monthly benefit amount
• b.Shortens the elimination period to zero days so benefits begin immediately, which is not what this premium-related feature does
• c.Adds a lump-sum death benefit
• d.Stops premium payments while the insured is disabled, usually after a waiting period, keeping the policy in force✓

The waiver of premium feature in a disability income policy relieves the insured of paying premiums once they have been disabled for a specified period (often 90 days), and coverage continues without payment while the disability lasts. It does not eliminate the elimination period, double the benefit, or add a death benefit. The feature protects the policy from lapsing at the very time the disabled insured may struggle to pay premiums.

A 'noncancelable' disability income policy guarantees that the insurer:

• a.Covers only losses caused by accidents
• b.May cancel the policy at any anniversary it chooses
• c.Can neither cancel the policy nor change the premium as long as premiums are paid, up to a stated age✓
• d.May raise the premium but must always renew the coverage, which describes the guaranteed renewable provision instead

A noncancelable policy gives the insured the strongest guarantee: the insurer cannot cancel the coverage and cannot change the premium schedule, which is fixed in the contract, as long as premiums are paid up to a specified age. A policy that must renew but can reprice is guaranteed renewable, a weaker guarantee. It is not cancelable at the insurer's choice, and it is not limited to accidents. Noncancelable locks in both renewal and premium, making it the most protective (and often costliest) renewability provision.

Under a 'guaranteed renewable' health policy, the insurer:

• a.May refuse to renew if the insured's health worsens
• b.May raise an individual's premium based on that person's own claims experience alone
• c.May cancel the policy at each renewal date
• d.Must renew the policy but may adjust premiums only for an entire class of insureds✓

A guaranteed renewable policy requires the insurer to renew the coverage (usually to a stated age) and forbids singling out an individual for a rate increase or nonrenewal; premiums can be changed only for an entire class of similar policyholders. The insurer cannot cancel at renewal, cannot raise one person's premium for their own claims, and cannot refuse renewal because health declined. This provision sits between the stronger noncancelable and weaker conditionally renewable forms.

A 'conditionally renewable' policy allows the insurer to decline renewal:

• a.Only after the policy has been in force for twenty years, a time restriction this provision does not impose
• b.For absolutely any reason the insurer chooses
• c.Only for specific reasons stated in the contract, and not because of the insured's declining health✓
• d.Under no circumstances at all

A conditionally renewable policy lets the insurer refuse renewal only for reasons spelled out in the contract (such as the insured reaching a certain age or leaving employment), but it may not decline renewal simply because the insured's health has deteriorated. It is not renewable-or-cancelable at the insurer's whim, is not guaranteed under all circumstances, and has no twenty-year rule. This form gives the insurer more control than guaranteed renewable but still protects against nonrenewal for health reasons.

An 'optionally renewable' health policy gives the insurer the right to:

• a.Cancel the policy in the middle of a term without any notice to the insured, which this provision does not permit
• b.Refuse renewal or change premiums on policy anniversaries or premium due dates, at its own option✓
• c.Never change the premium for the life of the policy
• d.Renew the coverage indefinitely no matter what

An optionally renewable policy reserves for the insurer the option, at renewal (policy anniversaries or premium due dates), to either decline renewal or adjust the premium, giving the insurer substantial discretion. It does not lock in premiums, does not guarantee renewal, and generally does not permit cancellation in the middle of a paid term (renewability decisions occur at the renewal points). Optionally renewable is a weaker guarantee for the insured than guaranteed renewable.

Business overhead expense (BOE) disability insurance reimburses a disabled business owner for:

• a.The ongoing fixed business expenses, such as rent, utilities, and employee wages, while the owner is disabled✓
• b.The purchase of the owner's business interest from the estate, which is the role of a disability buy-sell policy rather than overhead coverage
• c.The owner's own lost personal salary
• d.The owner's personal medical bills

BOE insurance covers the continuing overhead costs of running the business (rent, utilities, staff salaries, and similar fixed expenses) while the owner is disabled, so the business can keep operating until the owner returns. It does not replace the owner's personal income (that is a personal disability income policy), fund a buyout (that is disability buy-sell), or pay personal medical bills. BOE benefits are also generally deductible to the business, and the reimbursements are taxable, reflecting their nature as a business expense reimbursement.

A disability buy-sell policy is designed to provide funds to:

• a.Reimburse the owner's personal medical expenses, which is the job of a health insurance plan instead
• b.Continue paying the disabled owner's salary
• c.Buy out the share of an owner who becomes permanently disabled, under a buy-sell agreement✓
• d.Cover the business's monthly overhead costs

A disability buy-sell policy funds the purchase of a permanently disabled owner's interest in the business by the other owners or the entity, mirroring how life-insurance-funded buy-sell agreements handle an owner's death. It does not continue salary, cover overhead, or pay medical bills, which are the jobs of personal disability income, business overhead expense, and health insurance respectively. The buy-sell policy ensures a smooth, funded transfer of ownership when disability makes an owner unable to continue.

Key-person disability income insurance pays its benefit to the:

• a.Disabled key employee personally rather than to the business that owns and pays for the coverage
• b.Key employee's family members
• c.State disability fund
• d.Business, to offset lost revenue and added costs while a vital employee is disabled✓

Key-person disability insurance is owned by and payable to the business, providing funds to cover the lost productivity, replacement hiring, and other costs the company faces when an essential employee becomes disabled. The benefit does not go to the employee personally or to the family (that would be personal coverage), and it is not paid to a government fund. Like key-person life insurance, the business is the owner, payer, and beneficiary of the policy.

A disability income policy that covers the insured only for injuries and sickness occurring away from the job is described as:

• a.Twenty-four-hour coverage
• b.Occupational coverage
• c.Presumptive coverage
• d.Nonoccupational coverage✓

Nonoccupational coverage applies only to disabilities arising off the job, because on-the-job injuries and illnesses are generally handled by workers compensation. Occupational coverage would include both on- and off-the-job causes. Twenty-four-hour coverage combines occupational and nonoccupational protection into one plan. Presumptive disability refers to automatic total-disability status for certain severe losses. Group short-term and long-term disability plans are commonly written as nonoccupational to avoid overlapping with workers compensation.

On-the-job injuries and illnesses of most employees are typically covered by:

• a.Medicare
• b.Workers compensation, which is separate from off-the-job disability coverage✓
• c.The employee's major medical plan alone
• d.A nonoccupational disability income policy, which specifically excludes on-the-job losses

Workers compensation is a separate, employer-provided coverage that pays for work-related injuries and illnesses, including medical care and a portion of lost wages, which is why private disability income policies are often written as nonoccupational. A nonoccupational policy specifically excludes on-the-job losses. Major medical is general health coverage, not the primary payer for work injuries, and Medicare is a federal program for seniors and certain disabled persons, not the on-the-job payer. Coordinating with workers compensation is an important design point for disability coverage.

Short-term disability (STD) coverage generally provides benefits for a maximum period of about:

• a.A few weeks up to roughly two years, depending on the plan✓
• b.The insured's entire lifetime with no maximum benefit period
• c.Thirty years
• d.Ten years

Short-term disability benefits are designed to cover brief periods out of work and typically last from a few weeks up to about two years at most, with many group plans paying for several weeks to a few months. They are not intended to run for a decade, for life, or for thirty years, which would be the province of long-term disability coverage. STD has a short elimination period and a short benefit period, filling the early gap before long-term coverage or savings take over.

Long-term disability (LTD) coverage typically begins after short-term benefits end and may continue paying until:

• a.A stated age such as 65, or for a set number of years, depending on the policy✓
• b.The insured reaches age thirty
• c.The end of the following month only, which is far too short for long-term coverage
• d.Exactly one week has passed

Long-term disability coverage picks up where short-term coverage leaves off and can pay benefits for a long duration, commonly to a stated age like 65 (or a set number of years) if the disability persists. It is not limited to the next month or a single week, and it is not tied to age thirty. LTD has a longer elimination period (often 90 days or more) and a much longer benefit period than STD, protecting against lengthy or permanent disabilities.

Skilled nursing care under a long-term care policy refers to:

• a.General housekeeping and laundry services
• b.Home-delivered meal service
• c.Daily nursing and rehabilitative care ordered by a physician and performed by licensed medical personnel✓
• d.Assistance with bathing provided by a personal aide, which is actually custodial care rather than skilled nursing care

Skilled nursing care is the highest level of long-term care: continuous, physician-ordered nursing or rehabilitative services delivered by licensed medical professionals such as registered nurses. Help with bathing is custodial care, a lower level. Housekeeping and meal delivery are support services, not skilled care. LTC policies distinguish among skilled, intermediate, and custodial care, and it is important to know that most long-term care needs are actually custodial rather than skilled.

Custodial care under a long-term care policy refers to:

• a.Emergency room treatment after an accident, which is acute medical care and not the routine daily assistance custodial care describes
• b.Help with the activities of daily living, such as bathing, dressing, and eating, that non-medical personnel can provide✓
• c.Complex surgery performed by specialists
• d.Intensive care provided in a hospital

Custodial care assists a person with the routine activities of daily living, bathing, dressing, eating, toileting, transferring, and continence, and can be provided by non-medical caregivers, making it the most common type of long-term care. It is not intensive hospital care, surgery, or emergency treatment, which are acute medical services. Because standard health insurance and Medicare largely do not cover custodial care, long-term care insurance is designed to fill that gap.

Home health care coverage under a long-term care policy pays for:

• a.Daycare services for young children
• b.Care provided only in a nursing home and in no other setting
• c.Skilled or custodial care delivered in the insured's own home✓
• d.A stay in an acute-care hospital

Home health care benefits cover skilled or custodial services provided in the insured's own residence, such as visits from a home health aide or nurse, allowing the person to remain at home rather than move to a facility. It is not hospital care, is not limited to a nursing home, and has nothing to do with childcare. Many modern LTC policies emphasize home and community-based care because most people prefer to receive care at home for as long as possible.

An inflation protection option in a long-term care policy is important because it:

• a.Reduces the policy's premium each year
• b.Adds a life insurance death benefit
• c.Shortens the elimination period automatically each year, which is not the purpose of inflation protection
• d.Increases the daily or monthly benefit over time so it keeps pace with rising care costs✓

Because long-term care may be needed decades after a policy is purchased, and care costs rise over time, inflation protection increases the benefit amount (often by a fixed percentage each year) so the coverage remains adequate when care is finally needed. It does not lower the premium (it raises it), shorten the elimination period, or add a death benefit. Inflation protection is one of the most important features to evaluate when comparing LTC policies.

The elimination period in a long-term care policy functions as a:

• a.Discount applied to the premium
• b.Waiting period during which the insured pays for care out of pocket before benefits begin✓
• c.Cap on the total lifetime benefit
• d.Period during which the policy can be returned for a refund, which is actually the free-look provision

The elimination period in an LTC policy is a deductible measured in days: the insured must pay for their own care for that number of days after becoming eligible before the policy starts paying benefits, and a longer elimination period lowers the premium. It is not the maximum benefit, not a premium discount by itself, and not the free-look period (which is the right to return a new policy). The elimination period functions the same way here as in disability income insurance, as a time deductible.

Benefits received from a tax-qualified long-term care insurance policy are generally:

• a.Taxed at long-term capital gains rates rather than received free of income tax
• b.Deductible by the insurance company
• c.Fully taxable as ordinary income
• d.Received income-tax-free, up to federal per-day or actual-cost limits✓

Benefits from a tax-qualified LTC policy are generally received income-tax-free, subject to federal limits (a per-day amount or the actual cost of care, whichever applies). They are not fully taxable, not taxed as capital gains, and the concept of the insurer deducting them does not apply. Tax-qualified LTC policies also allow certain premiums to count toward deductible medical expenses, which is part of why the tax-qualified designation matters to buyers.

A hospital indemnity (hospital confinement) policy pays:

• a.Only the cost of surgery
• b.A fixed dollar amount for each day the insured is hospitalized, regardless of the actual charges✓
• c.The exact amount of the hospital's bill, which is how a medical expense plan pays rather than a fixed indemnity
• d.Nothing toward a hospital stay

A hospital indemnity policy pays a predetermined flat amount (for example, a set dollar figure per day of confinement) whenever the insured is hospitalized, no matter what the actual bill is, and the insured may use the cash for any purpose. It does not reimburse the exact bill (that is a medical expense plan), is not limited to surgery, and does provide a hospital benefit. Because it is a limited, fixed-benefit product, it supplements rather than replaces comprehensive medical coverage.

An accident-only policy covers:

• a.Losses resulting from accidental injury, but not from sickness✓
• b.Long-term custodial care
• c.Only routine annual checkups
• d.Both sickness and accidental injury equally under the same terms

An accident-only policy provides benefits solely for losses caused by accidental injury, such as emergency treatment, hospitalization, or disability resulting from an accident, and it does not cover illness. It is not comprehensive coverage for both sickness and injury, is not limited to checkups, and is not long-term care. Because it excludes sickness, an accident-only policy is a narrow, lower-cost product that should be presented as a supplement, not a substitute for major medical coverage.

A specified (dread) disease policy pays benefits:

• a.For accidental injuries only
• b.For routine dental cleanings
• c.For any illness the insured develops over the life of the policy
• d.Only for a named disease, such as cancer, that is listed in the policy✓

A specified or dread disease policy pays benefits only if the insured is diagnosed with a particular disease named in the contract, most commonly cancer, and pays nothing for other conditions. It is not general coverage for any illness, not an accident policy, and not dental coverage. Because its benefits are limited to one disease, it is a supplemental product, and producers must be careful not to let a consumer treat it as comprehensive health insurance.

An Accidental Death and Dismemberment (AD&D) policy pays:

• a.A principal sum for accidental death and a capital sum, a percentage of the principal, for the accidental loss of limbs or sight✓
• b.A monthly benefit for any illness the insured happens to develop, which is the province of a medical or disability policy rather than accidental death and dismemberment coverage
• c.Long-term custodial care benefits
• d.A guaranteed retirement income

AD&D coverage pays the full principal sum if the insured dies as a result of a covered accident, and pays a capital sum, a stated percentage of the principal, for the accidental loss of, or loss of use of, limbs or eyesight (for example, half the principal for the loss of one hand). It does not pay for illness, provide retirement income, or fund long-term care. AD&D is limited strictly to accidental death and dismemberment, so it is inexpensive but narrow.

Dental insurance plans commonly organize covered services into categories of:

• a.Accident and sickness
• b.Preventive, basic, and major services, sometimes with separate deductibles and annual maximums✓
• c.Skilled and custodial care
• d.Inpatient and outpatient care, a distinction used in medical expense plans rather than in how dental benefits are grouped

Dental plans typically classify services as preventive (cleanings and exams, often covered at or near 100 percent), basic (fillings and simple extractions), and major (crowns, bridges, and dentures), frequently applying deductibles and an annual dollar maximum. Inpatient and outpatient, accident and sickness, and skilled and custodial are classifications used in other kinds of coverage, not dental. Knowing the preventive-basic-major structure helps explain why dental plans emphasize low-cost preventive care.

The mandatory 'notice of claim' provision requires the insured to notify the insurer of a claim within:

• a.Six months after treatment ends
• b.Exactly five days, with no exceptions permitted for any reason, which is stricter than the actual provision
• c.A stated period, typically 20 days after a loss or as soon as reasonably possible✓
• d.One full year after the loss

The notice of claim provision requires the insured to tell the insurer that a loss has occurred within a stated time, commonly 20 days after the loss or as soon as reasonably possible. A rigid five-day rule, six months, or a full year does not match the standard uniform provision. Prompt notice lets the insurer begin processing and, if needed, investigate the claim. This is the first step in the claims sequence, followed by claim forms and proof of loss.

Under the 'claim forms' provision, if the insurer fails to furnish claim forms within the required time (usually 15 days) after receiving notice of claim, the insured may:

• a.Immediately file a lawsuit against the insurer without first submitting any proof of the loss
• b.Automatically receive double the benefit
• c.Submit written proof of the loss in their own words and still be considered compliant✓
• d.Cancel the policy and demand a refund

If the insurer does not supply claim forms within the stated period after notice, the insured is allowed to submit written proof of the loss in their own words (describing the nature and extent of the loss) and is treated as having complied with the proof requirement. The insured is not entitled to sue immediately, cancel for a refund, or collect double benefits. This provision keeps the insurer's delay from defeating an otherwise valid claim.

The mandatory 'proof of loss' provision generally requires the insured to submit proof of loss within:

• a.Five days after the loss occurs
• b.A stated period, commonly 90 days after the date of the loss✓
• c.Three years after treatment
• d.Ten years after the policy is issued, which is far too long a period

The proof of loss provision typically requires written proof within 90 days after the loss (or as soon as reasonably possible, and not later than one year except in cases of legal incapacity). Five days is too short, and three or ten years is far too long. Proof of loss documents the details the insurer needs to determine what it owes. Failing to provide timely proof can jeopardize a claim, which is why the 90-day standard is worth remembering.

The mandatory 'time of payment of claims' provision requires the insurer to pay claims:

• a.No sooner than two years after the loss has occurred, which would defeat the purpose of prompt payment
• b.Only once at the end of the year
• c.Whenever the insurer chooses to
• d.Promptly, immediately or within a stated number of days after it receives proof of loss✓

The time of payment of claims provision requires the insurer to pay benefits promptly, immediately or within a specified number of days after receiving acceptable proof of loss, so a valid claim is not left unpaid. Paying at the insurer's discretion, only at year-end, or after a two-year delay would defeat the purpose. This provision protects insureds from unreasonable delays once they have properly documented a covered loss.

The mandatory 'payment of claims' provision specifies:

• a.The length of the elimination period before benefits begin, which is a separate matter from who is paid a claim
• b.To whom benefits are paid, generally the insured, with death benefits going to a named beneficiary✓
• c.The premium the insured must pay
• d.The size of the policy's deductible

The payment of claims provision states who receives the benefit money: benefits are ordinarily paid to the insured, while any death benefit under the policy is paid to the designated beneficiary (or the estate if none is named). It does not set the premium, the deductible, or the elimination period, which are addressed elsewhere. This provision ensures there is a clear, contractually defined recipient for each type of benefit.

The mandatory 'physical examination and autopsy' provision gives the insurer the right, at its own expense, to:

• a.Raise the insured's premium
• b.Have the insured examined during a pending claim and, where not prohibited by law, require an autopsy✓
• c.Cancel the policy during a claim it is investigating, which this examination-and-autopsy provision does not authorize
• d.Deny every claim automatically

This provision permits the insurer, at its own cost and as often as reasonably necessary while a claim is pending, to have the insured physically examined and, in the event of death, to require an autopsy unless state law forbids it. It does not allow the insurer to deny all claims, raise premiums, or cancel the policy. The right exists so the insurer can verify the nature and extent of a loss it is being asked to pay.

The mandatory 'legal actions' provision prevents an insured from bringing a lawsuit against the insurer until:

• a.A stated time (often 60 days) after proof of loss has been filed, and bars suits brought after an outer limit such as three years✓
• b.One day after filing any claim
• c.The moment the policy is issued
• d.The insured has switched insurers and obtained a replacement policy elsewhere, which has nothing to do with the timing rules this provision sets for filing suit

The legal actions provision sets a window for lawsuits: the insured cannot sue for at least a stated period (commonly 60 days) after submitting proof of loss, giving the insurer time to pay, and cannot sue after an outer limit (often three years) from when proof was due. It is not tied to policy issuance, a one-day wait, or changing insurers. This provision gives the insurer a fair chance to settle before litigation and sets a deadline for claims disputes.

The optional 'change of occupation' provision allows the insurer to adjust benefits or premiums if the insured:

• a.Moves to a different state
• b.Purchases a second unrelated policy from another insurer
• c.Gets married or divorced
• d.Changes to a more hazardous or less hazardous occupation✓

The change of occupation provision lets the insurer modify the benefit or premium when the insured switches to a job with a different risk level: a more hazardous occupation may reduce benefits to what the premium would buy at the higher risk, while a less hazardous one may lower the premium and refund the difference. It is not triggered by relocating, marrying, or buying another policy. The provision keeps the coverage aligned with the actual occupational risk being insured.