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Health Insurance – Questions & Correct Solutions
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Health Insurance – Questions & Correct Solutions
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Health Insurance – Questions & Correct SolutionsInsurance Policy Correct Ans - Is a social device, legal contract, or
policy for the transfer of financial risk
Transfer of risks Correct Ans - Through insurance individuals
transfer to insurance companies financial risks they cannot individually
afford. Insurance companies can accept for insureds risks insureds cannot
individually afford by charging a small premium to a large group of people
Pooling of risks Correct Ans - Is when a large group of people
contribute money to a fund out of which their losses can be paid. The larger
the group, the better it works financially
The premium Correct Ans - Is the money paid by the policyowner
to the insurance company in exchange for the policy. The premium must be
sufficient to pay commissions and marketing costs; pay administrative
costs, and provide a loss reserve
A lapse Correct Ans - Is when a policy is terminated due to non-
payment of premiums
The policyowner Correct Ans - Is the person or organization that
applies for the policy and pays the premiums
The insured Correct Ans - Is the person for whose covered health
expenses the insurance company pays benefits
A rider Correct Ans - Is a form added to an insurance policy. It
usually adds coverage for an extra premium charge. It can, however, be
added sometimes to limit coverage
Actuarial tables Correct Ans - Are statistical tables that are used
when calculating premium rates and morbidity loss reserve which tell
insurance companies how many claims they are likely to have each year
enabling the insurance companies to estimate what their losses will be
, Morbidity actuarial tables Correct Ans - Are actuarial tables that
tell the insurance companies how many people of each age and sex
(gender) are likely to become sick, injured or disabled each year
Test topic Correct Ans - For life insurance mortality tables are used
for health insurance morbidity tables are used
Morbidity loss reserve Correct Ans - Is the money set aside to pay
claims
The law of large numbers Correct Ans - Indicates that the larger the
group, the more accurate the morbidity actuarial tables will become and
the losses will become more predictable and manageable
Health insurance Correct Ans - It also sometimes is called Accident
and Sickness insurance and other times Accident and Health Insurance
Test topic Correct Ans - At its very beginning, the original purpose
of health insurance was to indemnify or reimburse insureds for just risk-
type expenses
Risk type expenses Correct Ans - is something that cannot be
planned and which is unintended
Test topic Correct Ans - Although many health insurance plans
provide benefits for preventive healthcare, still, today the primary purpose
of heath insurance is to indemnify for risk-type expenses
Test topic Correct Ans - The purpose of health insurance is to
protect an insured against the risk of financial loss he/she cannot
individually afford caused by illness, injury or disability.
Insurable interest Correct Ans - It is a financial interest which the
POLICYOWNER must have at the time the policy is purchased
Indemnity Correct Ans - Means to reimburse. Both the principals of
indemnity and insurable interest prohibit the insurance company from
reimbursing an insured for more than the actual amount of loss
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