Accident & Sickness: Types of Policies Flashcard

Front

What does an Individual Disability Income Policy provide?

Back

Income replacement if the insured cannot work due to illness or injury

Answer explanation

An Individual Disability Income Policy provides income replacement if the insured cannot work due to illness or injury, ensuring financial support during their recovery.

Front

Which policy pays business expenses if the owner becomes disabled?

Back

Business Overhead Expense Policy

Answer explanation

The Business Overhead Expense Policy specifically covers business expenses if the owner becomes disabled, making it the correct choice. Other policies focus on individual income or key employees, not business expenses.

Front

What is the primary feature of a Health Maintenance Organization (HMO)?

Back

Prepaid, managed care with network providers

Answer explanation

The primary feature of an HMO is its prepaid, managed care model, which requires members to use a network of providers for their healthcare services, ensuring coordinated and cost-effective care.

Front

What does a Business Disability Buyout Policy fund?

Back

Purchase of a disabled owner's share under a buy-sell agreement

Answer explanation

A Business Disability Buyout Policy specifically funds the purchase of a disabled owner's share under a buy-sell agreement, ensuring the business can continue operating smoothly without the disabled owner's involvement.

Front

Which policy provides benefits to a business if a key employee becomes disabled?

Back

Key Employee Policy

Answer explanation

The Key Employee Policy provides financial benefits to a business if a key employee becomes disabled, helping cover lost income and maintain operations, making it the correct choice.

Front

What is a characteristic of Major Medical Policies?

Back

Broad coverage with high limits

Answer explanation

Major Medical Policies are known for providing broad coverage with high limits, ensuring that a wide range of medical expenses are covered, unlike other options that may have limitations or require managed care.

Front

What is the purpose of a Flexible Spending Account (FSA)?

Back

To allow pre-tax employee contributions for qualified medical expenses

Answer explanation

A Flexible Spending Account (FSA) allows employees to contribute pre-tax dollars to cover qualified medical expenses, making healthcare costs more manageable and reducing taxable income.

Front

What does a High Deductible Health Plan (HDHP) typically feature?

Back

Lower premiums and higher deductibles

Answer explanation

A High Deductible Health Plan (HDHP) is characterized by lower premiums and higher deductibles, making it more affordable for monthly costs but requiring more out-of-pocket expenses before coverage kicks in.

Front

What is the main benefit of a Medicare Supplement Policy?

Back

Covers Medicare’s deductibles, coinsurance, and gaps

Answer explanation

The main benefit of a Medicare Supplement Policy is that it covers Medicare’s deductibles, coinsurance, and gaps, helping to reduce out-of-pocket costs for beneficiaries.

Front

What is a key feature of Group Insurance?

Back

Master policy to employer with certificates to members

Answer explanation

A key feature of Group Insurance is the master policy issued to the employer, which covers all members. Each member receives a certificate of insurance, simplifying administration and providing coverage under a single policy.