Free Connecticut Accident & Health Practice Questions

Morale hazard is the 'eh, I'm covered' attitude: indifference or carelessness that creeps in because insurance exists. It's not dishonesty (that's moral hazard) and it's not a physical condition (physical hazard). Trick to remember: moralE hazard is about a person's lazy attitudE.

An insurer can't predict whether your house specifically will burn down, but give them a big enough pool of similar homes and they can predict pretty accurately how many out of the whole group will. That's the law of large numbers: more similar exposures, more reliable predictions. It's the statistical engine that makes pricing coverage possible at all.

Buying insurance is the classic risk transfer: you hand the financial consequences of a loss to the insurer in exchange for a premium. Avoidance means not doing the risky thing at all, retention means keeping the risk yourself (like a deductible), and reduction means lowering the odds or severity (smoke detectors). Insurance equals transfer.

Indemnity is the whole heartbeat of insurance: you get made whole, not rich. The goal is to put you back where you were financially right before the loss, no better, no worse. That's why you can't insure a $20,000 car for $80,000 and cash in. Insurance reimburses a loss; it doesn't hand out winnings.

Adverse selection is the insurer's headache: the people most likely to have a loss are also the most eager to buy and keep coverage. If underwriting didn't push back, the risk pool would fill up with bad risks and the math would collapse. It's exactly why underwriting and exclusions exist.

Reinsurance is insurance for insurance companies. The original insurer (the ceding company) hands off part of its risk to a reinsurer so one giant loss doesn't sink it. Individuals never deal with reinsurers directly; it all happens behind the scenes between carriers.

A captive (or exclusive) agent represents a single insurer, and that insurer owns the book of business. An independent agent represents multiple companies and owns their own expirations (the renewal rights). The ownership-of-expirations detail is the classic distinguisher.

Express authority is the authority written right into the agency agreement, the powers the insurer explicitly hands the agent. Implied authority fills in the gaps needed to use that express authority, and apparent authority is what the public reasonably assumes. Express equals expressly stated.

Representations are statements the applicant believes are true, and they only need to be true to the best of the applicant's knowledge. A warranty is a stronger animal: it's guaranteed to be absolutely true. Concealment is hiding a material fact. For most applications, you're dealing with representations.

A waiver is voluntarily surrendering a known right, say, an insurer choosing not to enforce a policy condition. Estoppel is the follow-on: once you've waived something, you can be legally prevented (estopped) from later trying to enforce it. Waiver is the giving up; estoppel is being held to it.

Most health policies define a covered sickness as one that first appears (manifests) and is contracted while the coverage is in force. This wording is what lets insurers exclude pre-existing conditions that showed up before the policy started. Hook: a covered sickness has to show up on the policy's watch, not before it began.

Medical expense insurance pays for the care itself, hospital stays, surgery, doctor visits, and related services, rather than replacing income. It's the bucket most people picture when they hear health insurance. Hook: medical expense pays the providers; disability income pays you.

Disability income is paid as a stream of periodic payments (usually monthly) for as long as the qualifying disability lasts, up to the policy's benefit period. It functions like a substitute paycheck rather than a one-time payout. Hook: think of it as a replacement salary that keeps coming while you can't work.

Blanket coverage protects a constantly changing group whose members aren't named individually, like airline passengers, campers, or a sports team. You're covered simply because you belong to the defined group during the covered activity. Hook: a blanket covers whoever happens to be under it, no individual names required.

For health insurance, insurable interest must exist when the policy is applied for; you naturally have it in your own health, and, for example, an employer has it in a key employee. Unlike property insurance, it isn't re-tested at the time of loss. Hook: insurable interest is checked at the start, when the application is taken.

Group coverage is underwritten on the group as a whole, its size, industry, and demographics, rather than screening each person's health. That's why an employee can usually enroll without a medical exam during the eligibility window. Hook: group underwriting looks at the group, not each individual's medical history.

Noncancelable is the strongest renewal guarantee for the insured: the insurer can't cancel, can't refuse renewal, and can't raise the premium beyond what the policy already states, all the way to the stated age. Hook: noncancelable locks everything, coverage and premium alike, in the insured's favor.

Optionally renewable hands the insurer discretion: at each anniversary or renewal date it can decide whether to renew at all and can raise the premium. It's much weaker protection for the insured than guaranteed renewable. Hook: the insurer holds the option, so renewal is its choice at each renewal date.

The MIB is a nonprofit information exchange whose member insurers report coded medical and risk information. It flags inconsistencies, such as a condition disclosed on a prior application but omitted on a new one, but an insurer can't decline coverage based on MIB data alone. Hook: the MIB is a tip-off network for catching omissions, not a stand-alone reason to decline.

A substandard, or rated, risk represents a greater-than-average likelihood of claims, so the insurer charges a higher premium (or adjusts the coverage) to offset it, rather than simply declining. Hook: substandard risk means a higher price tag, not an automatic no.

The grace period is a short window after a premium's due date during which the insured can still pay and keep the policy in force, so a late payment doesn't immediately cause a lapse. Hook: the grace period is breathing room to pay late without losing coverage.

The grace period varies with how often premiums are paid: 7 days for weekly premiums, 10 days for monthly premiums, and 31 days for any other mode. The less often you pay, the longer the grace period. Hook: weekly 7, monthly 10, everything else 31, so the rarer the payment, the longer the grace.

On reinstatement, accidental injury losses are covered immediately, but sickness is covered only if it begins more than 10 days after the reinstatement date. The 10-day gap on sickness exists to discourage someone from reinstating only because they've just become ill. Hook: accidents covered at once, sickness has to wait 10 days after reinstatement.

The insurer has 15 days after notice of claim to send the claimant the forms used to file proof of loss. Hook: notice of claim starts a 15-day clock for the insurer to provide claim forms.

Benefits are generally paid to the insured, while any death benefit (such as under AD&D) goes to the named beneficiary, or to the insured's estate if none is named. Hook: living benefits to the insured, death benefits to the beneficiary.

While a claim is pending, the insurer may have the insured examined as often as reasonably necessary and, in the event of death, order an autopsy unless state law forbids it, with the insurer paying for these. Hook: during a claim the insurer can examine (or autopsy) at its own cost to verify the loss.

The insured generally has up to 3 years (5 in some states) from the time proof of loss is required to file a lawsuit, after which the right to sue expires. Hook: at least 60 days before you can sue, no more than 3 years after, that's the legal-action window.

Move to safer work and the insurer reduces the premium to the lower-risk rate, refunding the excess premium already paid for the period. The change works in the insured's favor here. Hook: a safer job means a lower premium and money back.

This optional provision excludes losses sustained while the insured is intoxicated or using narcotics not taken on a physician's advice. Prescribed and properly used medications don't trigger the exclusion. Hook: losses while drunk or on non-prescribed narcotics aren't covered.

A probationary period is an initial stretch, often the first 15 to 30 days after the policy starts, during which sickness-related losses aren't yet covered; it keeps someone from buying a policy after symptoms appear. Accident coverage usually begins right away. Hook: a short waiting period at the start before sickness benefits kick in.

Residual disability coverage pays a partial benefit scaled to your loss of income, so if a disability cuts your earnings by 40%, you collect roughly 40% of the total disability benefit. It bridges the gap when you can work but not at full capacity. Hook: residual benefits track your percentage of lost income.

The benefit period is the longest span the policy will keep paying for a single disability, such as 2 years, 5 years, or to age 65. A longer benefit period raises the premium. Hook: the benefit period is how long the checks can keep coming.

The probationary period is a short stretch at the start of the policy during which sickness-related disabilities aren't covered, which discourages someone from buying coverage once symptoms appear. Disabilities from accidents are usually covered from day one. Hook: a probationary period delays sickness coverage at the very start, while accidents are covered right away.

Insurers cap benefits below full income (and below what you'd net after taxes, since the benefits are often tax-free) so the insured always has a financial reason to recover and return to work. Paying 100% could encourage staying disabled, known as malingering. Hook: benefits stop short of full pay so working still beats collecting.

Insurers typically issue benefits in the range of about 60% to 66 2/3% of gross earned income. Since individually paid benefits are received tax-free, that range often comes close to the insured's after-tax take-home pay. Hook: think roughly two-thirds of income, which lands near net take-home pay.

The benefit is simply 60% of monthly earned income: 0.60 times $5,000 equals $3,000 per month. The remaining 40% stays uninsured on purpose, preserving the incentive to return to work. Hook: 60% of $5,000 is $3,000, the monthly check.

The COLA rider raises the monthly benefit periodically while the insured is on a long claim, usually tied to an inflation index, so a multi-year disability benefit doesn't lose purchasing power. Hook: COLA keeps a long-running benefit from being eaten away by inflation.

A social insurance supplement rider is designed to fill the gap if Social Security disability benefits are denied, delayed, or paid at a reduced amount, paying the supplement in their place and stepping down as Social Security pays. Hook: the SIS rider covers the shortfall when Social Security disability falls through or comes up short.

A disability buy-sell arrangement supplies the money for the remaining owners (or the business) to purchase the share of an owner who becomes permanently disabled, mirroring how a life-insurance buy-sell works at death. Hook: it funds the buyout of a disabled owner's stake in the business.

Social Security disability imposes a five-month waiting period, so benefits start in the sixth full month of disability. Combined with the strict definition, it makes private disability income coverage important for bridging that gap. Hook: Social Security disability makes you wait five months before the first payment.

Basic hospital expense pays a daily room-and-board benefit (often up to a stated maximum per day and number of days) plus miscellaneous hospital charges like lab work and medications. It doesn't cover the surgeon, which is surgical expense. Hook: hospital expense pays for the bed and the hospital's charges, not the surgeon.

In the IPA model, the HMO contracts with independent doctors (or physician groups) who continue to run their own practices and see non-HMO patients too, rather than employing them directly as in a staff model. Hook: IPA doctors keep their own practices and just contract with the HMO.

A POS plan blends the two models: members pick a primary care physician and get the best benefits in network (HMO-style), but they can still go out of network at a higher cost (PPO-style). They decide at the point of service. Hook: POS is the HMO-PPO hybrid, gatekeeper inside, freedom outside for more money.

An EPO is a middle ground: like an HMO, it generally covers only in-network providers (no out-of-network benefits except emergencies), but like a PPO, it usually doesn't require a gatekeeper referral to see a specialist. Hook: EPO equals HMO network rules with PPO-style direct specialist access.

An HDHP trades a higher annual deductible for a lower premium, with the insured covering more upfront cost before coverage kicks in. HDHPs are the plans that can be paired with a health savings account. Hook: HDHP equals high deductible and low premium, and it's the partner for an HSA.

HSAs are tied to HDHPs by law: you must be covered by a qualified high deductible health plan (and have no disqualifying coverage) to contribute. The high deductible is what the HSA is meant to help fund. Hook: no HDHP, no HSA, they're a required pair.

An HRA is funded solely by the employer, which sets aside money to reimburse employees for qualified medical expenses. Because the employer owns it, the rules on carryover and portability are set by the employer. Hook: the employer funds and owns the HRA.

Consumer-directed plans put more decision-making, and more of the early cost, in the consumer's hands, pairing a high deductible with a tax-favored account so people shop more carefully for care. Hook: consumer-directed means you steer the spending, with skin in the game.

Precertification is a utilization-management tool: the plan reviews and approves certain planned services or admissions in advance to confirm they're medically necessary before agreeing to pay. Emergencies are generally exempt. Hook: precert means getting the plan's green light before non-emergency care.

Federal reform requires these plans to cover a core set of essential health benefits (things like hospitalization, prescription drugs, maternity, and preventive care) and bars them from denying coverage or claims based on pre-existing conditions. Hook: a guaranteed benefit floor, and no more pre-existing-condition lockouts.

The insurer issues one master contract to the group sponsor, and each covered member gets a certificate of coverage summarizing their benefits and rights. The members don't hold individual policies. Hook: the sponsor gets the master contract, the members get certificates.

Once eligible, an employee gets an enrollment period, a limited window often around 31 days, to elect coverage. Enroll on time and no evidence of insurability is required; miss it and they may become a late enrollee. Hook: the enrollment period is your on-time window to sign up without health questions.

When the employer pays 100% of the premium (noncontributory), insurers require 100% of eligible employees to be covered. Since employees pay nothing and everyone is in, healthy and unhealthy alike, adverse selection nearly disappears. Hook: the employer pays all, so everyone's in, 100% participation.

Conversion must be requested within a short window after group coverage ends, commonly 31 days. Miss that window and the right to convert without evidence of insurability is lost. Hook: act fast, the conversion window is short, often about 31 days.

Creditable coverage is prior, generally continuous, health coverage that gets credited against any pre-existing condition waiting period a new plan might impose, shortening or eliminating it. Hook: creditable coverage is the prior coverage you get credit for when you switch plans.

Coordination of benefits assigns one plan as primary (pays first) and the other as secondary (pays the balance up to allowable limits) so the total paid doesn't exceed the actual expense. Your own employer plan is usually primary for you. Hook: COB just sorts out who pays first and who pays the rest.

For active employees age 65 and older at larger employers, the group health plan is primary and Medicare is secondary, under the Medicare Secondary Payer rules. The retiree situation can differ. Hook: still working at a big employer means the group plan leads and Medicare follows.

Association (or alumni and trade) groups can offer coverage when the association is a bona fide organization formed for reasons other than insurance, with a real purpose, defined membership, and adequate size. Hook: an association group works only if the association is real, not a shell built just to sell coverage.

In a self-funded plan, the employer assumes the risk and pays claims directly out of its own assets, often using a third-party administrator to process them and stop-loss insurance to cap catastrophic exposure. Hook: self-funded means the employer is effectively the insurer, paying claims itself.

Self-funded employer plans fall largely under ERISA, a federal law, which is one reason employers choose self-funding: it exempts them from many state insurance mandates. Hook: self-funded plans answer mainly to ERISA at the federal level.

A nonscheduled, or comprehensive, dental plan pays a percentage of the UCR charge for each service rather than a fixed dollar amount, so benefits track local prevailing fees. It's the dental version of UCR-based medical coverage. Hook: nonscheduled dental pays a percentage of the going UCR rate, not a fixed table.

A dental PPO contracts with a network of dentists who accept negotiated (discounted) fees, while still letting members see out-of-network dentists at a higher out-of-pocket cost. It mirrors the medical PPO model. Hook: a dental PPO is the discounted-network-with-an-exit-option model.

Major services are usually covered at about 50%, the lowest tier, because they are expensive, so the plan shifts more of the cost to the patient through higher coinsurance. The three-tier 100/80/50 pattern is the classic dental structure. Hook: the bigger and pricier the work, the smaller the share the plan pays, with major care around 50%.

The 100/80/50 pattern maps to the three dental tiers: preventive/diagnostic at 100%, basic/restorative at 80%, and major at 50%. Knowing this ladder answers many dental questions at a glance. Hook: 100/80/50 equals preventive, basic, major, top to bottom.

Because orthodontic treatment is a one-time, multi-year course, plans cap it with a separate lifetime maximum rather than an annual one. Once that lifetime amount is used, ortho benefits end. Hook: ortho is capped for life, not per year.

Plans often require a waiting period (such as 6 to 12 months) before paying for expensive major services, which discourages someone from enrolling, getting costly work, and then dropping the plan. Preventive care is usually available immediately. Hook: big-ticket dental work often comes with a waiting period; cleanings do not.

Only $200 of the annual maximum remains ($1,500 minus the $1,300 already paid), so the plan pays $200 toward this procedure and the patient covers the rest. The annual maximum caps total payments regardless of the individual procedure's coinsurance. Hook: the plan pays only what's left under the annual max, here $200, and the patient absorbs the overage.

The alternate benefit (LEAT) provision lets the plan calculate its payment based on the cheapest treatment that would adequately do the job. If the patient chooses a pricier option, they pay the difference. Hook: the plan pays for the cheapest adequate fix; upgrades are on the patient.

Routine vision coverage handles the everyday eye-care items, periodic exams plus eyewear like lenses, frames, and contacts, usually through allowances and frequency limits. Disease and surgery fall under medical coverage instead. Hook: routine vision means exams and eyewear, not eye disease or surgery.

Routine vision, like dental, is usually a standalone elective benefit with its own premium and rules, rather than being built into major medical. Hook: vision, like dental, typically stands alone as its own benefit.

Original Medicare is the combination of Part A (hospital insurance) and Part B (medical insurance). Parts C and D are the private add-on options (Advantage and prescription drugs). Hook: Original Medicare equals A plus B, hospital plus medical.

Part A is hospital insurance: it covers inpatient hospital stays, limited skilled nursing facility care, home health care, and hospice. Everyday doctor visits fall under Part B. Hook: Part A is the hospital side, inpatient, skilled nursing, home health, hospice.

Part A pays for limited, short-term skilled nursing care after a qualifying hospital stay, with full coverage for an initial period and coinsurance after that, but it does not pay for ongoing custodial (long-term) care. That gap is a key reason people buy LTC insurance. Hook: Part A skilled nursing is short and skilled, not long-term custodial.

Hospice care for the terminally ill is a Part A benefit, focused on comfort and support rather than cure. Hook: hospice rides under Part A, alongside the other inpatient-type benefits.

Medicare Advantage (Part C) lets beneficiaries get their Medicare benefits through a private plan, often an HMO or PPO, that combines Part A and Part B (and frequently Part D drug coverage and extras) in one package. It's an alternative to Original Medicare, not a supplement to it. Hook: Part C is Medicare delivered through a private all-in-one plan.

Part D is the prescription drug benefit, delivered through private drug plans (either standalone or built into a Medicare Advantage plan). It helps cover the cost of outpatient medications. Hook: Part D is for drugs, the prescription piece of Medicare.

Medigap plans are standardized into lettered plans (Plan A, Plan G, Plan N, and so on); a given lettered plan offers identical core benefits no matter which insurer sells it, so consumers can compare on price and service. Hook: same letter equals same benefits, whoever sells it.

The six ADLs are bathing, dressing, eating, transferring (moving in and out of a bed or chair), toileting, and continence. They measure basic self-care, not complex tasks like driving or managing finances. Hook: ADLs are the basics, bathing, dressing, eating, transferring, toileting, continence.

LTC benefits are also triggered by severe cognitive impairment, such as Alzheimer's or other dementia, even if the person can still physically perform ADLs, because they need supervision for safety. Hook: serious cognitive decline is its own LTC trigger, separate from the ADL test.

Like the elimination period in disability income coverage, the LTC elimination period is the number of days at the start of care the insured pays out of pocket before policy benefits begin; a longer one lowers the premium. Hook: the elimination period is the upfront waiting stretch before LTC benefits start.

Medical expense benefits simply reimburse what you spent on care, so they aren't treated as income and are received tax-free. You can't deduct the same expense the insurer reimbursed, though. Hook: getting paid back for medical bills isn't income, so it's tax-free.

When employees fund the premiums themselves with after-tax money, the resulting disability benefits come back tax-free, the same logic as an individually owned policy. Hook: employees paying after-tax premiums collect their DI benefits tax-free.

Employer-paid group health premiums are a deductible business expense, a major reason employers offer health benefits. Hook: the employer writes off group health premiums as a business cost.

The value of employer-paid group health coverage is excluded from the employee's taxable income, so the employee gets the benefit tax-free. This is one of the most valuable tax breaks in the benefits world. Hook: employer-paid health coverage is tax-free to the employee, not counted as wages.

Just like individual medical expense benefits, group medical benefits reimburse care and aren't treated as income, so they're tax-free to the employee. Hook: group medical benefits reimburse bills, so they're tax-free.

Disability buy-sell premiums are not deductible, much like a life insurance buy-sell, and the benefits used to fund the buyout are received income-tax-free. Hook: buy-sell premiums aren't deductible, but the buyout funds come tax-free.

The HSA's triple advantage is contributions that are deductible or pre-tax, earnings that grow tax-free, and withdrawals that are tax-free when used for qualified medical expenses. Few accounts offer all three. Hook: HSA equals a tax break going in, growing, and coming out, all three.

HRA reimbursements for qualified medical expenses are tax-free to the employee, and the employer funds and deducts the arrangement, another tax-favored health benefit. Hook: employer-funded HRA reimbursements reach the employee tax-free.

Premiums for a tax-qualified LTC policy count as deductible medical expenses, but only up to age-based dollar limits and only to the extent total medical costs exceed the AGI floor. Hook: qualified LTC premiums can be deducted, within age caps and the usual medical-expense floor.

Benefits from a tax-qualified LTC policy are generally received income-tax-free, up to a stated per diem limit set by law. Amounts above that limit may be taxable unless they reflect actual incurred expenses. Hook: qualified LTC benefits come tax-free, within a daily cap.