Free West Virginia Accident & Health Practice Questions

Keep these three straight and you'll bank easy points all day: a peril is the cause of loss (fire, wind, theft), a hazard is something that increases the chance or severity of that loss, and risk is the uncertainty of loss itself. The peril is the thing that actually does the damage.

A hazard doesn't cause the loss itself; it just makes a loss more likely or more severe. Icy steps, frayed wiring, a careless attitude: none of those start the fire or the fall, but they tip the odds. Causes of loss are perils; hazards just stack the deck.

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.

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.

A stock insurer is owned by its stockholders (shareholders), who receive taxable dividends when the company profits. Policyholders are just customers. Contrast that with a mutual insurer, which is owned by its policyholders. Stock equals stockholders; mutual equals members/policyholders.

Participating policies 'participate' in the insurer's profits by paying policy dividends, and are typically issued by mutual companies. Nonparticipating policies don't pay dividends and are typically issued by stock companies. The word 'participate' is your tell.

A reciprocal (an unincorporated group of members who insure each other) is run by an attorney-in-fact. The members are both insureds and insurers to one another. Niche, but the exam likes the 'attorney-in-fact' detail, so tuck it away.

Premiums an agent collects belong to the insurer, not the agent, so the agent holds them in a fiduciary capacity, a position of financial trust. Mixing that money with personal funds (commingling) is a big no-no and a fast way to lose a license.

Unilateral means only one side makes a legally enforceable promise, and it's the insurer, who promises to pay covered claims. The insured doesn't actually promise to keep paying premiums; they just won't get coverage if they stop. One enforceable promise equals unilateral.

Older policies used the stricter accidental means test (the cause had to be unexpected), but the modern trend is the accidental results, or accidental bodily injury, standard, which only requires that the injury be unintended. It's a more generous, claimant-friendly definition. Hook: results, not means; the newer standard looks at the unexpected injury, not the cause.

In group coverage the insurer issues one master contract to the group sponsor (typically the employer), and each covered member receives a certificate of coverage rather than an individual policy. Hook: the employer holds the master contract; employees hold certificates.

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.

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 deductible is the insured's upfront share, the amount you pay before the insurer's coverage kicks in for the year. A higher deductible usually means a lower premium, since you're absorbing more of the early cost. Hook: the deductible is what you pay first, before the insurer pays anything.

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.

An attending physician's statement (APS) is a report the insurer obtains, with the applicant's authorization, from the doctor who treated a disclosed condition. It fills in clinical details the application alone can't provide. Hook: when underwriters need the medical specifics, they go to the treating doctor for an APS.

Underwriters sort applicants into risk classes, commonly preferred (better than average health, lowest rates), standard (average), and substandard or rated (higher risk and higher premium), with some applicants declined outright. Hook: preferred, standard, substandard, the ladder running from lowest risk and price to highest.

Changes to the contract are valid only when approved in writing by an executive officer of the insurer, and even then they must be noted on or attached to the policy. An agent has no power to waive or alter provisions. Hook: only a company officer can change the deal, never the agent at your kitchen table.

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.

Written notice of claim must be given within 20 days after a covered loss, or as soon as reasonably possible. It simply alerts the insurer that a claim is coming. Hook: 20 days to put the insurer on notice that a loss occurred.

If the insurer doesn't deliver claim forms on time, the claimant is allowed to submit proof of loss in their own words; any written statement of the nature and extent of the loss will satisfy the requirement. Hook: no forms from the insurer means you can describe the loss in any written form.

Proof of loss, the documentation supporting the claim, must be furnished within 90 days after the loss, or as soon as reasonably possible. It's a longer window than the 20-day notice because it requires more detail. Hook: 20 days to notify, 90 days to prove.

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.

The facility of payment clause lets the insurer pay up to a stated amount to a relative or whoever appears equitably entitled, which is useful when there's no living beneficiary or the insured is deceased or incapacitated. It gives the insurer a practical way to settle small amounts without a court. Hook: facility of payment is the insurer's shortcut to pay someone fairly entitled when no beneficiary fits.

Proof of loss is the supporting documentation, bills, statements, and records, that lets the insurer verify a claim and determine what it owes. Without it, the insurer can't properly evaluate the claim. Hook: proof of loss is the evidence file that backs up the claim.

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.

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.

Once a disability lasts past the waiver's waiting period (commonly 90 days), the insurer waives further premiums for as long as the disability continues, and often refunds any premiums paid during the waiting period. The policy stays fully in force. Hook: stay disabled long enough and the insurer stops charging premiums, sometimes back to day one.

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.

The rehabilitation benefit funds vocational training, education, or similar services that help a disabled insured re-enter the workforce, often while disability benefits continue during the program. It serves both the insured and the insurer, who would rather see a return to work. Hook: it pays to retrain you back into a job.

Short-term disability typically replaces a larger share of income (sometimes 60% to 70%) but only for weeks or months, while long-term disability pays a somewhat lower percentage for years or to retirement age. STD covers the early gap; LTD takes over for prolonged disabilities. Hook: STD pays more for a short time, LTD pays steadily for the long haul.

Key person DI pays the business a benefit when an essential employee is disabled, helping cover lost productivity and the cost of recruiting or training a replacement. The business owns the policy and receives the benefit. Hook: it cushions the company when a key player can't work, much like key person life does at death.

Workers' compensation is an occupational-only program: it pays for work-related injuries and illnesses regardless of fault, but covers nothing that happens off the job. That's why private and group DI often coordinate around it. Hook: workers' comp covers on-the-job harm only.

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 medical expense plans (hospital, surgical, and physician expense) typically pay from the first dollar with little or no deductible, but they cap benefits at modest limits. They cover routine costs well but can run out fast for a catastrophic claim. Hook: basic plans pay early but shallow, low deductible and low ceiling.

UCR ties the allowable benefit to what providers in the same area normally charge for that procedure, rather than to a flat schedule. A charge far above the local norm may not be fully covered. Hook: UCR pays the going local rate, not just any billed amount.

Major medical is built for big claims: it features high (or no) maximum benefits, a deductible, and coinsurance, in exchange for covering a broad range of expenses. The cost sharing is the trade-off for that wide, deep protection. Hook: major medical goes big and broad, with a deductible and coinsurance along the way.

Comprehensive major medical merges basic and major medical into one policy, so a single deductible and coinsurance structure covers everything from routine care up through catastrophic claims. Hook: comprehensive equals basic plus major rolled into one plan with one deductible.

The gatekeeper PCP manages each member's care and must provide a referral before the member can see a specialist, which keeps utilization, and cost, under control. Hook: in an HMO, you go through the gatekeeper PCP to reach a specialist.

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 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.

Coordination of benefits prevents duplicate payment when someone has two plans: one is designated primary and pays first, the other is secondary and may cover the remainder, but the total can't exceed the actual cost. It stops the insured from making money on a claim. Hook: COB keeps two plans from paying more than 100% combined, primary first, secondary second.

Federal law generally lets young adults stay on a parent's health plan until they turn 26, regardless of student or marital status, when the plan offers dependent coverage. Hook: kids can ride a parent's plan to age 26.

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.

Experience rating sets a group's premium according to its own claims history, so a group with low claims earns lower rates. It's common for larger groups, while smaller groups are often community rated using a broader pool. Hook: experience rating prices you on your own group's track record.

The probationary period is the initial stretch of employment, often 30 to 90 days, that a new hire must complete before becoming eligible to enroll. It's followed by the enrollment (eligibility) period when they can actually sign up. Hook: the probationary period is the wait before a new hire can even enroll.

Someone who passes up the on-time enrollment window becomes a late enrollee and may have to provide evidence of insurability or wait until an open enrollment period to join. The penalty discourages waiting until you're sick to sign up. Hook: enroll late and you may have to prove insurability or wait, the cost of not signing up on time.

A disability determination (under Social Security rules) during the early part of COBRA can extend the 18-month period to 29 months, and the premium during the extension may rise to as much as 150% of the group rate. Hook: disability stretches COBRA from 18 to 29 months, at a higher premium.

Termination for gross misconduct is the key exception; it does not trigger COBRA rights. Ordinary terminations, layoffs, and resignations do qualify. Hook: gross misconduct is the one firing that forfeits COBRA.

HIPAA's nondiscrimination rule prohibits a group plan from denying an eligible individual coverage, or charging them more, because of their health status or medical history. Everyone in the eligible group must be treated alike. Hook: HIPAA says a group plan can't single you out for being sick.

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.

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.

Plans usually cover preventive and diagnostic care at or near 100% with no deductible, because catching problems early is cheaper than treating them later. It's the same prevention logic as in managed medical care. Hook: prevention is usually free (100%, no deductible) because it saves the plan money down the road.

Basic restorative procedures typically sit in the middle tier, often paid at around 80%, with the patient covering the remaining 20% after any deductible. Hook: basic care lands in the middle, often about 80% covered.

Preventive and diagnostic care covers the routine maintenance items, cleanings, exams, and x-rays, that keep small problems from becoming big ones. Crowns and bridges are major services, and braces are orthodontia. Hook: cleanings and x-rays are textbook preventive care.

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.

With predetermination, the dentist submits the proposed treatment plan and the insurer estimates what it will cover before the work is done, so there are no payment surprises. It's recommended for expensive procedures. Hook: predetermination is a no-surprises preview of what the plan will pay.

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.

Just as with medical coverage, dental coordination of benefits designates a primary and a secondary plan so that total payments don't exceed the actual cost of care. Hook: two dental plans still pay only the real cost, primary first, secondary second.

Vision coverage usually separates the exam (the professional service) from the materials (lenses, frames, contacts), each with its own copay, allowance, or frequency rule. Hook: vision splits into the exam and the eyewear materials.

Network-based vision plans work much like a PPO: members get the best benefit (often a richer allowance or lower copay) by using in-network providers, with reduced benefits out of network. Hook: vision networks follow the PPO playbook, best deal inside the network.

People under 65 can get Medicare if they've received Social Security disability benefits for 24 months, and certain conditions (end-stage renal disease, ALS) qualify sooner. Hook: long-term disability, not just age 65, can open the Medicare door.

People already drawing Social Security are usually enrolled in Part A automatically at 65, since Part A is premium-free for those with enough work credits. Part B enrollment may require action because it carries a premium. Hook: Part A usually arrives automatically when you're already on Social Security.

Most people pay no premium for Part A because they (and their employers) already funded it through Medicare payroll taxes while working. Those without enough work credits can buy in by paying a premium. Hook: Part A is usually premium-free, paid for by a lifetime of FICA taxes.

Medigap is designed to fill gaps in Original Medicare, so it doesn't work with, and shouldn't be sold to, someone on a Medicare Advantage plan. Selling Medigap to an Advantage enrollee is a prohibited practice. Hook: Medigap and Medicare Advantage don't mix, one supplements Original Medicare, the other replaces it.

Medigap policies, sold by private insurers, pay some or all of the out-of-pocket costs Original Medicare leaves behind, like the Part A deductible and the Part B 20% coinsurance. They work alongside Original Medicare, not in place of it. Hook: Medigap fills the holes Original Medicare leaves.

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.

LTC insurance fills the gap left by Medicare, which doesn't pay for ongoing custodial care, by covering help with daily living over an extended period, whether in a facility or at home. Hook: LTC covers the long-term custodial care Medicare leaves out.

Tax-qualified LTC policies generally pay when the insured is unable to perform at least two of the six ADLs (bathing, dressing, eating, transferring, toileting, and continence) for an expected period, or has a severe cognitive impairment. Hook: lose two of the six ADLs and tax-qualified LTC benefits kick in.

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.

Itemizers can deduct unreimbursed medical expenses, but only the portion that exceeds a set percentage of AGI (currently 7.5%). Expenses below that floor aren't deductible. Hook: only medical costs above the AGI floor count, and only if you itemize.

You can't get a tax benefit twice for the same dollar. If you deducted a medical expense and the insurer later reimburses it, that reimbursed amount can become taxable to undo the earlier deduction. Hook: no double-dipping, deduct and then get reimbursed, and the reimbursement is pulled back into income.

Because the insured paid the premiums with after-tax dollars and got no deduction, the disability benefits come back income-tax-free. This is why individual DI benefits aren't reduced by taxes. Hook: after-tax premiums in means tax-free benefits out, the core DI rule.

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.

The combination is what makes it powerful: the employer deducts the premium as a business expense, and the employee pays no tax on either the coverage or the benefits. Hook: deductible for the employer, tax-free for the employee, the best of both ends.

An employer can deduct group disability premiums as an ordinary business expense, just like other employee benefit costs. The trade-off is that the employee is then taxed on the benefits. Hook: the employer deducts the DI premiums, which is why the employee gets taxed later.

Employer-paid medical expense benefits reimburse care and stay tax-free, but employer-paid disability income benefits replace taxable wages, so they're taxable to the employee. The benefit type, not just the funding, matters here. Hook: employer health benefits stay tax-free, while employer-paid disability benefits are taxed because they replace a paycheck.

FSA contributions come out of salary on a pre-tax basis, lowering the employee's taxable income, in exchange for the use-it-or-lose-it restriction on unused funds. Hook: FSA money goes in pre-tax, shrinking your taxable pay.

The self-employed health insurance deduction lets self-employed individuals deduct premiums for medical, dental, and qualified LTC coverage above the line, without having to itemize, subject to certain limits. Hook: the self-employed get a special above-the-line write-off for their health premiums.

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.