Free Wyoming Accident & Health Practice Questions

Insurance only deals with pure risk: situations where there's a chance of loss or no loss, but no chance of gain (like your house burning down). Speculative risk involves a chance of loss, no loss, OR gain. That's gambling and investing, and insurers won't touch it. If there's an upside, it's not insurable.

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.

Moral hazard equals dishonesty. It's the risk that someone deliberately causes or exaggerates a loss to profit, like torching a failing business for the payout. Don't mix it up with morale hazard (carelessness, choice B) or physical hazard (the actual physical conditions in A and D).

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.

A physical hazard is a tangible condition that increases the likelihood or severity of a loss: gasoline in the garage, a slippery floor, frayed wiring. You can see or touch it. If it's an attitude problem it's morale; if it's dishonesty it's moral; if it's a physical thing sitting there raising the odds, it's physical.

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.

Insurers like risks that are accidental (due to chance, not intentional) and definite and measurable (you can pin down when, where, and how much). Add in 'predictable for large groups,' 'not catastrophic to the insurer,' and 'affordable premium,' and you've got the recipe for an insurable risk. A loss someone causes on purpose? Not insurable.

A&H insurance exists to handle the two ways your health can cost you money: accidents (sudden injuries) and sickness (illnesses and conditions). Whether the policy pays for medical bills or lost income, those are the two triggering perils. Hook: A&H equals the two perils right in the name, accident and sickness.

Disability income coverage doesn't pay medical bills; it replaces a paycheck. When illness or injury keeps you from working, it provides periodic income (usually a percentage of your earnings) so the bills at home still get paid. Hook: disability income protects the paycheck, not the medical bill.

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.

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.

AD&D pays only for losses caused by accidents: a death benefit if an accident is fatal, and a scheduled benefit for accidental dismemberment, such as losing a hand, foot, or eyesight. Death or loss from illness isn't covered. Hook: AD&D is strictly accident-driven; both the death and the dismemberment must come from an accident.

The principal sum is the full benefit, paid for accidental death or for severe losses like both hands or both eyes. The capital sum is a percentage of that principal sum, paid for the loss of a single member or sight in one eye. Hook: principal sum is the whole pie (death or two losses); capital sum is a slice (one loss).

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.

The entire contract is just the policy plus the application attached to it. Nothing outside those documents, not the agent's promises and not the company's internal rules, can be made part of the agreement. Hook: if it isn't in the policy or the attached application, it isn't in the contract.

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.

After the policy has been in force for a set period, commonly two years, the insurer can no longer void it or deny a claim because of misstatements in the application, with fraudulent misstatements being the usual exception. It mirrors the incontestable clause in life insurance. Hook: after about two years, honest application errors can no longer be used against the claim.

Once the time limit passes, the insurer loses the right to deny a claim merely because the condition predated the policy, unless that condition was specifically named and excluded by endorsement. It protects insureds from late-discovered, unintentional omissions. Hook: after the clock runs out, an unexcluded pre-existing condition can't be used to refuse the claim.

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.

If the insurer requires an application for reinstatement and then neither approves it nor rejects it by sending written notice, the policy is automatically reinstated on the 45th day after the application date. Hook: insurer silence for 45 days equals automatic reinstatement.

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 unpaid premium provision lets the insurer simply subtract any premium then due and unpaid from the benefits it pays out, rather than denying the claim. Hook: the insurer just nets the overdue premium out of the claim check.

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.

The own-occupation definition pays benefits when the insured can't perform the main duties of their specific occupation, even if they could work in some other field. It's the more generous definition because it judges disability against your actual career. Hook: own occ asks only whether you can do your own job.

The any-occupation definition is stricter and more insurer-friendly: you're considered totally disabled only if you can't work in any job that fits your background. It's harder to qualify for benefits than under own occ. Hook: any occ asks whether you can do any suitable job, not just your old one.

Own occupation is the more favorable, and more expensive, definition, because it pays when you can't do your specific job regardless of whether you could earn a living elsewhere. Any occ, by contrast, sets a much higher bar to collect. Hook: own occ favors the insured, any occ favors the insurer.

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.

Presumptive disability treats certain severe losses, such as total loss of sight, hearing, speech, or any two limbs, as automatically and totally disabling, so full benefits are paid even if the insured could technically still work. Often no elimination period applies. Hook: lose sight, hearing, speech, or two limbs and you're presumed totally disabled, no questions asked.

The recurrent disability provision says that a relapse from the same cause within a set time (often six months) counts as a continuation of the prior claim, so the insured doesn't have to satisfy a brand-new elimination period. A later, unrelated disability would start fresh. Hook: same cause, soon after, means it picks up where it left off, no new waiting period.

The elimination (or waiting) period is the time after a disability begins before benefits start to accrue, functioning like a time deductible. A 90-day elimination period means no benefits for the first 90 days. Hook: the elimination period is the unpaid waiting stretch before benefits begin.

A longer elimination period means the insurer pays out less often and later, so it charges a lower premium. The insured accepts more of the short-term risk in exchange for a cheaper policy. Hook: wait longer to collect, pay less to own, so a longer elimination period means a lower premium.

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.

No benefits are paid during the elimination period, so with a 60-day elimination period, benefits start accruing only after those 60 days of continuous disability have passed. The insured covers that initial gap themselves. Hook: nothing is paid until the elimination period clock runs out.

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.

A scheduled surgical plan assigns a set dollar benefit to each listed procedure, so an appendectomy pays one amount and a different surgery pays another. If the surgeon charges more than the schedule amount, the insured covers the difference. Hook: a surgical schedule is a fixed price list, one dollar figure per operation.

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.

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.

Supplementary (or superimposed) major medical layers on top of a basic plan, picking up large or extended expenses once the basic plan's limited benefits run out. Hook: supplementary major medical is the backup layer that kicks in after basic runs dry.

The corridor deductible is the gap the insured must cover between the exhaustion of the basic plan's benefits and the start of the supplementary major medical benefits. It links the two layers together. Hook: the corridor is the deductible bridge between basic running out and major medical starting.

The out-of-pocket maximum (stop-loss) caps the insured's coinsurance share. Once the insured has paid $2,000 in coinsurance, the plan switches to paying 100% of additional covered charges for the rest of the year, protecting against a catastrophic bill. Hook: hit the out-of-pocket max and your 20% share drops to 0%.

An HMO operates on a prepaid basis: members pay a fixed periodic amount and receive comprehensive services from the HMO's providers, who are often paid by capitation (a set fee per member). It shifts the focus from billing per service to managing care within a fixed budget. Hook: an HMO is prepaid care, a flat fee buys a defined set of services.

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.

A valid insurable group must exist for some primary reason other than getting insurance, such as an employer, a union, or a trade association, so the coverage is incidental and the group isn't just assembled to game the system. Hook: the group has to exist first for another reason, with insurance as a perk, not the point.

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.

Community rating spreads risk across a wide pool and charges similar rates regardless of any one group's experience, which protects small groups from volatile pricing. It's the counterpart to experience rating. Hook: community rating prices everyone off the shared community pool, not your group alone.

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.

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.

Because employees share the cost in a contributory plan, not everyone signs up, so insurers usually require around 75% participation to guard against adverse selection. Hook: contributory plans need roughly three-quarters in to keep the risk pool healthy.

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.

A noncontributory plan is fully employer-paid; the employee contributes nothing toward the premium. A contributory plan, by contrast, has the employee pay a share. Hook: noncontributory means the employee does not contribute, so the employer foots the whole bill.

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 scheduled dental plan lists a set dollar benefit for each covered procedure, regardless of what the dentist actually charges. If the bill exceeds the schedule amount, the patient pays the difference. Hook: scheduled dental is a fixed price list, one dollar figure per procedure.

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 combination plan blends the two methods, often paying preventive and basic care on a UCR percentage basis while using a fixed schedule for certain services (or vice versa), to balance predictability and flexibility. Hook: a combination plan mixes scheduled and nonscheduled methods in one plan.

Like a medical HMO, a DHMO pays network dentists a capitation fee, a set amount per member assigned to them regardless of services used, and members generally must use network dentists. It emphasizes prepaid, managed dental care. Hook: a DHMO pays dentists per member (capitation), not per procedure.

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.

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.

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.

Orthodontia is usually a distinct, optional benefit with its own lifetime maximum (not an annual one) and a lower coinsurance percentage, and it's frequently limited to dependent children. Hook: ortho stands apart, with its own lifetime cap, lower coverage, and often kids only.

Medicare's standard eligibility age is 65, the same age tied to its origins alongside Social Security. Certain younger people qualify too, such as those who have received Social Security disability for the required period. Hook: 65 is the magic Medicare age.

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.

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.

The Initial Enrollment Period spans 7 months: the 3 months before your 65th-birthday month, that month itself, and the 3 months after. Enrolling on time avoids late penalties. Hook: a 7-month window, three before, the month of, and three after your 65th.

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.

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.

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.

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.

Part A uses benefit periods: one begins when you're admitted and ends after you've been out of a hospital or skilled nursing facility for 60 days in a row. A new stay after that starts a new benefit period (and a new deductible). Hook: a Part A benefit period resets only after 60 days fully out of care.

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.

Personal health insurance premiums generally aren't deductible, though they may count toward the itemized medical expense deduction if total medical costs clear the AGI threshold. Hook: personal health premiums usually get no deduction, paid with after-tax dollars.

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.

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.

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.

Without itemizing, a typical individual gets no federal deduction for personal health premiums; they're paid with after-tax dollars. (Self-employed individuals are a notable exception, covered separately.) Hook: no itemizing usually means no deduction for your health premiums.

Premiums for an individually owned disability income policy are not deductible; they're paid with after-tax dollars. That sets up the favorable treatment of the benefits. Hook: no deduction for personal DI premiums, you pay them after tax.

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.

The governing rule is symmetry: tax-free premiums going in lead to taxable benefits coming out, and after-tax premiums going in lead to tax-free benefits coming out. It applies across both individual and group disability coverage. Hook: the tax gets paid somewhere, either on the premium or on the benefit, never both and never neither.

If the employer paid (and deducted) the premiums and the employee was never taxed on them, the disability benefits are taxable to the employee when received; the tax simply shifts to the back end. Hook: employer-paid, employer-deducted DI premiums mean the employee is taxed on the benefits.

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.