Free Accident and Health or Sickness Agent Practice Questions

Sample Practice Questions

Try these 10 sample questions from the Accident and Health or Sickness Agent practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A self-employed designer wants coverage that replaces part of earnings if an illness prevents work. Which coverage addresses that income loss?

   1. A. Disability income insurance
   2. B. Basic hospital expense insurance
   3. C. Hospital confinement indemnity insurance
   4. D. Accidental death and dismemberment insurance

   Answer: A

   Explanation: "provides income if a worker is unable to perform their job duties and earn money due to a disability." The requested benefit replaces earnings during disability. The other policies address medical care, hospital days, or accidental death and dismemberment.

   Reference: NAIC, Simplifying the Complications of Disability Insurance — Disability Insurance

2. 2A North Carolina health-policy agent orally promises to remove an exclusion. The insurer has made no endorsed or attached change approved by an executive officer. What effect does the agent's promise have on the policy?

   1. A. It changes the contract when the next premium is paid
   2. B. It cannot change or waive the policy provision
   3. C. It changes the contract after the claim is submitted
   4. D. It waives the provision for this applicant alone

   Answer: B

   Explanation: "No agent has authority to change this policy or waive any of its provisions." The agent's oral promise is ineffective; the required approved, endorsed or attached change has not occurred.

   Reference: North Carolina General Statutes § 58-51-15 — G.S. 58-51-15(a)(1), Entire Contract; Changes

3. 3An employer establishes North Carolina group accident-and-health coverage for its employees. How should covered classes and insured amounts be structured under the employer-group provision?

   1. A. By each employee's unrestricted choice of any insured amount
   2. B. By employment-based classes and a plan precluding individual selection
   3. C. By health-based classes chosen separately for each applicant
   4. D. By insurer negotiation of a distinct amount for each employee

   Answer: B

   Explanation: "for amounts of insurance based upon some plan which will preclude individual selection." The provision permits employment-related classes and a plan that prevents individual selection of amounts. The alternatives rely on individual selection or unrelated classifications.

   Reference: North Carolina General Statutes § 58-51-80 — G.S. 58-51-80(b)(1), Employer Group

4. 4Under North Carolina law, which agreement is a contract of insurance?

   1. A. An agreement binding an insurer to pay money, its equivalent, or perform an act of value as indemnity or reimbursement for destruction, loss, or injury to something in which the other party has an interest
   2. B. An agreement placing contributions in a separate account and paying only the account's investment value at withdrawal
   3. C. An agreement requiring a service provider to repair a product after a covered mechanical breakdown
   4. D. An agreement advancing funds to an owner with an insurance policy's cash value pledged as collateral

   Answer: A

   Explanation: G.S. 58-1-10 states, "A contract of insurance is an agreement by which the insurer is bound to pay money or its equivalent or to do some act of value to the insured." The agreement in A matches the statutory definition.

   Reference: G.S. 58-1-10 — G.S. 58-1-10

5. 5A surgeon can no longer perform surgery but can work in another occupation for which she is qualified. Which total-disability definition could still treat her as disabled based on inability to perform surgery?

   1. A. Any gainful occupation for which qualified
   2. B. Own occupation duties
   3. C. Any occupation at all
   4. D. Qualified alternative occupation duties

   Answer: B

   Explanation: "Some may pay benefits if you are unable to perform the duties of your occupation, while others may require that your disability keep you from any gainful employment for which you are qualified." The own-occupation test focuses on her surgical duties; the competing qualified-work tests consider her ability to perform another job.

   Reference: NAIC, Simplifying the Complications of Disability Insurance — Definition of Disability

6. 6A qualifying North Carolina major-medical policy has been in force for over two years. A new covered loss begins after that period, and an application statement was inaccurate but not fraudulent. Under the time-limit-on-defenses clause, may the insurer use that statement to deny this loss?

   1. A. Yes, if the statement concerned any covered medical condition
   2. B. Yes, if the statement was material to the original underwriting
   3. C. No, the clause bars this nonfraudulent statement for the later loss
   4. D. No, but only if the insured has paid every premium annually

   Answer: C

   Explanation: "After two years from the date of issue or reinstatement of this policy no misstatements except fraudulent misstatements made by the applicant in the application for such policy shall be used to void the policy or deny a claim for loss incurred or disability" For the specified qualifying policy and later-commencing loss, the nonfraudulent misstatement cannot support denial under the clause. Materiality alone does not override this cutoff.

   Reference: North Carolina General Statutes § 58-51-15 — G.S. 58-51-15(a)(2)a, Time Limit on Certain Defenses

7. 7An employer sponsors group health insurance. Which pairing correctly identifies who receives the group policy and what a covered worker may receive as evidence of coverage?

   1. A. The worker holds the policy; the employer receives a certificate
   2. B. The worker holds the policy; the insurer receives a certificate
   3. C. The insurer holds the policy; the employer receives a certificate
   4. D. The employer holds the policy; the worker may receive a certificate

   Answer: D

   Explanation: "health insurance issued to employers, associations, trusts, or other groups covering employees or members and/or their dependents, to whom a certificate of coverage may be provided." The group sponsor is the policyholder, and a worker may receive a coverage certificate. The alternatives reverse the group policy and certificate roles.

   Reference: NAIC, Glossary of Insurance Terms — Group Health

8. 8A company organized under the laws of Canada is classified in North Carolina as what type of company?

   1. A. Domestic
   2. B. Alien
   3. C. Foreign
   4. D. Reciprocal

   Answer: B

   Explanation: G.S. 58-1-5 defines this category by organization under law "outside of the United States." Canada meets that condition, so B is correct.

   Reference: G.S. 58-1-5 — G.S. 58-1-5(1)

9. 9An insured remains at work after an injury but can perform only some regular duties. Which disability benefit feature may pay a partial amount based on that limited ability?

   1. A. Total disability benefit
   2. B. Residual disability income benefit
   3. C. Partial disability benefit
   4. D. Presumptive disability benefit

   Answer: C

   Explanation: "Some policies may require you be totally disabled before paying benefits, while others may pay a partial amount, or for a limited time, if your injury restricts you from performing only part of your job" The question asks about restriction of job duties, the partial-disability trigger. Residual benefits focus on reduced income, while total and presumptive disability use different triggers.

   Reference: NAIC, Simplifying the Complications of Disability Insurance — Extent of Disability

10. 10A North Carolina accident-and-health policy collects premiums monthly. What is the minimum statutory grace period that the policy's required provision must grant for a renewal premium?

    1. A. 7 days
    2. B. 10 days
    3. C. 20 days
    4. D. 31 days

    Answer: B

    Explanation: "A grace period of ______ (insert a number not less than "7" for weekly premium policies, "10" for monthly premium policies and "31" for all other policies) days will be granted" Monthly premium policies require at least 10 days. Seven days applies to weekly premiums and 31 days to other premium modes; 20 days is not this minimum.

    Reference: North Carolina General Statutes § 58-51-15 — G.S. 58-51-15(a)(3), Grace Period