General knowledge · Section V · Life, Accident and Health only
Types of health policies (Types of policies)
The kinds of health coverage on the exam: disability income, accidental death and dismemberment, medical expense insurance, Medicare supplement policies, group insurance, long-term care and other policies. It is the largest general section of the Life, Accident and Health exam.
Questions on the exam
- Life, Accident and Health: 16 questions
- Life Agent: Not on this exam
Life, Accident and Health exam
What the official outline lists
- Disability income
- Accidental death and dismemberment
- Medical expense insurance
- Medicare supplement policies
- Group insurance
- Individual/group long term care (LTC)
- Other policies
Practice questions
Choose your answer, then open “Show the answer” to see why each option is right or wrong and the exact source text.
1. According to IRS Publication 969, who must fund a Health Reimbursement Arrangement (HRA)?
- Only the employer
- Only the employee
- Employer and employee jointly
- A state insurance pool
Show the answer
Correct answer: A. Only the employer
According to IRS Publication 969, an HRA must be funded solely by an employer, so the employer is the only permitted source of funding.
Why the other options are wrong
- B. Publication 969 says the HRA must be funded solely by an employer, so the employee cannot be the funding source.
- C. A shared contribution contradicts the passage: the HRA must be funded solely by an employer, which excludes an employee share.
- D. The passage names the employer as the sole funding source; it does not mention any state insurance fund.
An HRA must be funded solely by an employer.
2. A member of a PPO decides to see a doctor who does not belong to the plan's network. According to HealthCare.gov, what is the result?
- The member may use that doctor, at an additional cost
- The member may not use that doctor under any condition
- The member may use that doctor at the same cost as in-network
- The member may use that doctor only with the plan's approval
Show the answer
Correct answer: A. The member may use that doctor, at an additional cost
According to the HealthCare.gov glossary (PPO), you pay less if you use providers in the plan's network, and you can use doctors, hospitals, and providers outside of the network for an additional cost.
Why the other options are wrong
- B. The passage says providers outside of the network can be used, for an additional cost; it does not forbid them.
- C. The passage says you pay less for network providers and an additional cost applies outside the network, so the cost is not the same.
- D. The passage mentions no approval requirement; it says outside providers can be used for an additional cost.
You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
3. Under 28 TAC §3.3306, an issuer of a Medicare supplement policy may cancel or nonrenew the policy for which of the following reasons?
- Nonpayment of premium
- A decline in the insured's health
- Heavy use of the policy's benefits
- The insured's move to another county
Show the answer
Correct answer: A. Nonpayment of premium
According to 28 TAC §3.3306, the issuer may not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation. Nonpayment of premium is therefore a permitted reason.
Why the other options are wrong
- B. The rule allows no reason other than nonpayment of premium or material misrepresentation, so health status (deterioration of health) cannot be the basis for cancellation or nonrenewal.
- C. Use of benefits is not among the two reasons the rule permits; only nonpayment of premium or material misrepresentation is allowed.
- D. A change of county is not one of the permitted reasons; the rule allows only nonpayment of premium or material misrepresentation.
The issuer may not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.
4. Under the Texas Insurance Code, what must a group accident and health insurance policy provide about premiums due under the policy?
- They must be remitted by the premium payor as designated in the policy, on or before the due date or within any grace period specified in the policy
- They must be remitted by each insured individual directly to the insurer, regardless of who is designated in the policy as premium payor
- They must be remitted by the premium payor on the due date only, because a group policy may not allow any grace period
- They must be remitted by the premium payor only after the insurer sends each insured a separate premium notice
Show the answer
Correct answer: A. They must be remitted by the premium payor as designated in the policy, on or before the due date or within any grace period specified in the policy
According to TIC §1251.102, a group accident and health insurance policy must provide that premiums due under the policy must be remitted by the premium payor as designated in the policy, either on or before the due date or within any grace period specified in the policy.
Why the other options are wrong
- B. TIC §1251.102 refers to the premium payor as designated in the policy; it does not require each insured to remit premiums directly to the insurer.
- C. TIC §1251.102 allows remittance within any grace period specified in the policy, so the due date is not the only permitted time.
- D. TIC §1251.102 contains no requirement for a separate premium notice to each insured as a condition of remitting premiums.
A group accident and health insurance policy must provide that premiums due under the policy must be remitted by the premium payor as designated in the policy: (1) on or before the due date; or (2) within any grace period specified in the policy.
5. Greenfield Supply buys a group accident and health policy for its employees. Mara, an eligible employee, wants to know who gets a written summary of her coverage. Under Texas law, what must the insurer do?
- Give the employer a certificate for each employee summarizing the coverage and naming who is paid benefits
- Issue Mara her own full individual policy contract, because every insured must hold one
- Give nothing in writing to employees, because only the employer receives any document
- Provide a certificate to an employee only if that employee asks for one in writing
Show the answer
Correct answer: A. Give the employer a certificate for each employee summarizing the coverage and naming who is paid benefits
According to TIC §1251.201(a), an insurer issuing a group policy must provide to the policyholder, for delivery to each employee or member of the insured group, a certificate of insurance that summarizes the essential features of the employee's or member's coverage and states the person to whom benefits are payable.
Why the other options are wrong
- B. TIC §1251.201(a) provides for a certificate of insurance delivered through the policyholder to each employee, not a separate individual policy for each insured.
- C. TIC §1251.201(a) requires a written certificate for each employee or member of the group, so the employee does receive a document.
- D. TIC §1251.201(a) requires the certificate to be provided for delivery to each employee or member of the insured group; it is not conditioned on an employee's request.
An insurer issuing a group policy under this chapter shall provide to the policyholder for delivery to each employee or member of the insured group: (1) a certificate of insurance that: (A) summarizes the essential features of the insurance coverage of the employee or member, including the annual deductibles, annual and lifetime policy limits, and maximum out-of-pocket expenses under the policy; and (B) states the person to whom benefits are payable;
6. Under the activities-of-daily-living test in 26 U.S.C. 7702B(c)(2)(A)(i), a licensed health care practitioner must certify that the individual is unable to perform, without substantial assistance, how many activities of daily living and for how long?
- At least 2 activities of daily living for at least 90 days
- At least 3 activities of daily living for at least 90 days
- At least 2 activities of daily living for at least 30 days
- At least 1 activity of daily living for at least 180 days
Show the answer
Correct answer: A. At least 2 activities of daily living for at least 90 days
According to 26 U.S.C. 7702B(c)(2)(A)(i), the test is certification by a licensed health care practitioner that the individual is unable to perform, without substantial assistance from another individual, at least 2 activities of daily living for a period of at least 90 days due to a loss of functional capacity.
Why the other options are wrong
- B. The passage requires at least 2 activities of daily living, not 3.
- C. The passage requires a period of at least 90 days, not 30 days.
- D. The passage requires at least 2 activities of daily living for at least 90 days, not 1 activity for 180 days.
any individual who has been certified by a licensed health care practitioner as— (i) being unable to perform (without substantial assistance from another individual) at least 2 activities of daily living for a period of at least 90 days due to a loss of functional capacity
7. According to the TDI health insurance glossary, what is another name for a specified disease policy?
- Dread disease policy
- Short-term limited-duration plan
- Subscription health plan
- Limited-payment policy
Show the answer
Correct answer: A. Dread disease policy
According to the TDI Health insurance glossary, specified disease policies are also called dread disease policies, and they pay only if you get the illness specified in the policy.
Why the other options are wrong
- B. The glossary entry gives only 'dread disease policies' as the other name for specified disease policies, not short-term limited-duration plans.
- C. The glossary entry gives only 'dread disease policies' as the other name, not subscription health plans.
- D. The glossary entry gives only 'dread disease policies' as the other name, not limited-payment policies.
Specified disease policies (also called dread disease policies) – Policies that pay only if you get the illness specified in the policy.
8. Under the Texas rules on individual accident and health policies, when are dental or vision benefits limited to a narrow range of benefits treated as excepted benefits?
- Only if the benefits are provided under a separate policy or contract of insurance
- Under all circumstances, as with accident-only and disability income coverage
- Only if the benefits are included in a policy that also combines hospital, medical, and surgical benefits
- Whenever the benefits are added to a medical policy by a rider or endorsement
Show the answer
Correct answer: A. Only if the benefits are provided under a separate policy or contract of insurance
According to 28 TAC §3.3002(b)(6)(B), dental or vision benefits limited in scope to a narrow range or type of benefits are excepted benefits only if the benefits are provided under a separate policy or contract of insurance.
Why the other options are wrong
- B. Section 3.3002(b)(6)(A) lists accident-only and disability income coverage as excepted under all circumstances, but dental or vision benefits fall under (B), which applies only if the benefits are provided under a separate policy or contract.
- C. The rule describes these benefits as generally excluded from policies that combine hospital, medical, or surgical benefits, and requires a separate policy or contract; combining them in the same policy does not meet the condition.
- D. The rule requires the benefits to be provided under a separate policy or contract of insurance; a rider or endorsement to a medical policy is not a separate policy or contract.
Only if the benefits are provided under a separate policy or contract of insurance: (i) Dental or vision benefits that are limited in scope to a narrow range or type of benefits and that are generally excluded from policies that combine hospital, medical, or surgical benefits.
Practice all 76 questions of this topic in the app, with a plan to your exam date. Get the app
Key flashcards
Front and back, as in the app.
- Who may fund a Health Reimbursement Arrangement (HRA)?
- Only the employer. An HRA must be funded solely by an employer (IRS Pub. 969). (Publication 969 (2025) (17))
- Texas (TIC §1251.102): what must a group accident and health insurance policy provide about the remittance of premiums due under the policy?
- That premiums due under the policy must be remitted by the premium payor as designated in the policy, either on or before the due date or within any grace period specified in the policy. (Texas Insurance Code §1251.102, “Payment of premiums”)
- Texas (TIC §1251.201(a)): what must an insurer issuing a group policy provide to the policyholder for delivery to each employee or member?
- Two things: (1) a certificate of insurance that summarizes the essential features of the employee's or member's coverage (including annual deductibles, annual and lifetime policy limits, and maximum out-of-pocket expenses) and states the person to whom benefits are payable; and (2) a notice informing the employee or member of the availability of and premiums for a rider or separate insurance policy that would provide additional coverage. (Texas Insurance Code §1251.201(a), “Certificate of insurance; notice of separate available coverage”)
Terms on this topic
- Grace period — Período de gracia
- Misrepresentation — Representaciones falsas
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