Accident and Health Insurance Basics Question and Answers

Accident and Health Insurance Basics Question and Answers

What is Accident and Health Insurance?

Accident and Health Insurance provides coverage for medical expenses and lost income if an individual becomes sick or injured. It covers expenses related to accidents, illness, or injury and sometimes includes benefits for rehabilitation.

How does Accident Insurance differ from Health Insurance?

Accident insurance typically provides a lump-sum benefit directly to the policyholder in the event of an accident, regardless of medical expenses incurred. Health insurance, however, covers a portion of medical expenses directly, often requiring policyholders to pay copays, deductibles, and coinsurance.

What types of accidents are covered under Accident Insurance?

Accident insurance usually covers a wide range of incidents, including falls, car accidents, cuts, burns, or any sudden injury. However, specific coverage can vary by policy, so reviewing the policy details for inclusions and exclusions is essential.

Is there a difference between Disability Insurance and Accident Insurance?

Yes, disability insurance provides income replacement if an injury or illness prevents someone from working, whereas accident insurance is primarily focused on paying out benefits based on accident-related expenses or a lump sum.

What is the purpose of a deductible in health insurance?

The deductible is the amount a policyholder must pay out-of-pocket for covered services before the insurance plan begins to pay. High-deductible plans have lower premiums, making them an option for people who want lower monthly costs and who don’t expect frequent healthcare expenses.

What is a “Copayment” and “Coinsurance”?

Copayment: A fixed amount the policyholder pays for specific services, like doctor visits, while the insurer covers the rest.
Coinsurance: The percentage of costs shared between the policyholder and the insurer after meeting the deductible. For example, with an 80/20 coinsurance plan, the insurer covers 80%, while the policyholder pays 20%.

Does health insurance cover all types of medical expenses?

Not always. While most policies cover essential health benefits (hospitalizations, prescriptions, preventive care, etc.), certain services like cosmetic surgery, experimental treatments, or alternative therapies may not be covered unless specified.

What is “Out-of-Pocket Maximum”?

The out-of-pocket maximum is the most a policyholder will have to pay for covered services in a year. Once this limit is reached, the insurance plan covers 100% of eligible expenses for the rest of the policy year.

Are pre-existing conditions covered under health insurance?

In many regions, health insurance policies are required to cover pre-existing conditions. However, some policies may have a waiting period before coverage begins, especially for conditions that existed before enrolling in the plan.

Why do premiums vary between health insurance plans?

Premiums depend on factors like age, health, lifestyle, coverage level, and deductible amount. Generally, higher deductibles mean lower monthly premiums, while more comprehensive plans with low deductibles come at higher monthly costs.

Can you buy accident insurance as a standalone policy?

Yes, accident insurance can be purchased separately. This can be helpful for people who want additional coverage to supplement their existing health insurance.

What is critical illness insurance, and how does it relate to health insurance?

Critical illness insurance provides a lump-sum payment upon diagnosis of severe illnesses like cancer, heart attack, or stroke. It’s often purchased alongside health insurance to help cover non-medical expenses like mortgage payments, travel for treatment, or rehabilitation.

What does accident insurance typically cover?

Answer: Accident insurance generally provides a lump-sum payment for expenses directly resulting from accidental injuries, such as fractures, burns, or other sudden accidents.

How does a deductible work in health insurance?

Answer: A deductible is the amount a policyholder must pay out-of-pocket for covered services before the insurance plan starts covering costs.

When the policy premium wasn’t submitted with the application, what should the agent obtain from the insured upon policy delivery?

A statement of good health

Which of the following groups would most likely be covered under a blanket accident policy?

Students at a public school

All of the following are true regarding the Medical Information Bureau (MIB) except

MIB reports are based upon information supplied by doctors and hospitals

Which of the following information regarding an insured is NOT included in an Investigative Consumer Report, which is requested by an underwriter?

Medical History

Which of the following factors about the insured determines the amount of disability benefit that the insured will receive?

income

2 ways to purchase health insurance

group plan & individual plan

2 perils of health insurance

sickness & accident

2 kinds of losses in health insurance

medical bills & lost income

2 types of health insurance policies

medical expense policies & disability income policies

Medical Expense Policies pay:

the doctors, nurses, hospitals

Disability Income Policies pay:

insured as replacement check

Which Health Insurance policy?

-whole family covered
-paid immediately
– no guaranteed premiums (adjustable)
– dollar deductible

Health Maintenance Organization (HMO)

an organization that provides comprehensive medical care to subscribers for a fixed fee
-early treatment
-preventive medicine
– out-patient treatment

Preferred Provider Organization (PPO)

a group of doctors and hospitals that agree to provide health care at rates approved by the insurer
– fee-for-service basis

High Deductible Health Plan (HDHP)

A health insurance policy that requires the policyholder to pay more out-of-pocket medical expenses but usually has lower premiums than traditional health insurance plans.

Health Reimbursement Account (HRA)

an account into which employers place contributions that employees can use to pay for qualified medical expenses. Usually combined with a HDHP.

Insuring Clause

A general statement that identifies the basic agreement between the insurance company and the insured, usually located on the first page of the policy.

What type of payment does health insurance make after reaching the out-of-pocket maximum?

Answer: Once the out-of-pocket maximum is reached, health insurance covers 100% of eligible expenses for the rest of the policy year.

What is the purpose of coinsurance?

Answer: Coinsurance is the percentage of costs shared between the insurer and the policyholder after the deductible has been met. For instance, in an 80/20 coinsurance plan, the insurance pays 80%, and the policyholder pays 20% of covered expenses.

Can accident insurance be purchased as a standalone policy?

Answer: Yes, accident insurance can be bought separately to provide additional financial protection alongside health insurance.

Why might someone choose a high-deductible health plan?

Answer: High-deductible health plans generally have lower monthly premiums, making them an attractive option for people who want to keep costs down and expect lower healthcare expenses.