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LLQP Accident & Sickness study materials
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LLQP Accident & Sickness practice questions

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Question 1Accident & Sickness Insurance Fundamentals and Regulation

Under provincial insurance legislation, what is the main purpose of licensing an insurance agent?

  1. To fix the commission rates that insurers may pay agents
  2. To protect the public by setting minimum competence and conduct standards Correct answer.
  3. To limit the number of insurers operating in the province
  4. To guarantee that every policy sold will pay a claim

Explanation

Licensing regimes exist to protect consumers by ensuring that people who sell insurance meet minimum standards of knowledge, good character, and conduct, and remain accountable to a regulator. Licensing does not guarantee claim outcomes, set commission levels, or control how many insurers operate.

Question 2Accident & Sickness Insurance Fundamentals and Regulation

An applicant for an accident and sickness insurance licence must generally complete which of the following before being licensed?

  1. A surety bond equal to one year of expected commissions
  2. Five years of prior experience selling life insurance
  3. A specified qualifying examination plus a criminal record or background check Correct answer.
  4. A university degree in finance or economics

Explanation

Regulators typically require applicants to pass a qualifying exam covering the relevant insurance material and to demonstrate good character, often verified through a criminal record or background check. A finance degree, prior life insurance experience, and a large surety bond are not standard licensing prerequisites.

Question 3Accident & Sickness Insurance Fundamentals and Regulation

Which document gives an accident and sickness agent the legal authority to represent a particular insurer?

  1. The insurer's policy wording
  2. The agent's certificate of registration
  3. The notice of appointment filed with the regulator Correct answer.
  4. The client's signed application

Explanation

An agent can only act for an insurer once the insurer files a notice of appointment with the regulator, which authorizes the agent to represent that company. The certificate of registration licenses the agent generally but does not tie the agent to any specific insurer.

Question 4Accident & Sickness Insurance Fundamentals and Regulation

A client asks whether a licensed agent's authority to bind coverage on behalf of an insurer is unlimited. What is the most accurate answer?

  1. No, because only the regulator can bind coverage
  2. No, the agent's authority is limited by the terms of the agency agreement with the insurer Correct answer.
  3. Yes, provided the client pays the first premium in cash
  4. Yes, a licence gives the agent full authority to bind any risk

Explanation

An agent's binding authority comes from the agency contract with the insurer and may be limited by specified classes of risk, dollar limits, or referral requirements. A licence alone never confers unlimited binding power, and the regulator does not bind coverage for consumers.

Question 5Accident & Sickness Insurance Fundamentals and Regulation

Which of the following best describes the role of the insurer's underwriting department in an accident and sickness application?

  1. It collects the first premium from the client
  2. It explains policy exclusions to the client
  3. It decides whether to accept the risk and on what terms Correct answer.
  4. It files the agent's appointment with the regulator

Explanation

Underwriting evaluates the information disclosed on the application and determines whether the insurer will issue coverage, at what premium, and with what limitations. Explaining exclusions is an agent duty, premium collection is administrative, and appointments are filed by the insurer as an employer, not by underwriting.

Question 6Accident & Sickness Insurance Fundamentals and Regulation

An applicant signs an accident and sickness application but leaves out a previous back injury. The agent noticed nothing unusual and submitted the form as completed. What is the primary consequence if a claim later arises from that injury?

  1. The agent's licence is automatically revoked
  2. The insurer may rescind or deny the claim for material misrepresentation Correct answer.
  3. The insurer must pay because the agent reviewed the application
  4. The policy is void only if the premium was unpaid

Explanation

Insurance contracts are based on utmost good faith, so material facts known to the applicant must be disclosed. A material omission on the application can entitle the insurer to rescind the contract or deny a related claim even if the agent overlooked it.

Question 7Accident & Sickness Insurance Fundamentals and Regulation

What does the principle of utmost good faith require of an applicant for accident and sickness insurance?

  1. Naming the insurer as beneficiary of the policy
  2. Disclosing all facts that a prudent underwriter would consider material Correct answer.
  3. Purchasing the maximum coverage the agent recommends
  4. Repeating the medical exam every policy year

Explanation

Utmost good faith obliges the applicant to volunteer material information, meaning facts that would influence a reasonable underwriter's decision to accept or rate the risk. It does not require buying maximum coverage, annual medical exams, or naming the insurer as beneficiary.

Question 8Accident & Sickness Insurance Fundamentals and Regulation

An insurer issues an accident and sickness policy and later discovers the applicant concealed a serious pre-existing condition that directly caused the disability claimed. Which outcome is most consistent with insurance law?

  1. The insurer must pay because the policy was already issued
  2. The insurer may treat the contract as voidable and deny the claim Correct answer.
  3. The insurer must pay half the benefit as a compromise
  4. The insurer must pay but may raise future premiums

Explanation

Concealment of a material fact allows the insurer to avoid the contract from the outset, which supports denying a claim arising from the concealed condition. Issuance of the policy does not waive the insurer's right to rely on the disclosure duty, and partial payment is not a legal remedy for concealment.

Question 9Accident & Sickness Insurance Fundamentals and Regulation

Which of the following is a distinguishing feature of accident and sickness insurance compared with life insurance?

  1. It can never be cancelled by the insurer
  2. It indemnifies for health-related loss rather than paying a fixed death benefit Correct answer.
  3. It does not require an insurable interest
  4. It is always sold without an application

Explanation

Accident and sickness policies respond to morbidity risks such as disability, medical expenses, or loss of income, whereas life insurance pays on death. Both types require insurable interest and an application, and accident and sickness policies can be cancelled or renewed depending on their terms.

Question 10Accident & Sickness Insurance Fundamentals and Regulation

A client wants coverage that pays a monthly income when illness or injury prevents them from working. Which type of accident and sickness product fits best?

  1. Disability income insurance Correct answer.
  2. Long-term care insurance
  3. Critical illness insurance
  4. Accidental death and dismemberment insurance

Explanation

Disability income insurance replaces a portion of earned income during a period of disability caused by sickness or accident. Critical illness pays a lump sum on diagnosis, long-term care funds custodial support, and AD&D pays for accidental death or loss of a limb.

Question 11Accident & Sickness Insurance Fundamentals and Regulation

A policy defines disability as the inability to perform the duties of one's own occupation for the first two years and any occupation thereafter. What is this provision called?

  1. A residual disability clause
  2. A presumptive disability clause
  3. A two-tier or own-occupation-to-any-occupation definition Correct answer.
  4. A waiting period provision

Explanation

Many disability policies use a two-tier definition: own occupation initially, then any occupation after a stated period. Residual disability addresses partial income loss, waiting periods delay benefits, and presumptive disability deems total disability for specified losses.

Question 12Accident & Sickness Insurance Fundamentals and Regulation

An insured earns $6,000 per month and holds a disability policy with a 60 percent benefit ratio and a 90-day waiting period. If the insured becomes totally disabled on March 1 and remains so, when do benefits typically begin and at what monthly amount?

  1. June 1 at $3,600 per month Correct answer.
  2. March 1 at $6,000 per month
  3. March 1 at $3,600 per month
  4. June 1 at $6,000 per month

Explanation

The 90-day waiting period delays benefits until roughly June 1, and the benefit equals 60 percent of $6,000, or $3,600 per month. Benefit ratios are designed to replace part of income rather than the full amount, so $6,000 is not payable.

Question 13Accident & Sickness Insurance Fundamentals and Regulation

What is the purpose of an elimination period in a disability income policy?

  1. To reduce the premium after the first claim
  2. To end the policy after the first disability
  3. To delay the start of benefits until a disability has lasted a specified time Correct answer.
  4. To eliminate coverage for pre-existing conditions

Explanation

The elimination or waiting period is the length of time an insured must be disabled before benefits become payable, which reduces short-term claims and lowers premium. It does not remove pre-existing condition exclusions, adjust premium after a claim, or terminate the policy.

Question 14Accident & Sickness Insurance Fundamentals and Regulation

An insured holds a non-cancellable disability income policy. What does this guarantee?

  1. The insurer can renew the policy only at a higher premium
  2. The benefit amount increases automatically with inflation
  3. The insured may cancel at any time without penalty
  4. The insurer cannot cancel the policy or raise the premium as long as premiums are paid Correct answer.

Explanation

Non-cancellable means the insurer cannot cancel the contract or increase the premium while the insured keeps paying premiums, giving the policyholder strong renewal security. Renewability at higher premium describes guaranteed renewable, and inflation protection is a separate optional benefit.

Question 15Accident & Sickness Insurance Fundamentals and Regulation

Which of the following best describes the insurable interest requirement for accident and sickness insurance?

  1. The beneficiary must be a family member
  2. The insurer must hold collateral equal to the benefit
  3. The insured must own real property
  4. The applicant must have a financial or legal relationship that would suffer loss from the insured's disability Correct answer.

Explanation

Insurable interest means the applicant would suffer a genuine financial or legal loss if the insured became disabled or ill, such as a business insuring a key person. Beneficiary family ties, property ownership, and collateral are not the test for insurable interest.

Question 16Accident & Sickness Insurance Fundamentals and Regulation

A small business wants to protect itself against the financial loss of losing a key employee to long-term illness. Which approach is most appropriate?

  1. The employee's group health plan automatically covers the business's lost profit
  2. The business relies on the employee's personal critical illness policy
  3. The business takes out key person disability coverage on the employee with the employee's consent Correct answer.
  4. The business purchases accidental death and dismemberment coverage on itself

Explanation

A business has an insurable interest in a key person and can insure that person's disability, with consent, so that benefits help offset the loss of the individual's contribution. Group health plans cover medical costs, AD&D covers accidental death or dismemberment, and personal policies belong to the individual.

Question 17Accident & Sickness Insurance Fundamentals and Regulation

Which statement accurately describes the relationship between the federal government and provincial regulators in Canadian insurance?

  1. Provinces regulate insurer solvency while the federal government licenses agents
  2. Both levels of government issue identical agent licences nationwide
  3. The federal government regulates insurer solvency while provinces regulate market conduct and licensing Correct answer.
  4. The federal government licenses agents while provinces license insurers

Explanation

In Canada, the federal Office of the Superintendent of Financial Institutions oversees the solvency of federally regulated insurers, while provincial and territorial regulators handle market conduct, licensing of agents, and consumer protection. The roles are divided rather than duplicated, and licences are issued provincially.

Question 18Accident & Sickness Insurance Fundamentals and Regulation

What is the main purpose of continuing education requirements for licensed accident and sickness agents?

  1. To increase the number of products each agent may sell
  2. To allow the regulator to set commission rates
  3. To ensure agents keep their knowledge current and maintain competence Correct answer.
  4. To replace the initial licensing examination

Explanation

Continuing education keeps licensed agents current on products, legislation, and ethics so that consumers receive competent advice. It does not expand product authority, set commissions, or substitute for the initial qualifying examination.

Question 19Accident & Sickness Insurance Fundamentals and Regulation

An agent collects a completed application and the initial premium from a client but delays submitting both to the insurer for three weeks. During that time the client suffers a covered accident. What is the most significant concern?

  1. The insurer must pay because the premium was collected
  2. The agent may have breached duties of care and prompt submission, affecting coverage and the client's position Correct answer.
  3. The client's policy is automatically in force from the date of the application regardless of insurer rules
  4. The agent's licence is automatically suspended for late submission

Explanation

Agents owe a duty to act promptly and in the client's interest, and delayed submission can prejudice coverage if the insurer's conditional receipt rules or underwriting are affected. Automatic coverage from the application date is not guaranteed, and automatic licence suspension is not the standard consequence.

Question 20Accident & Sickness Insurance Fundamentals and Regulation

Which of the following is an example of a duty owed by an agent to a client under the fair treatment of customers principle?

  1. Sharing the client's medical information with other insurers for marketing
  2. Replacing existing coverage without analysis
  3. Disclosing conflicts of interest and recommending coverage suited to the client's needs Correct answer.
  4. Recommending the highest-commission product available

Explanation

Fair treatment requires agents to act in the client's interest, disclose conflicts, and recommend suitable products after a needs analysis. Recommending based on commission, sharing health information for marketing, and unnecessary replacement all breach these duties.

Question 21Individual Accident & Sickness Insurance Products

Which type of accident and sickness policy pays a fixed daily benefit for each day the insured is hospitalized, regardless of the actual expenses incurred?

  1. A daily indemnity hospital policy Correct answer.
  2. A reimbursement major medical policy
  3. A disability income policy
  4. A critical illness policy

Explanation

A daily indemnity (per diem) hospital policy pays a pre-set amount for each day of confinement, and the payment is made whether or not the insured actually incurred that much cost. Reimbursement policies instead pay based on documented expenses, disability income replaces earnings, and critical illness pays a lump sum on diagnosis.

Question 22Individual Accident & Sickness Insurance Products

An insured holds an individual disability income policy with a 90-day elimination period. What does this provision determine?

  1. The maximum number of days benefits will be paid for any one disability
  2. The number of days the insurer has to investigate a claim
  3. The number of days after the policy issue date before coverage starts
  4. The number of days the insured must wait after disability begins before benefits are payable Correct answer.

Explanation

The elimination period, also called the waiting period, is the interval of disability that must elapse before benefit payments begin. It functions like a deductible measured in time and reduces the cost of the policy for the insurer and the premium for the insured.

Question 23Individual Accident & Sickness Insurance Products

Which provision allows an insured to continue an individual accident and sickness policy after the initial term by paying the premium on time, without providing new evidence of insurability?

  1. Grace period provision
  2. Reinstatement provision
  3. Renewability provision Correct answer.
  4. Non-cancellable provision

Explanation

Renewability provisions define the insured's right to continue the contract at each renewal date. Guaranteed renewable and conditionally renewable clauses allow continuation without new evidence of insurability, while non-cancellable also restricts the insurer's ability to raise premiums or cancel.

Question 24Individual Accident & Sickness Insurance Products

Under a typical individual accident and sickness policy, what is the main purpose of the probationary period?

  1. To delay the start of coverage for accidental injury
  2. To require the insured to complete a medical examination
  3. To allow the insurer to cancel for any reason during the first year
  4. To exclude coverage for sickness that begins shortly after the policy is issued Correct answer.

Explanation

A probationary period is a waiting period during which sickness-related claims are not covered, protecting the insurer against insureds who buy coverage after symptoms appear. Accidental injuries are generally covered from the policy effective date, so the probationary period typically applies only to sickness.

Question 25Individual Accident & Sickness Insurance Products

Which of the following best describes a pre-existing condition clause in an individual disability policy?

  1. It limits benefits to conditions that first appear after the policy has been in force for ten years
  2. It excludes conditions that arise from an accidental injury during the policy term
  3. It excludes any condition the insured disclosed on the application
  4. It excludes or limits benefits for a condition that manifested symptoms or received treatment before the policy took effect Correct answer.

Explanation

A pre-existing condition clause limits or excludes coverage for a condition that existed, showed symptoms, or was treated before coverage began. Disclosure on the application does not automatically create an exclusion, and the clause addresses prior conditions rather than future accidents.

Question 26Individual Accident & Sickness Insurance Products

An insured earns $60,000 per year and holds a disability income policy with a 70% benefit ratio and a 30-day elimination period. If the insured becomes totally disabled for two months, what is the approximate gross monthly benefit before any offsets?

  1. $4,200
  2. $3,500 Correct answer.
  3. $2,800
  4. $5,000

Explanation

The monthly benefit is calculated by applying the benefit ratio to monthly earnings: $60,000 divided by 12 equals $5,000 per month, and 70% of $5,000 is $3,500. The elimination period affects when payments start, not the size of the monthly benefit.

Question 27Individual Accident & Sickness Insurance Products

Which definition of total disability is most favourable to the insured in a disability income policy?

  1. Own occupation for two years, then any occupation
  2. Own occupation for the full benefit period Correct answer.
  3. Any occupation for the first two years
  4. Any occupation for the full benefit period

Explanation

An own-occupation definition treats the insured as totally disabled if unable to perform the duties of their own occupation, which is easier to satisfy than an any-occupation test. Extending own occupation for the full benefit period gives the broadest protection and costs the most in premium.

Question 28Individual Accident & Sickness Insurance Products

Which policy feature allows an insured to purchase additional coverage at specified intervals without providing new evidence of insurability?

  1. Coordination of benefits provision
  2. Waiver of premium rider
  3. Return of premium rider
  4. Guaranteed insurability option Correct answer.

Explanation

A guaranteed insurability option, sometimes called a future purchase option, lets the insured increase coverage at set dates or life events without medical underwriting. It protects against later uninsurability and is priced into the original premium.

Question 29Individual Accident & Sickness Insurance Products

An insured has two disability income policies that together would pay more than their income loss. How does a typical relation of earnings to insurance provision affect the claim?

  1. The insurer pays only the policy with the higher monthly benefit
  2. The insurer cancels the smaller policy and refunds its premium
  3. The insurer pays both policies in full because each contract is independent
  4. The insurer may reduce the benefit so total benefits do not exceed the insured's earnings loss Correct answer.

Explanation

The relation of earnings to insurance provision limits total disability benefits to the insured's actual loss of earnings, preventing over-insurance and malingering. When combined benefits exceed that limit, the insurer reduces its payment proportionally.

Question 30Individual Accident & Sickness Insurance Products

What is the primary function of a waiver of premium provision in an individual disability policy?

  1. It refunds all premiums paid if the insured dies
  2. It suspends premium payments while the insured remains disabled beyond the waiting period Correct answer.
  3. It reduces the premium permanently after the first claim
  4. It converts the policy to paid-up status at retirement

Explanation

A waiver of premium provision relieves the insured of premium payments during a qualifying disability, keeping coverage in force when income has stopped. Premiums are typically waived after a waiting period, often 90 days, and the policy continues as if premiums were paid.

Question 31Individual Accident & Sickness Insurance Products

Which of the following losses would most likely be covered under a standard individual accident policy that insures accidental bodily injury?

  1. A heart attack suffered while shovelling snow
  2. A knee injury caused by gradual wear over years of running
  3. A viral infection contracted on a business trip
  4. A fractured wrist sustained when the insured slipped on ice while walking to work Correct answer.

Explanation

Accident policies cover injury caused by an accidental, external, and sudden event, such as a fall on ice. Sickness, infection, and degenerative conditions arise from disease or gradual process and fall outside accident coverage.

Question 32Individual Accident & Sickness Insurance Products

An insured is injured in a car accident and has both group health coverage through an employer and an individual accident policy. Which mechanism determines which plan pays first?

  1. Coordination of benefits rules Correct answer.
  2. The grace period clause
  3. The misstatement of age provision
  4. The incontestability clause

Explanation

Coordination of benefits provisions establish the order of payment when an insured is covered by more than one plan, generally making the plan covering the person as an employee primary. The secondary plan then pays up to the balance of eligible expenses.

Question 33Individual Accident & Sickness Insurance Products

Which provision gives the insured a period after the premium due date to pay and keep the policy in force?

  1. Incontestable period
  2. Grace period Correct answer.
  3. Probationary period
  4. Elimination period

Explanation

The grace period allows the insured to pay an overdue premium within a specified number of days, commonly 30 or 31, while coverage continues. If the insured dies during the grace period, the unpaid premium is typically deducted from the benefit.

Question 34Individual Accident & Sickness Insurance Products

What is the effect of an incontestability clause after the policy has been in force for the stated period, usually two years?

  1. The insurer cannot void the policy for misrepresentation except for non-payment of premium or fraud as permitted by law Correct answer.
  2. The insurer may increase the premium retroactively to the issue date
  3. The insured may cancel the policy and receive a full refund of premiums
  4. The insurer must pay all claims regardless of fraud or non-payment of premium

Explanation

An incontestability clause prevents the insurer from denying a claim or rescinding the policy based on misstatements on the application after the contestable period. Non-payment of premium and certain fraudulent misstatements remain grounds for action where legislation permits.

Question 35Individual Accident & Sickness Insurance Products

Which rider would be most appropriate for an insured who wants coverage for a specified list of serious conditions with a lump-sum payment on first diagnosis?

  1. Long-term care rider
  2. Critical illness rider Correct answer.
  3. Hospital daily benefit rider
  4. Accidental death and dismemberment rider

Explanation

A critical illness rider pays a lump sum when the insured is diagnosed with a covered condition such as cancer, heart attack, or stroke. The payment is not tied to actual expenses and can be used for any purpose.

Question 36Individual Accident & Sickness Insurance Products

An insured's individual disability policy is conditionally renewable. What does this mean for the insurer?

  1. The insured may renew only if they remain in good health
  2. The insurer may decline renewal only for reasons specified in the contract, such as class-wide changes Correct answer.
  3. The insurer may cancel the policy at any time without notice
  4. The insurer must renew the policy at the same premium for life

Explanation

Conditionally renewable policies allow the insurer to refuse renewal only under conditions stated in the contract, which must apply uniformly to all insureds in the same class. The insurer cannot single out one insured for non-renewal based on individual health.

Question 37Individual Accident & Sickness Insurance Products

Which of the following would be considered a presumptive disability under many individual disability policies?

  1. A broken leg that requires a cast for two months
  2. A diagnosis of high blood pressure controlled by medication
  3. Loss of sight in both eyes Correct answer.
  4. A temporary sprain that heals in six weeks

Explanation

Presumptive disability provisions treat certain severe losses, such as loss of sight in both eyes or loss of two limbs, as total disability without requiring proof of lost income. Temporary injuries and controlled chronic conditions generally do not meet that standard.

Question 38Individual Accident & Sickness Insurance Products

What is the purpose of a residual disability benefit in a disability income policy?

  1. It pays the full benefit for the entire benefit period after any disability
  2. It covers medical expenses related to the disability
  3. It pays a partial benefit when the insured returns to work at reduced income due to disability Correct answer.
  4. It refunds a portion of premiums when no claim is made

Explanation

Residual disability benefits respond to a loss of income suffered when the insured can work only part-time or in a reduced capacity. The benefit is usually proportional to the percentage of income lost compared with pre-disability earnings.

Question 39Individual Accident & Sickness Insurance Products

An insured purchases an individual accident and sickness policy and later discovers the insurer misstated the insured's age on the application. What is the typical effect under the misstatement of age provision?

  1. The insured must submit to new underwriting before any claim is paid
  2. The policy is void from the outset and all premiums are refunded
  3. Benefits are adjusted to what the premium would have purchased at the correct age Correct answer.
  4. The policy remains unchanged because the insurer made the error

Explanation

The misstatement of age provision adjusts benefits to the amount the premium paid would have purchased at the correct age. This preserves coverage rather than voiding the contract, and the adjustment applies whether the error was made by the insured or the insurer.

Question 40Individual Accident & Sickness Insurance Products

Which of the following best describes the purpose of a return of premium rider on a disability income policy?

  1. It refunds a percentage of premiums paid if no disability claim is made during a defined period Correct answer.
  2. It guarantees a refund of all premiums at any time on request
  3. It waives premiums during a period of disability
  4. It returns the premium if the insured becomes disabled

Explanation

A return of premium rider refunds some or all premiums, often at intervals or at maturity, if the insured has not claimed benefits. It adds cost to the policy but appeals to insureds who value recovering premiums if coverage is unused.

Question 41Individual Accident & Sickness Insurance Products

An insured has a disability income policy with a 60-day elimination period and a two-year benefit period. If the insured is disabled for 18 months, how long will benefits be paid?

  1. 16 months Correct answer.
  2. 24 months
  3. 12 months
  4. 18 months

Explanation

Benefits begin after the 60-day elimination period, which is roughly two months, so the 18-month disability produces about 16 months of payments. The two-year benefit period is not exhausted, so the elimination period is the limiting factor.

Question 42Individual Accident & Sickness Insurance Products

Which exclusion is commonly found in individual accident and sickness policies to address injuries arising from a specific high-risk activity?

  1. Injuries sustained during normal household chores
  2. Illness contracted during a vacation
  3. Injuries sustained while committing a criminal offence Correct answer.
  4. Injuries sustained while commuting to work

Explanation

Accident and sickness policies commonly exclude losses arising from the commission of a criminal offence, along with self-inflicted injury and war. These exclusions reflect illegal or intentionally risky conduct rather than ordinary daily activity.

Question 43Individual Accident & Sickness Insurance Products

An insured holds a guaranteed renewable disability income policy. Which statement accurately reflects the insurer's rights at renewal?

  1. The insurer must renew the policy but may increase premiums for an entire class of insureds Correct answer.
  2. The insurer may cancel the policy if the insured's health declines
  3. The insurer may refuse renewal if the insured changes occupation
  4. The insurer may increase the premium for the individual insured based on claims history

Explanation

Guaranteed renewable policies require the insurer to renew coverage while the insured pays premiums, but allow class-wide premium increases approved for all insureds in the same rating class. The insurer cannot single out an individual for higher premiums or non-renewal because of health or claims.

Question 44Individual Accident & Sickness Insurance Products

Which of the following best describes the role of the attending physician statement in the claims process for an individual disability policy?

  1. It transfers the policy ownership to the physician
  2. It replaces the insured's signed claim form
  3. It serves as proof of premium payment for the policy
  4. It provides medical evidence of the disability and its expected duration to support the claim Correct answer.

Explanation

An attending physician statement documents the diagnosis, restrictions, and expected duration of disability so the insurer can assess the claim. It supplements rather than replaces the insured's own claim form and authorization.

Question 45Group Accident & Sickness Insurance

In a group accident and sickness plan, which party typically holds the master policy contract with the insurer?

  1. The third-party claims administrator
  2. The provincial regulator
  3. The plan sponsor, such as the employer Correct answer.
  4. Each individual employee

Explanation

Group coverage is issued as a single master contract between the insurer and the plan sponsor, usually the employer or an association. Individual members receive certificates of insurance that summarize their coverage rather than holding the contract themselves.

Question 46Group Accident & Sickness Insurance

What is the main purpose of a certificate of insurance issued to a group plan member?

  1. To replace the master policy as the legal contract
  2. To guarantee the member a fixed premium for life
  3. To transfer ownership of the plan to the member
  4. To summarize the member's coverage under the master policy Correct answer.

Explanation

The certificate is an evidence-of-coverage document that outlines the member's benefits, eligibility, and exclusions under the group master policy. It does not create a separate contract or guarantee future premiums.

Question 47Group Accident & Sickness Insurance

Which underwriting approach is most characteristic of group accident and sickness insurance?

  1. Full individual medical underwriting for every member
  2. Underwriting of the group as a whole using participation and demographic data Correct answer.
  3. No underwriting of any kind at any time
  4. Underwriting based only on each member's family history

Explanation

Group underwriting evaluates the risk of the entire group, focusing on factors such as group size, industry, participation levels, and aggregate demographics. Individual medical evidence is generally not required, which keeps administration efficient.

Question 48Group Accident & Sickness Insurance

An employer wants group coverage but only 40 percent of eligible employees choose to enroll. Why might the insurer decline or restrict the plan?

  1. Insurers are prohibited from covering groups below 50 members
  2. Low participation creates adverse selection risk for the insurer Correct answer.
  3. Certificates cannot be issued when participation is low
  4. Premiums are legally fixed regardless of enrollment

Explanation

Insurers set minimum participation requirements because when only unhealthy members opt in, the risk pool becomes skewed, a problem known as adverse selection. Requiring broad participation helps spread risk across a balanced group.

Question 49Group Accident & Sickness Insurance

In a contributory group plan, what does the term contributory mean?

  1. The insurer contributes to claims reserves
  2. The employer pays the entire premium
  3. Members share in the cost of the premium Correct answer.
  4. The government subsidizes the premium

Explanation

A contributory plan requires covered members to pay part of the premium, with the employer or sponsor paying the balance. Non-contributory plans are funded entirely by the sponsor.

Question 50Group Accident & Sickness Insurance

Which of the following is normally treated as an eligible dependent for group accident and sickness coverage?

  1. A roommate sharing rent with the member
  2. The member's spouse and dependent children Correct answer.
  3. A business partner of the member
  4. A cousin living in another province

Explanation

Group plans commonly define eligible dependents as a spouse or common-law partner and dependent children within specified age or student limits. Unrelated individuals generally do not qualify.