17 Free Massachusetts Life & Health Practice Questions: Accident & Health Types of Policies (2026)

Answer: C

Business overhead expense (BOE) insurance is designed to cover the ongoing operating expenses of a business when the owner becomes disabled and cannot work. These expenses include rent, utilities, employee salaries, and other fixed costs necessary to keep the business running. It does not cover the owner's lost salary (that is covered by individual disability income), nor does it fund a buyout (that is business disability buyout insurance). While it may indirectly support hiring help, BOE specifically covers overhead, not replacement wages.

Answer: D

AD&D policies only cover losses that result directly from accidents, not from illness or disease. A loss due to a heart attack or other medical condition is explicitly excluded because it is not accidental in nature. Options A, C, and D describe accidental events that would generally be covered unless other specific exclusions (like intoxication or illegal activity) apply. Workers' compensation coverage does not exclude AD&D benefits; both may be payable for the same incident.

Answer: B

COBRA continuation coverage allows qualified beneficiaries to maintain group health coverage after a qualifying event. A reduction in hours that results in loss of coverage is a qualifying event for the employee. The maximum coverage period for this event is 18 months. Twenty-nine months may be available if the beneficiary is disabled and meets Social Security disability requirements. Thirty-six months applies to other qualifying events such as the death of the covered employee, divorce, or loss of dependent status. Coverage is not indefinite; it is limited to the maximum period unless extended due to disability.

Answer: B

Worksite employer-sponsored insurance refers to voluntary or core benefits offered at the workplace, typically through payroll deduction, and is a form of group insurance. While employees may elect to participate, the coverage is made available through the employer's sponsorship and often involves group rates and administrative support. It is not an individually purchased product without employer involvement (A), nor is it a government program (C). While AD&D may be offered at the worksite, worksite programs are not limited to that coverage and often include medical, disability, and other benefits (making C incorrect).

Answer: A

In a key employee disability income policy, the business is both the policy owner and the beneficiary. When the business pays the premium, any disability benefit received is considered taxable income to the business because the premium was deducted as a business expense. The benefit is not paid to the disabled employee, so options B and D are incorrect. The benefit is not tax-free to the business, making A incorrect.

Answer: B

A Health Savings Account (HSA) is specifically designed to be paired with a high-deductible health plan (HDHP). Contributions to the HSA are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses. HRAs are employer-funded only, and FSAs are not paired exclusively with HDHPs and have use-it-or-lose-it rules. Traditional indemnity plans do not inherently include HSAs.

Answer: D

Benefits under a long-term care insurance policy are typically triggered when the insured is unable to perform a specified number of activities of daily living (ADLs), such as bathing, dressing, or eating (usually two or more), or suffers from severe cognitive impairment requiring substantial supervision. Hospitalization, income loss, or terminal illness are not standard benefit triggers for long-term care insurance.

Answer: D

The elimination period in disability income insurance is the waiting period after the onset of disability before benefits begin, functioning like a time-based deductible. Option A describes the benefit period, not the elimination period. Option B incorrectly ties the elimination period to hospitalization, which is not a standard requirement. Option C confuses the elimination period with a pre-existing condition waiting period, which is separate and not a standard feature of disability income policies.

Answer: D

Medigap plans C, D, F, G, M, and N include a foreign travel emergency benefit that pays 80% of emergency care costs outside the U.S. after a $250 deductible, with a lifetime limit of $50,000. This is a standardized provision in those plans. Options A, B, and C are incorrect: Medigap does not cover preventive care or prescription drugs, and the skilled nursing facility benefit applies only within the U.S. The foreign travel benefit is the only one addressing international coverage.

Answer: C

A key distinguishing feature of an HSA is that funds roll over indefinitely from year to year, allowing accumulation over time. In contrast, FSAs are generally 'use-it-or-lose-it' accounts, though some plans may offer a limited carryover (up to $610 for 2023) or grace period. HSAs are available to individuals with high-deductible health plans (HDHPs), not exclusively to Medicare enrollees (making A incorrect). HSAs do not require referrals to use funds (making B incorrect). HSAs can be funded by both employer and employee contributions (making C incorrect).

Answer: C

A residual disability benefit provides a partial payment when the insured can still work but suffers a loss of income (e.g., 20% or more) due to the disability. It is not limited to total disability (making A incorrect). It applies to disabilities from both illness and accident (making B incorrect). While some policies may offer inflation protection riders, the residual benefit itself is not an inflation adjustment (making D incorrect).

Answer: A

Health FSAs operate under a use-it-or-lose-it rule: if an employee terminates employment, they can only submit claims for expenses incurred while employed. Any unused funds remaining at termination are forfeited to the employer. Option B is incorrect because refunds are not allowed. Option C is wrong because claims must be for expenses incurred during employment. Option D describes an HSA or limited FSA rollover, which does not apply to standard health FSAs upon termination.

Answer: A

Hospital indemnity policies pay a fixed daily amount for each day of hospitalization, regardless of actual expenses. Here, $200 per day for 5 days equals $1,000. Option B is the daily benefit only. Option C incorrectly calculates 2.5 days. Option D assumes 6 days. The benefit is triggered by confinement and paid per day.

Answer: D

Many group disability income policies include a conversion privilege that allows departing employees to convert their group coverage to an individual policy without providing evidence of insurability, although the premium rate will typically be higher than the group rate. This is a standard feature to prevent gaps in coverage. Option A is incorrect because continuation is not indefinite and may not be at the same rate. Option B is too absolute; conversion rights often exist. Option C is incorrect as portability applies upon termination for any reason, not just retirement.

Answer: D

In a key employee disability income policy (also called key person disability insurance), the business is both the owner and beneficiary of the policy. The purpose is to provide the business with funds to offset financial losses resulting from the key employee's absence, such as lost profits or recruitment and training costs. The disabled employee does not receive the benefits directly; the business does. Options A, B, and D describe benefits payable under individual disability income, family protection policies, or business disability buyout arrangements, respectively.

Answer: B

B is correct because the waiver of premium provision in long-term care insurance typically becomes effective after the elimination period has been satisfied and the insured is receiving covered benefits, meaning the insurer waives further premium payments while benefits are being paid. A is incorrect because the waiver is not limited to skilled nursing care; it applies to any level of care that triggers benefit eligibility. C is incorrect because the waiver does not apply immediately upon onset; it requires satisfaction of the elimination period and benefit eligibility. D is incorrect because waiver of premium provisions are commonly available in both individual and group long-term care policies.

Answer: B

The elimination period is a waiting period after the onset of disability before benefits begin. A 90-day elimination period starting January 1 ends on March 31 (Jan 31 + Feb 28/29 + Mar 31 = 90 days). Benefits are typically paid in arrears, meaning the first payment covers the first month after the elimination period ends (April) and is paid at the end of that month, April 30. Options A and C incorrectly suggest payment at the start of a month, and D incorrectly uses May 30, which would be the end of the second month after the elimination period.