17 Free Nevada Life & Health Practice Questions: Health Policy Provisions, Underwriting and Social Insurance (2026)
How to Use This Policy Provisions and Social Insurance Set
This is the heaviest block of the Accident and Health-General section and of LanePrep's Nevada course: 34 of the 144 scored items, or 34 of the section's 50. The outline splits it into policy provisions, clauses and riders (15), social insurance (6), other insurance concepts (5) and field underwriting procedures (8).
These 17 questions come from LanePrep's Nevada Life & Health quiz bank (chapter 6). They cover claim arithmetic, the provisions a health policy carries, Social Security and Medicare rules, and the tax and managed-care concepts that go with them.
Do the arithmetic in order. Two questions are claim calculations with a deductible, a coinsurance split and, in one of them, a stop-loss limit. Apply the steps in that order, one at a time, and the answer is on the page.
Practice Questions 1-6: Reinstatement, Earnings Limits, the Social Security Wait and Claim Math
These questions cover when a lapsed policy comes back if the insurer says nothing, the provision that stops an insured from profiting from disability, the waiting period before Social Security disability benefits begin, a coinsurance calculation, subrogation and the waiver of premium rider.
Question 1 (Chapter 6)
A policyowner applies for reinstatement of a lapsed health policy on October 1st. The insurer receives the application and the premium but does not notify the applicant of a decision. On what date is the policy automatically deemed reinstated?
- A) October 11th
- B) November 15th
- C) October 31st
- D) December 1st
Show answer & explanation
Answer: B
According to the Reinstatement provision (NRS 689A.080), if an insurer requires an application for reinstatement and does not notify the insured of disapproval within 45 days of the application date, the policy is automatically reinstated.
Question 2 (Chapter 6)
Which provision prevents an insured from 'profiting' from a disability by limiting the total amount of disability income benefits from all insurers to the insured's actual earnings?
- A) Coordination of Benefits
- B) Other Insurance in This Insurer
- C) Coinsurance Clause
- D) Relation of Earnings to Insurance
Show answer & explanation
Answer: D
The optional Relation of Earnings to Insurance provision (NRS 689A.240) adjusts the loss-of-time (disability income) benefit when the total of such benefits under all valid coverage would exceed a stated percentage of the insured's earned income, which is the greater of the insured's monthly earnings when the disability began and the average monthly earnings for the two years immediately before it. This keeps the insured from collecting more in disability benefits than he or she was earning. Coordination of Benefits (NRS 689A.230) deals with duplicate expense-incurred benefits, and Other Insurance in This Insurer (NRS 689A.220) deals with overlapping policies issued by the same insurer.
Question 3 (Chapter 6)
In the context of Social Security Disability benefits, what is the 'waiting period' before an individual can begin receiving benefit payments?
- A) 5 months
- B) 30 days
- C) 90 days
- D) 12 months
Show answer & explanation
Answer: A
Social Security Disability Insurance (SSDI) requires a 5-month waiting period. Benefits begin with the 6th full month of disability.
Question 4 (Chapter 6)
An insured has a Major Medical policy with a $500 deductible and an 80/20 coinsurance clause. If the insured incurs $2,500 in covered medical expenses, how much will the INSURER pay?
- A) $1,600
- B) $500
- C) $2,000
- D) $2,500
Show answer & explanation
Answer: A
First, subtract the deductible: $2,500 - $500 = $2,000. Then apply the coinsurance: the insurer pays 80% of the remaining $2,000, which is $1,600. The insured pays the $500 deductible plus $400 (20% of $2,000).
Question 5 (Chapter 6)
An insured is injured in a car accident caused by a negligent third party. The insurer pays the medical bills but then seeks reimbursement from the negligent driver's insurance company. This process is called:
- A) Subrogation
- B) Coordination of Benefits
- C) Indemnity
- D) Assignment of Benefits
Show answer & explanation
Answer: A
Subrogation is the legal process by which an insurer, after paying a loss, seeks to recover the amount of that loss from a third party who is legally responsible for it.
Question 6 (Chapter 6)
An insured's disability income policy includes a 'Waiver of Premium' rider. The insured becomes totally disabled on February 1st and remains disabled for seven months. The insured continued to pay premiums during the first six months of disability. Which of the following occurs?
- A) The insurer will refund the premiums paid during the first six months and waive future premiums while the disability continues.
- B) The insurer will only waive premiums starting from the seventh month forward.
- C) The rider only applies if the insured is hospitalized.
- D) The insured must pay all premiums until the end of the year, then receive a tax credit.
Show answer & explanation
Answer: A
A Waiver of Premium rider typically requires a waiting period (usually 90 days or 6 months). Once the waiting period is met, the insurer waives future premiums and retroactively refunds the premiums paid during the waiting period.
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Practice Questions 7-12: Disability Definitions, Key Person Tax, Riders, the Entire Contract and HSAs
Here you will see how Social Security defines disability, the tax treatment of key person disability, the impairment rider, the change-of-occupation provision, who may change a health policy and what happens when HSA funds are spent on a boat.
Question 7 (Chapter 6)
To qualify for Social Security Disability Income (SSDI) benefits, a worker must meet a very strict definition of disability. Which of the following best describes this requirement?
- A) The inability to engage in any substantial gainful activity due to a physical or mental impairment expected to last at least 12 months or result in death.
- B) The inability to perform the duties of one's own occupation for at least 6 months.
- C) A 50% loss of income due to a work-related injury.
- D) Any injury that qualifies the worker for state Workers' Compensation.
Show answer & explanation
Answer: A
Social Security defines disability as the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.
Question 8 (Chapter 6)
A business owner purchases a 'Key Person Disability' policy on a vital employee. The business pays the premiums. Which of the following is true regarding the tax treatment of this policy?
- A) Premiums are not tax-deductible; benefits are received tax-free.
- B) Premiums are tax-deductible; benefits are taxable.
- C) Both premiums and benefits are tax-deductible.
- D) The employee must pay taxes on the premiums paid by the employer.
Show answer & explanation
Answer: A
For Key Person Disability insurance, the premiums are a non-deductible business expense, but the benefits are received by the business tax-free.
Question 9 (Chapter 6)
An applicant for health insurance has a history of severe back pain. The insurer issues the policy but attaches a rider that specifically excludes any coverage for 'disorders of the spine.' This is an example of:
- A) A Guaranteed Insurability Rider
- B) A Waiver of Premium Rider
- C) A Payor Rider
- D) An Impairment Rider
Show answer & explanation
Answer: D
An Impairment Rider (or Exclusion Rider) is attached to a policy to exclude coverage for a specific pre-existing condition. This allows the insurer to issue the policy to a high-risk applicant rather than rejecting them entirely.
Question 10 (Chapter 6)
An insured has a disability income policy that includes the 'Change of Occupation' optional provision. The insured leaves their job as a high-voltage linesman to become a librarian. If the insured notifies the insurer of this change, what action is the insurer required to take?
- A) The insurer must increase the monthly benefit amount for the same premium.
- B) The insurer must cancel the policy and issue a new one.
- C) The insurer must reduce the premium rate and return the excess pro-rata unearned premium.
- D) The insurer is not required to do anything as long as the premium is paid.
Show answer & explanation
Answer: C
Under the optional Change of Occupation provision (NRS 689A.200), if the insured changes to an occupation the insurer classifies as less hazardous than the one stated in the policy, the insurer, on receipt of proof of the change, reduces the premium rate accordingly and returns the excess pro rata unearned premium from the date of the change of occupation or from the policy anniversary date immediately preceding receipt of the proof, whichever is more recent.
Question 11 (Chapter 6)
A health insurance policy is issued to a policyowner. Two weeks later, the policyowner wants to change the 'Grace Period' provision to 60 days. According to the 'Entire Contract' provision, who has the authority to make this change?
- A) The producer who sold the policy
- B) The policyowner, provided they pay an additional fee
- C) An executive officer of the insurance company
- D) The Nevada Insurance Commissioner only
Show answer & explanation
Answer: C
The 'Entire Contract' provision (NRS 689A.050) states that no change in the policy is valid until approved by an executive officer of the insurer and unless that approval is endorsed on or attached to the policy. No agent has authority to change the policy or waive any of its provisions, so neither the producer nor the policyowner alone can change the Grace Period.
Question 12 (Chapter 6)
A 45-year-old individual has a Health Savings Account (HSA). They withdraw $5,000 from the HSA to pay for a new boat. What are the tax consequences of this distribution?
- A) The $5,000 is tax-free because it is a return of basis.
- B) The $5,000 is subject to income tax plus a 20% penalty.
- C) The $5,000 is subject to income tax only.
- D) The $5,000 is subject to income tax plus a 10% penalty.
Show answer & explanation
Answer: B
Distributions from an HSA used for non-qualified expenses (like a boat) are subject to ordinary income tax plus a 20% penalty. The penalty is waived if the account holder is age 65 or older, disabled, or deceased.
Practice Questions 13-17: Part D Penalties, Utilization Review, Stop-Loss, the Entire Contract and HSA Eligibility
The last five questions cover the late enrollment penalty for Medicare Part D, review types in managed care, a stop-loss calculation, the entire contract provision again and who may open a Health Savings Account.
Question 13 (Chapter 6)
A person is eligible for Medicare Part A and Part B but delayed enrollment in Part D (Prescription Drugs) for 24 months after their Initial Enrollment Period ended, despite not having creditable coverage. What is the consequence?
- A) They are permanently barred from enrolling in Part D.
- B) They must pay a flat $500 fine to the Social Security Administration.
- C) They must pay a lifetime late enrollment penalty of 1% for every full month they were eligible but not enrolled.
- D) There is no penalty as long as they are currently healthy.
Show answer & explanation
Answer: C
Medicare Part D imposes a late enrollment penalty if an individual goes 63 days or more without creditable prescription drug coverage after their initial enrollment period. The penalty is 1% of the 'base beneficiary premium' for every month they were without coverage, added to their monthly premium for as long as they have Part D.
Question 14 (Chapter 6)
A patient is currently hospitalized, and a representative from the insurance company contacts the hospital to monitor the stay and ensure that the treatment plan is progressing efficiently so the patient can be discharged on schedule. This managed care tool is called:
- A) Prospective Review
- B) Concurrent Review
- C) Retrospective Review
- D) Second Surgical Opinion
Show answer & explanation
Answer: B
Concurrent review takes place while the treatment is happening (during the hospital stay). Prospective review (pre-certification) happens before, and retrospective review happens after treatment.
Question 15 (Chapter 6)
An insured has a Major Medical policy with a $1,000 deductible, 80/20 coinsurance, and a $5,000 stop-loss limit. If the insured incurs $31,000 in covered medical expenses, what is the maximum the insured will pay out-of-pocket?
- A) $6,000
- B) $1,000
- C) $5,000
- D) $7,000
Show answer & explanation
Answer: A
The stop-loss limit usually applies to the coinsurance amount. The insured pays the $1,000 deductible first. Then, they pay 20% of the remaining $30,000 ($6,000). However, since the stop-loss is $5,000, their coinsurance is capped at $5,000. Total out-of-pocket = $1,000 (deductible) + $5,000 (stop-loss) = $6,000.
Question 16 (Chapter 6)
A policyowner wants to change a provision in his existing health insurance policy. According to the mandatory 'Entire Contract' provision, who is the only person authorized to make changes to the policy?
- A) The producer who sold the policy
- B) The policyowner, provided they notify the insurer in writing
- C) An executive officer of the insurance company
- D) The Nevada Insurance Commissioner
Show answer & explanation
Answer: C
The 'Entire Contract' provision states that only an executive officer of the insurer has the authority to change the policy. Producers do not have the authority to waive or change any policy provisions.
Question 17 (Chapter 6)
To be eligible to open and contribute to a Health Savings Account (HSA), an individual must be covered by what type of health plan?
- A) A Health Maintenance Organization (HMO)
- B) Medicare Part B
- C) A High Deductible Health Plan (HDHP)
- D) A standard PPO with a $250 deductible
Show answer & explanation
Answer: C
HSAs are only available to individuals enrolled in a High Deductible Health Plan (HDHP) that meets specific IRS requirements for minimum deductibles and maximum out-of-pocket limits.
The Mistakes That Cost Marks
Applying the cost-sharing terms out of order. Work through a claim in sequence: the deductible first, then the coinsurance split on what is left, then the stop-loss cap on the insured's share (questions 4 and 15).
Thinking an agent can change the policy. Under the entire contract provision no change is valid until approved by an executive officer of the insurer, and no agent has authority to change the policy or waive its provisions (questions 11 and 16).
Misreading Social Security. The disability waiting period is five months, with benefits starting in the sixth full month. The definition is an inability to engage in any substantial gainful activity because of an impairment expected to last at least 12 months or to result in death. That is far stricter than an own-occupation test (questions 3 and 7).
Missing the Part D penalty. Going 63 days or more without creditable drug coverage after the initial enrollment period earns a late enrollment penalty of 1% of the base premium for each full month, added to the monthly premium for as long as the person has Part D (question 13).
Mixing up HSA rules. Only someone covered by a high deductible health plan can contribute. Money withdrawn for a non-qualified expense is taxed as income plus a 20% penalty, unless the holder is 65 or older, disabled or deceased (questions 12 and 17).
Confusing the three kinds of review. Prospective review happens before treatment, concurrent review during a hospital stay and retrospective review afterward (question 14).
Forgetting the waiver of premium refund. After the waiting period a waiver of premium rider waives future premiums and refunds the premiums paid during the wait (question 6).
Missing what the optional provisions do. The change-of-occupation provision lowers the premium and returns the excess unearned premium when the insured moves to a less hazardous job (question 10), and relation of earnings keeps total disability benefits in line with earnings (question 2).
Learning generic numbers instead of Nevada's. Nevada's individual health policy provisions set a time limit on certain defenses of 3 years (NRS 689A.060); a grace period of at least 7, 10 or 31 days for weekly, monthly or other premiums (NRS 689A.070); written proof of loss within 90 days (NRS 689A.110); claim payment immediately on due written proof (NRS 689A.120); and a 10-day right to examine and return the policy (NRS 689A.170).
Your Next Step
Mark the ones you missed, then take the state-law block with Nevada health insurance law. For the rest of the course, start from the free Nevada Life & Health practice questions page, and you can open the free course preview to hear the material instead of reading it.
Item counts and weights come from Pearson VUE's Nevada Insurance Content Outlines. Read October 2026.
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