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Health Field Underwriting Procedures: Practice Questions

20 free practice questions with explanations. Pick an answer for each, then check your score.

Exam weight: 8 of 100 scored questions on the Life and Health general knowledge exam. Updated 2026-11-04.

Quick study guide

Field underwriting is the agent's part of the risk decision: taking an accurate application, collecting the first premium properly, explaining how the insurer will check the applicant's health, and delivering the policy with any changes explained. The health version adds HIPAA, the Affordable Care Act, and products such as disability income and long-term care.

Which health products are underwritten?

Product	Medical underwriting?	What sets the premium
ACA-compliant individual major medical	No. Guaranteed issue during enrollment periods; preexisting conditions covered from day one	Only age (up to 3 to 1), location, tobacco use (up to 1.5 to 1), individual or family coverage, plus the plan's metal level
Disability income	Yes. Health, occupation, income and other coverage	Risk class; may be rated or issued with an exclusion rider
Individual long-term care	Yes. Health questions, sometimes a medical exam or interview	Age and health at issue
Specified disease, short-term and other limited plans	Often. Can decline or charge more for preexisting conditions	Insurer's own rating

Sources of insurability information

The application is the starting point, so every answer must be recorded as given, and the applicant signs. Underwriters add an attending physician statement (from the applicant's own doctor), a paramedical exam (by a nurse or technician, paid for by the insurer), the MIB check (coded information that member insurers reported from earlier applications; an alert, never a reason to decline by itself), and consumer reports. Under the Fair Credit Reporting Act, an investigative consumer report needs written notice within three days of ordering it, and any adverse decision based on a report triggers a notice naming the reporting agency.

HIPAA's Privacy Rule covers health plans (including long-term care insurers), health care clearinghouses and providers who bill electronically. Doctors need the applicant's signed authorization before releasing records for underwriting, and a health plan may refuse to enroll an applicant who won't sign one.

Premium, receipt and delivery

Premium collected with the application earns a conditional receipt: coverage dates from the application or exam if the applicant qualifies exactly as applied for. A rated policy or an exclusion rider is a counteroffer that the applicant must accept at delivery. With no premium collected, coverage starts only when the policy is delivered and paid for, usually with a statement of good health.

Replacement and contract law

Never cancel the old policy until the new one is in force, and warn that new preexisting-condition and waiting periods may apply. Applicants' statements are representations, not warranties: only a material misstatement matters, and after the policy's time limit on certain defenses only fraud does. Health contracts are aleatory, adhesion, unilateral and conditional, just like life contracts.

Practice questions

An applicant for a disability income policy mentions physical therapy for a back injury last year, then asks the agent to leave it off the application because "it's healed." What should the agent do?
1. A.Leave it off the application but mention it to the underwriter in a separate email.
2. B.Leave it off, since a healed condition is not relevant to disability coverage.
3. C.Record it and explain that leaving it off could cost the applicant a claim or the policy.
4. D.Record it only if the applicant agrees to take a paramedical exam first.
Show answer
Answer: C. The application must reflect what the applicant discloses, and a recent back injury is plainly material to a disability insurer. Texas Department of Insurance guidance warns that if a company learns an applicant left something out or gave wrong information, it could cancel the policy or refuse to pay a claim. Telling the underwriter off the record doesn't fix a false application, and the duty to disclose doesn't depend on an exam.
Source: Texas content outline IX.A; Texas Department of Insurance: Long-term care insurance guide (answer health questions truthfully)
To close a sale, an agent tells an applicant he will waive the 90-day elimination period printed in her disability policy. Under the Entire Contract; Changes provision, the agent's promise is:
1. A.Binding only if the agent writes the promise down and signs it.
2. B.Valid for the first policy year, then the printed provision applies.
3. C.Binding, because the agent is the insurer's legal representative.
4. D.Not valid, since only an executive officer can approve a change, by endorsement.
Show answer
Answer: D. The NAIC Uniform Individual Accident and Sickness Policy Provision Law says the policy, endorsements and attached papers are the entire contract. No change is valid unless approved by an executive officer and endorsed on or attached to the policy, and no agent has authority to change the policy or waive its provisions. A signed note from the agent doesn't meet that requirement.
Source: Texas content outline IX.F; NAIC Uniform Individual Accident and Sickness Policy Provision Law (#180), entire contract provision
An underwriter's MIB check on a long-term care applicant returns a code for a heart condition that the applicant did not mention. What is the proper use of that MIB information?
1. A.Decline the application at once, because MIB codes are proof of the condition.
2. B.Treat it as an alert and investigate further, such as ordering medical records.
3. C.Ignore it, because MIB information may only be used for life insurance.
4. D.Report the applicant to the state insurance department for fraud.
Show answer
Answer: B. MIB is a membership organization that keeps coded underwriting information reported by its member insurers, used for life, health, disability income, critical illness and long-term care underwriting. MIB says members can't make underwriting decisions based on a consumer file without further investigation, so the code is a prompt to check, not proof. MIB is a specialty consumer reporting agency under the FCRA and gives consumers a free copy of their file once a year on request.
Source: Texas content outline IX.B; MIB: Facts about MIB; MIB: Request your MIB consumer file
A disability income underwriter wants details about the diagnosis, treatment and prognosis of a condition the applicant disclosed. The report most likely ordered from the applicant's own doctor is:
1. A.An attending physician statement
2. B.An inspection report
3. C.An MIB consumer file
4. D.A paramedical examination
Show answer
Answer: A. An attending physician statement (APS) comes from a doctor who has treated the applicant and describes the condition, treatment and outlook. A paramedical exam is a new exam done by a nurse or technician at the insurer's request, an inspection report covers lifestyle and finances from a reporting agency, and an MIB file contains only coded information reported by insurers.
Source: Texas content outline IX.B
A disability insurer tells an applicant in writing that it will order an investigative consumer report. He then sends a written request asking what the investigation will cover. Under the Fair Credit Reporting Act, the insurer must:
1. A.Refuse, because investigative reports are confidential until underwriting ends.
2. B.Disclose the nature and scope of the investigation in writing within five days.
3. C.Cancel the report, because his request withdraws his consent.
4. D.Let him choose which neighbors and associates the investigator may contact.
Show answer
Answer: B. The FCRA requires written notice within three days of first requesting an investigative consumer report, including a statement of the consumer's right to ask for more information. On a written request, the user must give a complete and accurate written disclosure of the nature and scope of the investigation within five days of receiving the request (or of requesting the report, if later). The law doesn't let him pick the sources or cancel the report by asking.
Source: Texas content outline IX.B; 15 U.S.C. § 1681d (investigative consumer reports)
A long-term care insurer declines an application partly because of information in a consumer report. Along with naming the reporting agency, the adverse action notice must tell the applicant about her right to:
1. A.Sue the reporting agency for the premiums she would have paid.
2. B.Make the insurer pay for an independent medical exam of her choice.
3. C.Have the insurer reconsider the application at a reduced premium.
4. D.Get a free copy of the report within 60 days and dispute errors with the agency.
Show answer
Answer: D. Under the FCRA, a notice of adverse action based on a consumer report must name the reporting agency, say that the agency didn't make the decision, and explain the consumer's right to a free copy of the report within 60 days and to dispute inaccurate or incomplete information with the agency. Nothing in the law requires the insurer to offer a cheaper policy or pay for an exam.
Source: Texas content outline IX.B; 15 U.S.C. § 1681m (adverse action notices); 15 U.S.C. § 1681a (adverse action includes denial of insurance)
Which of these is a covered entity that must follow the HIPAA Privacy Rule?
1. A.An insurer that sells only disability income policies
2. B.An employer reviewing sick-leave records it keeps in its role as employer
3. C.A life insurer underwriting a term life application
4. D.A doctor's office that submits insurance claims electronically
Show answer
Answer: D. Covered entities are health plans, health care clearinghouses, and health care providers who transmit health information electronically in standard transactions, such as electronic claims. Health plans include long-term care and Medicare supplement insurers but exclude policies that provide only excepted benefits such as disability income coverage, and protected health information excludes employment records an employer holds as employer. Life insurance is not a health plan.
Source: Texas content outline IX.B; 45 CFR § 160.103 (covered entity, health plan and protected health information); 42 U.S.C. § 300gg-91(c) (excepted benefits)
An applicant for an individual long-term care policy refuses to sign the HIPAA authorization that lets the insurer obtain her medical records for underwriting. Under the Privacy Rule, the insurer:
1. A.Must ask the state insurance department to order the records released.
2. B.Must process the application anyway, because HIPAA bans conditioning coverage on an authorization.
3. C.May decline to enroll her, since a health plan may require one for underwriting.
4. D.May get the records directly from her doctors without her permission.
Show answer
Answer: C. The Privacy Rule generally bars conditioning treatment or enrollment on an authorization, but it makes an exception: a health plan, which includes a long-term care insurer, may condition enrollment on an authorization requested before enrollment for its eligibility, underwriting or risk-rating decisions (psychotherapy notes excepted). Without an authorization, providers generally can't release her records for underwriting. She can revoke an authorization in writing later, subject to the insurer's right to contest the policy.
Source: Texas content outline IX.B; 45 CFR § 164.508 (authorizations, conditioning and revocation); 45 CFR § 160.103 (long-term care issuers are health plans)
An applicant pays the first premium for a disability income policy with his application and gets a conditional receipt. A week after his paramedical exam, before the policy is issued, he is injured in a car accident. Underwriting later finds he qualified exactly as applied for. What generally happens?
1. A.The insurer refunds the premium and closes the file without issuing coverage.
2. B.The insurer may issue the policy but excludes the injury as a preexisting condition.
3. C.No benefits are payable, because the policy had not been delivered.
4. D.Coverage dates from the application or exam date, so the claim falls under the policy.
Show answer
Answer: D. A conditional receipt makes coverage effective from the application date or the exam date, typically the later of the two, as long as the applicant is found insurable as applied for. Because he qualified, the claim is handled under the policy's terms, including its elimination period. If he had not qualified as applied for, the premium would be refunded and no coverage would have existed.
Source: Texas content outline IX.C
An applicant pays the first premium with her disability application and receives a conditional receipt. The insurer approves her only with a rider excluding disabilities caused by her left knee. What is the status of her coverage?
1. A.The rider is void, because the conditional receipt locked in the coverage applied for.
2. B.The insurer must issue the coverage applied for and add an extra premium instead.
3. C.The rider policy is a counteroffer; coverage starts only if she accepts it at delivery.
4. D.Coverage with the rider began on the application date, whether or not she agrees to it.
Show answer
Answer: C. The conditional receipt's coverage applies only if she qualifies exactly as applied for. A policy with an exclusion rider (or a higher rate) is a different offer, which she can accept or refuse. The NAIC minimum standards model regulation lets insurers use waivers that exclude named conditions but requires the insured's signed acceptance when the waiver is a condition of issue, unless its full text is on the first page or specification page.
Source: Texas content outline IX.C and IX.E; NAIC Accident and Sickness Insurance Minimum Standards Model Regulation (#171), § 6G (waivers)
An agent takes a long-term care application and the applicant's check for the first premium. What should the agent do next?
1. A.Deposit the check in the agent's own account and pay the insurer after approval.
2. B.Hold the check until the policy is approved, then submit both together.
3. C.Keep the application until the applicant's doctor sends medical records to the agent.
4. D.Send the application and the premium to the insurer promptly, following its procedures.
Show answer
Answer: D. The application and any premium collected belong with the insurer, which can't start underwriting until it has them. An agent who holds or mixes premium with personal funds breaches the fiduciary duty owed to the insurer and the applicant. Medical records go from providers to the insurer, not through the agent, and an incomplete application is returned, which only delays coverage.
Source: Texas content outline IX.D
No premium was collected with a disability income application. The policy is issued, but before the agent can deliver it the applicant is hospitalized with a heart attack. What is the proper course?
1. A.Deliver the policy but backdate the premium receipt to the application date.
2. B.Hold delivery and tell the insurer, since a good-health statement can't be signed.
3. C.Deliver the policy and collect the premium, since underwriting is already complete.
4. D.Deliver the policy and let the free-look period decide whether coverage applies.
Show answer
Answer: B. Without an initial premium, the issued policy is only the insurer's offer, and coverage begins when the premium is paid at delivery, usually with a signed statement that the insured's health hasn't changed since the application. A serious change in health means that statement can't be signed, so the agent refers the case back to the insurer. Backdating a receipt would be misrepresentation, and the free-look period lets an owner return a policy, not start coverage that was never in force.
Source: Texas content outline IX.E
A disability income policy is delivered with an exclusion rider for the insured's right shoulder. How should the agent explain the rider?
1. A.Benefits for every disability are cut in half because of the shoulder.
2. B.Disabilities from the shoulder aren't covered; other disabilities are paid as usual.
3. C.The insurer can cancel the policy if the shoulder condition gets worse.
4. D.The shoulder is covered, but only after a two-year waiting period ends.
Show answer
Answer: B. An exclusion (impairment) rider removes coverage only for the named condition or body part, letting the insurer accept an applicant it might otherwise decline or rate. All other disabilities are covered under the policy's normal terms. The NAIC minimum standards model regulation recognizes waivers that exclude specifically named or described conditions and requires the insured's signed acceptance when one is a condition of issue.
Source: Texas content outline IX.F; NAIC Accident and Sickness Insurance Minimum Standards Model Regulation (#171), § 6G (waivers)
An underwriter decides a disability applicant with well-controlled diabetes is a substandard risk. Which of these underwriting actions changes what the applicant pays rather than what the policy covers?
1. A.Adding an extra premium (a rated policy)
2. B.Shortening the benefit period
3. C.Lengthening the elimination period
4. D.Attaching an exclusion rider for diabetes
Show answer
Answer: A. A rated (rated-up) policy keeps the coverage applied for but charges more than the standard premium for the extra risk. An exclusion rider, a longer elimination period or a shorter benefit period instead change what the policy pays. Whichever the insurer uses, the agent must explain it when the policy is delivered.
Source: Texas content outline IX.F
A 45-year-old buys an ACA-compliant individual major medical plan. Which fact can the insurer use to charge her a higher premium?
1. A.She takes several prescription drugs.
2. B.She uses tobacco daily.
3. C.She is a woman.
4. D.She was treated for breast cancer two years ago.
Show answer
Answer: B. For ACA-compliant individual and small-group plans, premiums can vary only by age (up to 3 to 1 for adults), where the person lives, tobacco use (up to 1.5 to 1) and whether the plan covers one person or a family, plus the plan's metal level. Insurers can't consider health status, medical history or sex, and they must cover preexisting conditions from the day coverage starts.
Source: Texas content outline IX.F; HealthCare.gov: How plans set your premiums; 42 U.S.C. § 300gg (fair health insurance premiums)
A client with diabetes applies for several kinds of coverage. Which application is the insurer generally free to medically underwrite and decline?
1. A.An ACA-compliant family plan that adds her as a dependent
2. B.An ACA-compliant individual major medical plan bought during open enrollment
3. C.An individual disability income policy
4. D.A Marketplace silver plan bought during a special enrollment period
Show answer
Answer: C. The ACA requires health insurers offering individual or group coverage to accept every applicant (within enrollment periods) and bars rating on health. Disability income and stand-alone long-term care are excepted benefits outside those rules, so insurers still look at health history and can decline, rate or exclude. MIB notes that ACA-based health insurance isn't individually underwritten.
Source: Texas content outline IX.A; 42 U.S.C. § 300gg-1 (guaranteed availability of coverage); 45 CFR § 148.220 (excepted benefits include disability income); Texas Department of Insurance: Health care coverage guide; MIB: Request your MIB consumer file
A client wants to replace an individual accident and sickness policy with a new one from another insurer. Which advice reflects the NAIC replacement notice?
1. A.The new insurer must cover every preexisting condition starting on the first day.
2. B.You may skip the health questions because you already have health coverage.
3. C.Keep the old policy until the new one takes effect; preexisting conditions may wait.
4. D.Cancel the old policy now so you don't pay two premiums while you wait for approval.
Show answer
Answer: C. The NAIC model replacement notice warns that preexisting conditions may not be immediately or fully covered under the new policy, so a claim the old policy would pay could be denied or delayed. It also tells the applicant to answer all health questions completely, since omitting material information can lead to denied claims. Cancelling the old policy before the new one is issued and in force risks a gap with no coverage at all.
Source: Texas content outline IX.G; NAIC Accident and Sickness Insurance Minimum Standards Model Regulation (#171), § 9 (replacement notice)
An agent sells an individual long-term care policy that will replace the client's existing long-term care policy with another company. Under the NAIC long-term care model regulation, the replacing insurer must:
1. A.Cancel the existing policy on the client's behalf once the new application is signed.
2. B.Start new preexisting-condition and probationary periods, as with any new policy.
3. C.Get the existing insurer's written consent before it issues the new policy.
4. D.Notify the old insurer within five working days and credit waiting time already served.
Show answer
Answer: D. The NAIC Long-Term Care Insurance Model Regulation requires the replacing insurer to notify the existing insurer in writing within five working days of receiving the application or issuing the policy, whichever is sooner. When long-term care replaces long-term care, the new insurer must waive preexisting-condition and probationary periods to the extent they were already satisfied under the old policy. The applicant also gets a signed replacement notice and a 30-day free look.
Source: Texas content outline IX.G; NAIC Long-Term Care Insurance Model Regulation (#641), §§ 14 and 25
Four years after a disability policy was issued, the insured files a claim. The insurer finds that he innocently understated his blood pressure readings on the application. Under the time limit on certain defenses provision, the insurer generally:
1. A.Can void the policy, because any misstatement on an application is a breach of warranty.
2. B.Can't void the policy or deny the claim for that misstatement, because it wasn't fraudulent.
3. C.Can void the policy only if the misstatement is discovered within ten years.
4. D.Can deny this claim but must keep the policy in force for future claims.
Show answer
Answer: B. Applicants' answers are representations, not warranties. Under the time limit on certain defenses provision, once the stated period has passed, only fraudulent misstatements can be used to void the policy or deny a claim. The NAIC Uniform Provisions model uses three years, and some states, including Texas, use two years from issue. Four years exceeds either.
Source: Texas content outline IX.H.3; NAIC Uniform Individual Accident and Sickness Policy Provision Law (#180), time limit on certain defenses; Texas Department of Insurance: Long-term care insurance guide; Texas Insurance Code § 1201.208 (time limit on certain defenses: two years)
A health policy requires written notice of a claim within 20 days of a loss, or as soon as reasonably possible, before benefits are paid. This requirement illustrates that an insurance contract is:
1. A.Aleatory
2. B.Unilateral
3. C.A contract of adhesion
4. D.Conditional
Show answer
Answer: D. A conditional contract obligates the insurer to pay only if the insured meets certain conditions, such as paying premiums and giving timely notice and proof of loss; the 20-day notice rule comes from the NAIC Uniform Provisions model. Aleatory refers to the unequal, chance-based exchange, unilateral to only the insurer making an enforceable promise, and adhesion to the insurer writing all the terms.
Source: Texas content outline IX.H.4; NAIC Uniform Individual Accident and Sickness Policy Provision Law (#180), notice of claim

Where these questions come from: Texas content outline (Pearson VUE #124401, effective 1 Sep 2026), Life and Health general knowledge, section IX: Field Underwriting Procedures — 8 of 100 scored questions. See how we write questions.