South Carolina Health Insurance Practice Exam Free - 2026

• A. Yes, because misstatements may be used at any time to void a disability policy
• B. No; after two years from the issue date only fraudulent misstatements in the application may be used to void the policy or deny a claim
• C. Yes, because the policy has been in force less than five years
• D. No; after one year no misstatements of any kind may be used

Correct answer: B. No; after two years from the issue date only fraudulent misstatements in the application may be used to void the policy or deny a claim

Explanation: The required Time Limit on Certain Defenses provision states that after two years from the issue date only fraudulent misstatements in the application may be used to void the policy or deny a claim for loss incurred or disability starting after the two-year period. An unintentional omission is not fraud, so the insurer cannot void the policy. (A) ignores the two-year limit, (C) invents a five-year rule, and (D) uses the wrong period and wrongly bars fraud defenses. See S.C. Code Ann. § 38-71-340(2).

• A. Seven days
• B. Thirty-one days
• C. Ten days
• D. Sixty days

Correct answer: C. Ten days

Explanation: The required Grace Period provision must insert a number not less than seven days for weekly premium policies, ten days for monthly premium policies, and thirty-one days for all other policies. Seven days (A) applies only to weekly premium policies, thirty-one (B) to policies on other than weekly or monthly modes, and sixty (D) is not statutory. See S.C. Code Ann. § 38-71-340(3).

• A. Ten days
• B. Fifteen days
• C. Sixty days
• D. Twenty days

Correct answer: D. Twenty days

Explanation: The Notice of Claim provision requires written notice within twenty days after a covered loss starts or as soon as reasonably possible; it may be given to the company at its home office or to its agent. Fifteen days (B) is the period the insurer has to furnish claim forms, and ten (A) and sixty (C) days are not the notice-of-claim period. See S.C. Code Ann. § 38-71-340(5).

• A. Ninety days
• B. Thirty days
• C. Twenty days
• D. One hundred eighty days

Correct answer: A. Ninety days

Explanation: The Proofs of Loss provision requires written proof within ninety days after the loss (or, for periodic payments, ninety days after the end of each period), and the claim may not be denied for late proof if it was not reasonably possible to furnish it in time, provided proof is given within one year unless the claimant was legally incapacitated. Thirty (B), twenty (C), and one hundred eighty (D) days are not the statutory proof-of-loss period. See S.C. Code Ann. § 38-71-340(7).

• A. Permitted, because Medicare Supplement policies coordinate benefits with each other like group health plans
• B. Permitted if the prospect signs a written statement acknowledging that the coverage will be duplicated
• C. Prohibited, because knowingly selling duplicate Medicare Supplement coverage is an unfair trade practice
• D. Prohibited only if the second policy carries the same plan letter as the policy the prospect intends to keep

Correct answer: C. Prohibited, because knowingly selling duplicate Medicare Supplement coverage is an unfair trade practice

Explanation: Medicare Supplement marketing standards flatly bar knowingly selling a duplicate policy, because the second one cannot pay benefits the first already covers and the consumer simply pays two premiums. Using a different plan letter does not solve the duplication, since the core benefits overlap. A consumer waiver cannot make an unfair trade practice lawful, and producers must obtain a signed statement about existing coverage before completing a sale.

• A. The portion of the Medicare-approved amount that remains after Part B pays its 80 percent share
• B. The amount a beneficiary pays above the standard Part B premium because of higher income
• C. The surcharge added to the Part B premium for each year the beneficiary delayed enrollment
• D. The amount a nonparticipating provider may bill above the Medicare-approved amount

Correct answer: D. The amount a nonparticipating provider may bill above the Medicare-approved amount

Explanation: An excess charge arises when a provider who does not accept Medicare assignment bills more than the Medicare-approved amount, leaving the beneficiary responsible for the difference within legal limits. The Part B coinsurance, the income-related premium adjustment, and the late enrollment penalty are separate cost items unrelated to a provider's billing behavior, and no Medigap plan covers premium surcharges.

• A. They pay a stated percentage of certain cost-sharing items and include an annual out-of-pocket limit, after which they pay covered costs in full for the rest of the year
• B. They pay all Medicare cost-sharing items in full but impose an annual benefit maximum, after which the beneficiary must pay all covered costs personally for the rest of the calendar year
• C. They are high deductible versions of Plans F and G, paying nothing until the beneficiary has met a deductible that is set each year by Medicare
• D. They are Medicare SELECT plans that pay full benefits only when the beneficiary uses network hospitals and providers selected by the insurer

Correct answer: A. They pay a stated percentage of certain cost-sharing items and include an annual out-of-pocket limit, after which they pay covered costs in full for the rest of the year

Explanation: Plans K and L trade lower premiums for partial payment of specified cost-sharing items such as the Part A deductible, skilled nursing facility coinsurance, Part B coinsurance, blood, and hospice coinsurance, balanced by an annual out-of-pocket maximum after which the plan pays covered costs in full for the remainder of the calendar year. The Part A hospital coinsurance and the 365 additional lifetime hospital days are still paid in full, and the plans carry an out-of-pocket limit rather than a benefit maximum. High deductible Plans F and G and Medicare SELECT are separate, distinct Medigap structures.

• A. It is mandatory outpatient prescription drug coverage administered directly by Medicare, and a beneficiary is enrolled automatically upon becoming entitled to Part A
• B. It is voluntary outpatient prescription drug coverage offered through private plans, and a beneficiary who delays enrollment without creditable drug coverage may owe a permanent late enrollment penalty
• C. It is voluntary outpatient prescription drug coverage offered through private plans, and a beneficiary who delays enrollment without creditable drug coverage pays a temporary penalty that ends after twelve months
• D. It is prescription drug coverage that is built into every standardized Medicare Supplement plan letter, with the premium deducted from the beneficiary's Social Security benefits

Correct answer: B. It is voluntary outpatient prescription drug coverage offered through private plans, and a beneficiary who delays enrollment without creditable drug coverage may owe a permanent late enrollment penalty

Explanation: Part D is optional and delivered by private stand-alone drug plans or by Medicare Advantage plans that include drug coverage, with a lasting premium penalty designed to discourage waiting until drugs are needed. Enrollment is not automatic with Part A, the late enrollment penalty lasts for as long as the beneficiary has Part D coverage rather than ending after a year, and Medigap policies sold since Part D began may not include drug coverage.

• A. Confirm that every Medigap plan letter pays custodial care in an assisted living facility once the beneficiary has satisfied a 100-day waiting period
• B. Explain that Plan G covers assisted living in full, but only after Medicare's skilled nursing facility benefit has been exhausted for the benefit period
• C. Explain that Medigap fills gaps in Original Medicare and therefore does not pay for custodial long-term care, which requires a separate long-term care policy
• D. Recommend adding a second Medigap policy with a different plan letter so the two policies together will cover the assisted living costs

Correct answer: C. Explain that Medigap fills gaps in Original Medicare and therefore does not pay for custodial long-term care, which requires a separate long-term care policy

Explanation: Medigap benefits are derivative: they can only supplement what Medicare itself covers, and Medicare does not pay for ongoing custodial care, so no plan letter fills that need. Plan G is a comprehensive supplement but is still bound by that limit. There is no custodial care waiting period that unlocks the benefit, and buying a second Medigap policy would be prohibited duplication.

• A. Collecting a full year of premium in advance so the rate is locked in permanently, and explaining that the free look period is waived once the first premium payment has been accepted by the issuing insurer
• B. Describing the policy as endorsed by Medicare to build confidence, and documenting that the applicant understands the policy will replace rather than duplicate Original Medicare benefits
• C. Comparing plans only on premium, since standardized benefits make everything else irrelevant, and relying on the applicant's verbal assurance that no other Medigap coverage is in force
• D. Determining and documenting whether the applicant already has coverage that would duplicate the policy, and honoring the required free look period during which the policy may be returned for a full premium refund

Correct answer: D. Determining and documenting whether the applicant already has coverage that would duplicate the policy, and honoring the required free look period during which the policy may be returned for a full premium refund

Explanation: Suitability rules require a producer to ask about and record existing coverage to avoid duplication, and Medigap policies carry a free look, commonly 30 days, letting the buyer return the policy for a full refund. Implying government endorsement is a misrepresentation, since Medigap is private insurance. Prepaying premium does not freeze rates, and responsible comparison also considers the insurer's rating method, rate history, and service.

• A. Deductible only as part of itemized medical expenses, and only to the extent total qualifying medical costs exceed the applicable percentage of adjusted gross income
• B. Fully deductible from gross income regardless of the taxpayer's other circumstances
• C. Never deductible under any circumstances
• D. Deductible only if the policy also includes disability income coverage

Correct answer: A. Deductible only as part of itemized medical expenses, and only to the extent total qualifying medical costs exceed the applicable percentage of adjusted gross income

Explanation: An individual buyer generally gets no above-the-line deduction and must itemize, clearing an AGI floor before any benefit appears, which means most taxpayers deduct nothing. A blanket full deduction is available in narrower situations such as the self-employed health insurance deduction, not to individuals generally. Bundling disability coverage does not create deductibility, and saying it is never deductible ignores the itemized route.

• A. Fully taxable as ordinary income
• B. Received free of federal income tax
• C. Taxable only to the extent they exceed her prior salary
• D. Taxable at capital gains rates

Correct answer: B. Received free of federal income tax

Explanation: The controlling rule is who paid with what dollars: because the premiums were not deducted, the benefits come back tax free. Full taxation applies where an employer paid the premium and took a deduction. Disability benefits are ordinary in character, not capital gains, and there is no rule taxing only the portion above prior salary.