Life License Qualification Program (LLQP) Practice Exam

The Coordination of Benefits provision does what?

1. Allows an insured covered by two health plans to make a profit on a covered loss

2. Prevents an insured covered by two health plans from making a profit on a covered loss

3. Allows an insurer to defer paying a claim for a work-related injury until Workers' Compensation Benefits have expired

4. Prevents an insured from changing insurers during a claim for a covered loss

The correct answer is: Prevents an insured covered by two health plans from making a profit on a covered loss

The Coordination of Benefits provision is designed to ensure that when an individual is covered by multiple health insurance plans, the total benefits received do not exceed the amount of the loss incurred. This provision prevents individuals from profiting from their insurance coverage. In practice, when a person has coverage under more than one health insurance plan, Coordination of Benefits determines which plan is primary (the one that pays benefits first) and which is secondary (the one that pays benefits next, if needed). This prevents situations where an insured person could claim a total that is greater than the actual expenses incurred due to a loss, effectively stopping individuals from receiving more than the cost of their medical services or claims. By ensuring that claims are paid in an orderly manner and that the total coverage does not exceed the incurred loss, it safeguards the insurance system from potential abuse where policyholders might seek to profit from their health plans. This is a critical consumer protection measure within the health insurance landscape.