Ch 13 Life Claims

Question 1

claims administration

Answer 1

process of evaluating each submitted claim, deciding whether claim is eligible, informing individual who submitted claim of decision, authorizing payment of eligible claim

Question 2

claims department

Answer 2

responsible for evaluating and paying claims

Question 3

misstatement of age/gender provision

Answer 3

if discovered after death: amount payable adjusted to amount premiums paid would have purchased at correct age/sex according to premium rates at that time
if found before death: option to pay premium adjustment rather than adjust face amount. if overpaid, issue refund.

Question 4

contestable period

Answer 4

stated period under which insurer has right to void contract and deny claim, usually 2 years from date of issue.
Can contest validity of contract after contestable period if fraudulent misrepresentation.

Question 5

during lifetime of insured

Answer 5

phrase makes policy contestable forever if person dies during stated contestable period, no matter when claim is submitted to insurer.

Question 6

exclusions to coverage

Answer 6

Insurer pays no benefit if death is result of activity excluded, will pay greater of premiums paid or cash surrender value. determine if claim payable, riders or basic policy
examples: aviation, avocation, travel

Question 7

suicide exclusion

Answer 7

Protect against anti-selection. 2 years following date policy issued. If policy lapses and reinstated, still in effect from original issue date. In Canada exclusion period begins again w/ reinstated date.

Question 8

waiver

Answer 8

act of intentionally or knowingly relinquishing or abandoning a known right, claim or privilege, either expressed or implied. Failing to act upon information it had when it originally underwrote a case can cause surrender of right or privilege to contest on that basis

Question 9

express waivers

Answer 9

oral or written. Clear statements right is being given up.
ex. Insurer notifies insured has not lapsed policy for nonpayment even though had right to do so.

Question 10

implied waivers

Answer 10

Created by conduct of waiving party that clearly indicates a right will not be enforced.
ex. insurer accepts late premium after grace period, waives right to lapse policy

Question 11

waiver by silence

Answer 11

created when there is a duty to speak
ex. learns of facts showing insured is no longer disabled but continues to pay disability benefits, cannot later recoup benefits paid.

Question 12

estoppel

Answer 12

if by your actions, words, or silence, another person has relied on or taken action that he would not have otherwise taken, to his detriment, your defense is waived and you are prohibited from later defending, denying or rescinding your original course of action.

Question 13

natural beneficiary

Answer 13

spouse/child

Question 14

non-natural beneficiary

Answer 14

trust/company/estate

Question 15

interpleader

Answer 15

allows company to pay the policy proceeds to a court and ask court to determine proper recipient
ex. divorce

Question 16

explainable disappearance

Answer 16

result of specific peril that can reasonably account for disappearance, can be presumed dead
ex. plane crash

Question 17

unexplainable disappearance

Answer 17

need sufficient proof, 5-7 yrs before legally presumed dead, petition court for order presuming insured’s death.

Question 18

Temporary Insurance Agreement

Answer 18

provides temporary insurance on PI should death occur before policy is issued and delivered. takes precedence over policy terms if conflict.
subject to conditions:
- coverage is temporary
- when coverage becomes effective
- conditions that must be met for coverage to become effective
- any limitations, such as amount
- when coverage will end

Question 19

binding premium receipt

Answer 19

temporary coverage that becomes effective from time applicant receives receipt and remains in effect until earliest of following occurrences:
1. Insurer issues policy
2. insurer declines application
3. Insurer terminates or suspends coverage under the receipt
4. After specified length of time expires, 45-60 days

Question 20

conditional premium receipts

Answer 20

specify certain conditions that must be met before temporary insurance coverage provided by receipt becomes effective

Question 21

approval premium receipt

Answer 21

temporary coverage only when insurer approves PI as standard or better risk, If PI dies before application is approved, receipt provides no coverage. Rarely used by US

Question 22

conditional premium receipts

Answer 22

specify certain conditions that must be met before temporary insurance coverage provided by receipt becomes effective.
2 types: approval premium receipt and insurability premium receipt

Question 23

misrepresentation

Answer 23

untrue statement of fact on an application that is relevant to insurer’s evaluation of risk presented by PI

Question 24

material mispresentation

Answer 24

untrue statement that affects decision on the case. can be medical or financial. material if:
1. charged an increased premium for added risk
2. excluded coverage for added risk
3. reduced amount of coverage
4. declined to issue a policy

Question 25

elements required for misrepresentation

Answer 25

1. applicant or PI failed to disclose or misrepresented a fact
2. fact was w/in person’s knowledge at time misrepresentation was made
3. fact was material, or relevant, to insurer’s acceptance of the risk (health, occupation/avocation, habits, traffic violations, other insurance apps denied or rated)

Question 26

knowledge of agent

Answer 26

if agent has knowledge of facts about a PI, the insurer is considered to have that knowledge. If agent and PI engage in collusion, not imputed to insurer

Question 27

collusion

Answer 27

agreement between 2 or more people to defraud another person of his rights

Question 28

rescission

Answer 28

remedy provided by law to an insurer that discovers it has issued a policy based on material misrepresentation

Question 29

live rescission

Answer 29

grounds to rescind during insured’s lifetime

Question 30

policy reformation

Answer 30

practice of making a change to a policy contract, terms, or benefit due to information previously unknown at policy issue that has a meaningful impact to the policy
ex. misstatement of age

Question 31

fraudulent misrepresentation

Answer 31

misrepresentation made with intent & result of inducing the other party to enter into a contract. higher level of proof needed

Question 32

red flags for fraudulent mispresentation

Answer 32

1. requesting amount of coverage slightly less than amount of coverage that would require PI to undergo exam or other requirements
2. discrepancies between signature on app and other documents
3. answers to app questions appear to have been altered
4. Signs of speculation, PI requesting unusually large amounts of coverage based on income or amount inconsistent w/ the potential financial loss

Question 33

claim fraud

Answer 33

action by which a person intentionally uses false info in an unfair or unlawful attempt to collect benefits under an insurance policy

Question 34

International claims

Answer 34

-procedures for registration of death in other countries not as stringent
-death certificate or forms may be in different language
-parties attesting to death not always medical professionals or govt employees

Question 35

claims payable additions

Answer 35

face amount
paid up addl insurance
accidental death benefits
excess premium paid in advance
policy dividends declared/not yet paid
interest on delayed claims
loan interest paid in advance

Question 36

claims payable deductions

Answer 36

premiums due but unpaid
policy loans
interest on loans
accelerated death benefits paid

Question 37

escheat

Answer 37

common law doctrine