Chapter 10

Question 1

Provisions

Answer 1

All states have adopted the Uniform Individual Accident and Sickness Policy Provisions Law. Wording may be changed, but any variation must be at least as favorable as the original one and no provision may be deleted. No provision may be added to restrict or modify a uniform provision.

Question 2

Mandatory Uniform Provisions

Answer 2

Incontestability - after 2 years.
Grace Period - not less than 7 days for weekly, 10 days for monthly, and 31 days for all other modes.
Reinstatement - 45 days to process. Coverage for accidents is immediately, illness is a few days.
Proof of Loss - must be furnished within 10 days.
Time Payment of Claims
Payment of Claims
Physical Outside and Autopsy
Legal Actions
Change of beneficiary

Question 3

Mandatory Uniform Provisions

Answer 3

These provisions must by law, be in every individual policy.  They are designed to protect the insured's interest. 
Entire Contract
Incontestability
Grace Period
Reinstatement
Notice of Claim
Claim Forms
Proof of Loss
Time of Payment of Claims
Payment of Claims
Physical Exam and Autopsy
Legal Actions 
Change of Beneficiary

Question 4

Entire Contract (Mandatory)

Answer 4

The policy, a copy of the application, any riders constitute the entire contract. Only an executive officer of the insurer, not an agent, can makey changes to the policy. Only with insurer’s written consent. Only the applicant may alter statements.

Question 5

Time Limit on Certain Defenses Incontestability (Mandatory)

Answer 5

No statement or misstatement (except fraud) made in the application at the time of issue whall be used to deny a claim after the policy has been in force for a specified period of time. False statements on the application may bar coverage when material to the risk. In CA, the time limit on certain defenses under individual policies is 2 years.

Question 6

Grace Period (Mandatory)

Answer 6

Not less than 7 days for weekly, 10 days for monthly, 31 days for any other mode.

Question 7

Reinstatement (Mandatory)

Answer 7

Pay past premium amounts. Insurer may also require proof of insurability. If the insurer doesn’t reject the application within 45 days, coverage is automatically reinstated. Accidents immediately, Sickness coverage generally begins 10 days after reinstatement.

Question 8

Notice of Claim (Mandatory)

Answer 8

Insured’s Responsibility, and it must be given in writing and is required within 20 days of loss or as soon as reasonably possible. Notice to agent is the same thing as notice to insurer. If the insured is receiving continuing disability benefits, the insurer can require notice of continuance of claim every 6 months.

Question 9

Claim Forms (Mandatory)

Answer 9

Must be received by the insured within 15 days after notice of claim. If forms are not furnished, the insured may submit written proof of occurrence, character, and extenf of loss.

Question 10

Proof of Loss (Mandatory)

Answer 10

is required within 90 days of loss or in the shortest period of time possible, but not to exceed 1 year unless the insured suffers legal incapacity.

Question 11

Time Payment of Claims (Mandatory)

Answer 11

Paid immediately upon written proof of loss. Loss of time benefits will be paid not lesser than monthly.

Question 12

Payment of Claims (Mandatory)

Answer 12

Death Benefits are paid to the beneficiary, other benefits may be paid directly to the provider of services or the insured.

Question 13

Physical Exam and Autopsy (Mandatory)

Answer 13

Gives the insurer the right to examine the insured at insurer’s expense, where not prohibited by law.

Question 14

Legal Actions (Mandatory)

Answer 14

Insured must wait 60 days, but no later than 3-5 years (state) after proof of loss, before legal action can be brought against the insurer. In California, the period for the pursuit of legal action is 3 years.

Question 15

Change of Beneficiary (Mandatory)

Answer 15

Consent of Beneficiary is not required unless beneficiary is irrevocable. The change becomes effective on owner’s signature date upon the insurer’s recording the change.

Question 16

Optional Uniform Provisions

Answer 16

Change of Occupation - hazardous reprice
Misstatement of Age - reprice to benefit
Other Insurance with this Insurer 
Insurance with other Insurers
Unpaid Premiums 
Conformity with State Statutes 
Illegal Act/Occupation
Intoxicants and Narcotics
Cancellation - 5-31 days, unearned premium returned.

Question 17

Optional Uniform Provisions

Answer 17

These provisions are included at the insurer’s option, however, if used they must conform to this state’s insurance code.

Question 18

Change of Occupation (Optional)

Answer 18

If insured changes to a more hazardous occupation, the benefits will be reduced to that benefit which premiums would have purchased at the more hazardous occupation.
Less Hazardous, he/she may apply for a rate reduction.
If the Insured works at 2 occupations, rates for the most hazardous occupation will be charged.

Question 19

Misstatement of Age (Optional)

Answer 19

Benefits to what premium would have purchase. If the misstatement leads the insurer to provide coverage beyond the age limit, liability is limited to a refund of premiums.

Question 20

Other insurance with this insurer (Optional)

Answer 20

Protects against overinsurance, return of excess premiums.

Question 21

Relations of Earnings to Insurance (Optional)

Answer 21

Loss of time benefits shall not exceed the monthly earnings of an insured at the time the disability commenced or his/her average earnings for the 2 years immediately preceding a disability, whichever is greater. Monthly benefit cannot be reduced to less than $200.00

Question 22

Unpaid Premiums (Optional)

Answer 22

This provision allows an insurer to deduct unpaid premiums from a claim that has occurred during a grace period.

Question 23

Conformity with State Statutes (Optional)

Answer 23

Amended to meet state requirements

Question 24

Cancellation (Optional)

Answer 24

The insurer may cancel with written notice to the insured. Notice of 5-31 days may be required. Unearned premium is returned on a pro rata basis.
The insured may cancel after the initial policy term with written notice to the insurer at any time. Unearned premium when cancelled by the insured is returned on a short rate basis.

Question 25

Other Provisions and Clauses

Answer 25

Free Look
Insuring Clause
Consideration Clause
Preexisting Conditions
Probationary Period
Elimination Waiting Period
Reduction in Coverage
Accumulation
Waiver of Premium
Occupational
Nonoccupational
Accident (Injury)
Sickness
Right to Terminate
First Dollar Coverage
Coordination of Benefits

Question 26

Right to Examine (Free Look)

Answer 26

In California, the free-look period on individual health insurance policies is not less than 10 day or more than 30 days. It is 30 days for LTC and Medicare Supplement Policies.

Question 27

Insuring Clause

Answer 27

States who is covered, by whom, for how much, and for what time period against what peril. Premium or rate calculations are not part of this provision.

Question 28

Considerations Clause

Answer 28

Payment of the first premium and statements in the application are the applicant’s consideration. Insurer consideration is promise to pay within the contract.

Question 29

Preexisting Conditions

Answer 29

Applies to prior conditions which the applicant received (or should have received) medical advice or treatment within a specified period before the effective date of the policy.

Question 30

Probationary Period

Answer 30

Number of days new employee will not have coverage, 7, 30, 60, 90, or 180 days.

Question 31

Elimination (Waiting Period)

Answer 31

Time Deductible. A period of days that must elapse before benefits kick in. The shorter the elimination period, the longer the premium.

Question 32

Waiver of Premium

Answer 32

Premiums are waived by the insurer after a stated time period (usually 3-6 months). Premiums are not paid by the insured until such time he/she has recovered form the disability; then premiums are resumed at the same mode and amount.

Question 33

Accident

Answer 33

Accidental Bodily Injury (Result) - Requires only that the injury be unintended and unforeseen.
Accidental Means (Cause)- requires both the injury and the cause of the injury to be unintended and unforeseen, considered more restrictive.

Question 34

Sickness

Answer 34

A sickness or disease contracted and commencing after the policy has been in force at least 30 days.
A sickness first manifesting itself while the policy is in force.

Question 35

Right to Terminate

Answer 35

If a contract is with a health insurer that negotiates and arranges for alternative rates of payment with the provider, the contract may contain provisions permitting a material contract change by the health insurer if it provides at least 45 business days’ advance notice to the provider. The provider must have the right to terminate the contract prior to implementation of the change.

Question 36

First Dollar Coverage

Answer 36

First dollar coverage in health insurance means that your insurance covers health care expenses without co-payments or deductibles having to be paid first. It pays expenses beginning with the first dollar charged for health care or hospitalization depending on the type of policy purchased.

Question 37

Coordination of Benefits

Answer 37

Mode of payment between insurers.

Question 38

Policy Renewal Provisions

Answer 38

6 Types of Cancellation Provisions
Noncancellable - cannot rise premium frozen
Guaranteed Renewable to age 65, may raise premiums. Must show policy losses
Conditionally Renewable - Right to Drop
Optionally Renewable - policy anniversary. Notice of non renewable due 5-31 days.
Nonrenewable - 10 year plan.
Cancellable - cancel any time. Low premium.

Question 39

Policy Renewal Provisions

Answer 39

Each health or disability income policy must express conditions and provisions for coverage continuation. Effective and termination dates must be expressed in the policy. Insurers may cancel under any of the renewal provisions when premium payments are discontinued.

Question 40

Noncancellable

Answer 40

Guaranteed renewable to age 65 with guaranteed premiums. This is the one most favorable to the insured, because only the owner can terminate the policy and rates never increase. Insurer cannot change plan once issued.
Guaranteed Renewable - renewable without proof of insurability, at insured’s option, to age 65. Premiums however are not guaranteed, and may be change buy by classification only. The renewal provision used in group health conversions.

Question 41

Conditionally Renewable

Answer 41

Policy is renewable unless a termination is given by the insurer or is nonrenweable for speficified conditions that must be stated in the policy when issued.

Question 42

Optionally Renewable

Answer 42

Renewable only at option of insurer (on renewal or anniversary date).

Question 43

Nonrenewable (Period of Time)

Answer 43

cannot be renewed.

Question 44

Cancellable

Answer 44

Insurer or insured may cancel at any time (lowest premium).

Question 45

Cost Containment

Answer 45

Mandatory Second Surgical Opinion - insured must obtain second opinion.
Precertification - submit workup before procedure, explanation to insurer.
Concurrent Review - monitor hospital review. Doesn’t remain longer than necessary.
Ambulatory Outpatient Care - education, family planning, vision, and dental, minor surgery. Eliminates hopital stays which are more expensive.
Managed Health Care - control behavior, control access to providers, with gatekeepers.
Emergency Services - HMO will allow outside areas in life threatening conditions.
Non-Emergency Hospital Preauthorization Admissions
Out of Area Benefits and Services
Medicare - dis-enroll if in HMO

Question 46

Cost Containment in Health Care Delivery

Answer 46

Mandatory Second Surgical Opinion
Precertification
Concurrent Review
Ambulatory Outpatient Care
Managed Health Care
Emergency Services
Non Emergency Hospital pre-authorization admissions
Out of area benefits and services
Medicare
Where to Obtain Services
HMO Restrictions
Provider Credentialing

Question 47

Mandatory Second Surgical Opinion

Answer 47

Failure to do so, will essentially reduce benefits significantly. Non-related to gatekeeper.

Question 48

Precertification

Answer 48

Claim information prior to treatment to know in advance if the procedure is covered and at what rate benefits will be paid.

Question 49

Managed Health Care

Answer 49

Used in Medical Expense Plans attempting to contain costs by controlling behavior of participants. It usually contains the following characteristics:
Controlled access to providers
Comprehensive case management
Preventative Care
Risk Sharing
High quality Care
Does not authorize elective cosmetic surgery.

Question 50

Emergency Services

Answer 50

Obtaining Services in an emergency situation, which includes directives for the ocntact of an HMO before care is received. What to do in the event of an emergency.