Chapter 14 - Individual Health and Disability Insurance Policy Provisions

Question 1

Describe the rights of renewability for Noncancelable Policies.

Answer 1

Continuous coverage with guaranteed renewal until a specific age or for a specified number of years, with no increase in premium.

Question 2

Describe the rights of renewability for Guaranteed Renewable Policies.

Answer 2

Right to renew is guaranteed, but premiums can be adjusted by the insurance company on a class basis.

Question 3

Describe the rights of renewability for Conditionally Renewable Policies.

Answer 3

Continuous-term policies that the insurance company may terminate if certain conditions stated in the contract are met.

Question 4

Describe the rights of renewability for Renewable Only at the Insurance Company’s Option.

Answer 4

Renewal is not guaranteed to the insured.

Question 5

Describe the rights of renewability for Single-Term Policies.

Answer 5

Policies that do not contain a renewable provision.

Question 6

Describe the rights of renewability for Cancelable Policies.

Answer 6

The insurance company can terminate the policy at its discretion.

Question 7

Please provide a sentence-long description of the Uniform provisions by NAIC regarding the Uniformity in insurance contracts.

Answer 7

12 required provisions and several optional provisions to create uniformity.

Question 8

List out the 12 required provisions that the NAIC advanced to create uniformity in insurance contracts.

Answer 8

1. Entire Contract
2. Time limit on certain defenses
3. Grace period
4. Reinstatement
5. Notice of Claim
6. Claim Forms
7. Proof of Loss
8. Time of Payment of Claims
9. Payment of Claims
10. Physical Examination and Autopsy
11. Legal Action
12. Change of Beneficiary

Question 9

Regarding the Required Provisions of uniformity in insurance contracts, please define the Entire Contract provision.

Answer 9

The policy, endorsements, and attached papers constitute the entire contract.

Question 10

Regarding the Required Provisions of uniformity in insurance contracts, please define the Time Limit on Certain Defenses provision.

Answer 10

The policy is incontestable after two years except for fraud.

Question 11

Regarding the Required Provisions of uniformity in insurance contracts, please define the Grace Period provision.

Answer 11

A period wherein the insured may pay past-due premiums and continue coverage.

Question 12

Regarding the Required Provisions of uniformity in insurance contracts, please define the Reinstatement provision.

Answer 12

A lapsed policy may be reinstated.

Question 13

Regarding the Required Provisions of uniformity in insurance contracts, please define the Notice of Claim provision.

Answer 13

The policyholder must notify the insurance company of a claim within 20 days after the occurrence.

Question 14

Regarding the Required Provisions of uniformity in insurance contracts, please define the Claim Forms provision.

Answer 14

The insurance company will furnish claim forms to the insured.

Question 15

Regarding the Required Provisions of uniformity in insurance contracts, please define the Proof of Loss provision.

Answer 15

The insured must furnish written proof of loss within 90 days from the date of loss.

Question 16

Regarding the Required Provisions of uniformity in insurance contracts, please define the Time of Payment of Claims provision.

Answer 16

Benefits are payable by the insurance company immediately upon proof of loss.

Question 17

Regarding the Required Provisions of uniformity in insurance contracts, please define the Payment of Claims provision.

Answer 17

Indemnities are payable to the insured.

Question 18

Regarding the Required Provisions of uniformity in insurance contracts, please define the Physical Examination and Autopsy provision.

Answer 18

The insurance company can require physical examinations and autopsies.

Question 19

Regarding the Required Provisions of uniformity in insurance contracts, please define the Legal Action provision.

Answer 19

No legal action can be brought to recover on a contract for 60 days following the submission of proof of loss.

Question 20

Regarding the Required Provisions of uniformity in insurance contracts, please define the Change of Beneficiary provision.

Answer 20

The beneficiary may be changed unless designated as irrevocable.

Question 21

List the 10 Optional Provisions for uniformity in insurance contracts.

Answer 21

1. Change of Occupation
2. Misstatement of Age
3. Other Insurance with Insurer
4. Insurance with Other Insurers
5. Relation of Earnings to Insurance
6. Unpaid Premiums
7. Cancellation Clause
8. Conformity with State Statutes
9. Illegal Occupation
10. Intoxicants and Narcotics

Question 22

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Change of Occupation provision.

Answer 22

The insurance company can adjust the premium to compensate for changes in occupation.

Question 23

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Misstatement of Age provision.

Answer 23

Benefits are adjusted appropriately for misstatements of age.

Question 24

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Other Insurance with Insurer provision.

Answer 24

The insured may not recover more than the maximum loss (indemnity).

Question 25

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Insurance with Other Insurers provision.

Answer 25

Duplicate coverage with other companies will not yield payment of benefits in excess of maximum (coordination of benefits).

Question 26

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Relation of Earnings to Insurance provision.

Answer 26

Benefits under two or more policies will not exceed average earned income for a two-year period.

Question 27

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Unpaid Premiums provision.

Answer 27

The insurance company may deduct unpaid premiums from a claim if the premium is due.

Question 28

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Cancellation Clause provision.

Answer 28

The company has the right to cancel a policy at any time with five days’ notice.

Question 29

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Conformity with State Statutes provision.

Answer 29

The policy must meet minimum requirements of state statutes.

Question 30

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Illegal Occupation provision.

Answer 30

The insurance company is not liable for claims arising from engaging in an illegal occupation.

Question 31

Regarding the Optional Provisions for uniformity in insurance contracts, please define the optional Intoxicants and Narcotics provision.

Answer 31

Relieves the insurance company of liability if the insured is under the influence of alcohol or narcotics.

Question 32

Regarding the uniformity in insurance contracts, please list the 3 additional disability options along with a brief description of each one.

Answer 32

a. Guaranteed Insurability Option:

As the income of the insured increases, the insured may increase the amount of coverage.

b. Cost-of-Living Adjustment Benefit:

Increases the benefit amount received by the insured each year, based on a preapproved index, typically the Consumer Price Index (CPI).

c. Accidental Death and Dismemberment:

A death benefit is paid to the beneficiaries if the insured dies by accidental means; benefits are paid to the insured for loss of limb or sight.