Chapter 3

Question 1

Entire Contract

Answer 1

Policy + signed application + attached riders and amendments; only an executive officer of the company can make changes to policy

Question 2

Time Limit of Certain Defenses

Answer 2

No statement/misstatement (unless fraudulent) in the application can be used to void policy or deny claim after the policy has been in force for 3 years

Question 3

Grace period

Answer 3

7 days for weekly premium policies; 10 days for monthly; 31 days for all other modes

Question 4

Reinstatement

Answer 4

Accidents will be covered immediately following reinstatement; sickness is covered only after 10 days

Question 5

Notice of claim

Answer 5

In the event of a loss, notice is required within 20 days of the loss or as soon as reasonably possible

Question 6

Claims forms

Answer 6

Must be supplied to the insured upon receipt of a claim, usually within 15 days

Question 7

Proof of Loss

Answer 7

Must be submitted by claimant within 90 days of loss or as soon as reasonably possible but MAY NOT exceed a year (unless claimant is not legally competent to comply)

Question 8

Time of Payment of Claims

Answer 8

Claims must be paid immediately upon written proof of loss

Question 9

Payment of claims

Answer 9

Specifies to whom claim payments are to be made - paid to insured while they are living, paid to beneficiary if they are deceased

Question 10

Legal Actions

Answer 10

insured must wait 60 days after proof of loss is filed with the insurer before legal action can be brought against company. time period lasts 3 years

Question 11

Cancellation

Answer 11

Cancellation by either party triggers a refund of unearned premium. Policy may be cancelled with at least 5 days notice if it doesn’t conflict with the minimum notice of cancellation of state statute

Question 12

Pro Rata Basis

Answer 12

How the premium is refunded when the insurer initiates cancellation

Question 13

Short Rate Basis

Answer 13

How the premium is refunded when the insured initiates cancellation

Question 14

Noncancellable

Answer 14

Insured cannot cancel; premium may not be increased beyond what is stated in policy; insured can renew policy for the life of the contract

Question 15

Guaranteed Renewable

Answer 15

Premium can increase on anniversary date; insured can renew for life of contract; premiums can only be increased on a class basis (not individual)

Question 16

Conditionally Renewable

Answer 16

Insurer can terminate only at renewal for conditions stated in contract; Premiums can increase

Question 17

Optionally Renewable

Answer 17

Insurer may cancel for any reason; insurer can only decide not to renew on policy anniversary or premium due date; premiums can increase

Question 18

Nonrenewable/Period of Time

Answer 18

For individuals who need coverage for a specified period of time; cancels at the end of the term

Question 19

Coinsurance

Answer 19

Sharing of expenses; the larger the percentage that is paid by the insured, the lower the premium

Question 20

Probationary Period

Answer 20

Time that must lapse before coverage for specified conditions goes into effect

Question 21

Elimination period

Answer 21

Period that must expire after onset of an illness or occurrence of an accident before benefits will be payable; longer elimination period = lower cost of coverage