Chapter 3 Flashcards
Entire Contract
Policy + signed application + attached riders and amendments; only an executive officer of the company can make changes to policy
Time Limit of Certain Defenses
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
Grace period
7 days for weekly premium policies; 10 days for monthly; 31 days for all other modes
Reinstatement
Accidents will be covered immediately following reinstatement; sickness is covered only after 10 days
Notice of claim
In the event of a loss, notice is required within 20 days of the loss or as soon as reasonably possible
Claims forms
Must be supplied to the insured upon receipt of a claim, usually within 15 days
Proof of Loss
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)
Time of Payment of Claims
Claims must be paid immediately upon written proof of loss
Payment of claims
Specifies to whom claim payments are to be made - paid to insured while they are living, paid to beneficiary if they are deceased
Legal Actions
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
Cancellation
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
Pro Rata Basis
How the premium is refunded when the insurer initiates cancellation
Short Rate Basis
How the premium is refunded when the insured initiates cancellation
Noncancellable
Insured cannot cancel; premium may not be increased beyond what is stated in policy; insured can renew policy for the life of the contract
Guaranteed Renewable
Premium can increase on anniversary date; insured can renew for life of contract; premiums can only be increased on a class basis (not individual)
Conditionally Renewable
Insurer can terminate only at renewal for conditions stated in contract; Premiums can increase
Optionally Renewable
Insurer may cancel for any reason; insurer can only decide not to renew on policy anniversary or premium due date; premiums can increase
Nonrenewable/Period of Time
For individuals who need coverage for a specified period of time; cancels at the end of the term
Coinsurance
Sharing of expenses; the larger the percentage that is paid by the insured, the lower the premium
Probationary Period
Time that must lapse before coverage for specified conditions goes into effect
Elimination period
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
