Chapter 6: Health Insurance Policy Provisions

Question 1

Was on the test

Time Limit on Certain Defenses

Answer 1

states the policy is incontestable after it has been in force a certain period of time, usually two years. This is similar to the incontestable clause. Unlike life policies, a fraudulent statement on a health insurance application is grounds for contest at any time, unless the policy is guaranteed renewable. There is a TIME LIMIT for which you must DEFEND yourself. This applies to the contestable period, preexisting conditions, and new claims. If you file a claim that you broke your leg yesterday, and the insurance company sees you moving a grand piano up 5 flights of stairs, you will probably have to DEFEND your claim. However, at some point, it is expected your leg will heal.

Question 2

Was on the test

Reinstatement

Answer 2

putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required. It Permits the policyowner to reinstate a policy that has lapsed- as long as the policyowner can provide proof of insurability and pays all back premiums, outstanding loans, and interest. Most states allow reinstatement up to 3 years after a policy has lapsed. However, some states are 5- 7 years. To reinstate any policy, you need: A reinstatement application, statement of good health, all back premiums.

Question 3

Was on Test

Notice of Claim

Answer 3

policy provision that describes the policy owner’s obligation to provide notification of a claim to the insurer within a reasonable period of time. Typically, the period is 20 days after the occurrence or a commencement of the loss, or as soon thereafter as is reasonably possible

Question 4

Was on test

Change of Occupation provision

Answer 4

allows the insurer to reduce the maximum benefit payable under the policy if the insured switches to a more hazardous occupation or to reduce the premium rate charged if the insured changes to a less hazardous occupation.

Question 5

Which health policy clause specifies the amount of benefits to be paid?

Answer 5

Insuring

Question 6

Which type of renewability best describes a disability income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class?

Answer 6

Conditionally renewable
Optionally renewable
**Guaranteed renewable

Question 7

Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?

Answer 7

Entire contract

Question 8

According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid?

Answer 8

31 days

Question 9

T applied for a disability income policy and has a history of back injuries. The insurer issued the policy with a statement that excludes coverage for back injuries. This statement is called a(n)

Answer 9

Impairment rider. A statement on a policy that excludes coverage for specific injuries or conditions

Question 10

Which of the following health insurance policy provisions specifies the health care services a policy will provide?

Answer 10

Insuring clause. Identifies the specific type of health care services that are covered by that policy

Question 11

Which accident and health policy provision addresses preexisting conditions?

Answer 11

Time limit on certain defenses. This provision limits the period during which an insurer can deny a claim on the basis of an preexisting condition

Question 12

Periodic health claim payments MUST be made at least:

Answer 12

monthly

Question 13

Which of the following is NOT included in the policy face?

Answer 13

Exclusions

Question 14

When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and insurer is called the:

Answer 14

Entire contract provision. States that the application and policy contain all the provisions and constitute the entire contract

Question 15

The sections of an insurance contract which limit coverage are called:

Answer 15

exclusions

Question 16

Which of the following provisions specifies how long a policyowner’s health coverage will remain in effect if the policyowner does not pay the premium when it’s due?

Answer 16

Grace period

Question 17

The provision that defines to whom the insurer will pay benefits to is called:

Answer 17

payment of claims

Question 18

An insured must notify an insurer of a medical claim within ____ days after an accident

Answer 18

20

Question 19

When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?

Answer 19

change of occupation provision

Question 20

An insurer must provide an insured with claim forms within ___ days after receiving notice of a loss.

Answer 20

15

Question 21

The notice of claims provision requires a policyowner to:

Answer 21

notify an insurer of a claim within the specified time

Question 22

What is the initial requirement for an insured to become eligible for benefits under the waiver of premium provision?

Answer 22

insured must be under a physician’s care

Question 23

Under a guaranteed renewable health insurance policy, the insurer

Answer 23

may cancel the policy for nonpayment only

Question 24

When does a probationary period provision become effective in a health insurance contract?

Answer 24

At the policies inception

Question 25

According to the time payment of claims provision, the insurer must pay disability income benefits no less frequently than which of the following options?

Answer 25

Monthly

Question 26

A disability income policy that only the policyowner can terminate and which the rates will never go up in considered to be

Answer 26

Noncancellable

Question 27

Which of these is considered a mandatory provision?

Answer 27

Insurance with other insurers
Change of occupation
**Payment of claims

Question 28

Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?

Answer 28

entire contract

Question 29

An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the grace period provision?

Answer 29

31 days

Question 30

The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the:

Answer 30

insuring clause

Question 31

If an insurance company issues a disability income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best describes this policy is called:

Answer 31

noncancellable. A noncancellable policy is one in which the insurance company cannot cancel and which premiums cannot be increased

Question 32

“A producer does not have the authority to change a policy or waive any of its provisions.” The health provision that best describes this statement is called the

Answer 32

entire contract

Question 33

The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is:

Answer 33

time limit on certain defenses

Question 34

P is a major medical policyowner who is hospitalized as result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?

Answer 34

Claim will be denied and policy terminated
Claim will be partially paid
**Claim will be denied

Question 35

The Legal actions provision of an insurance contract is designed to do all of the following, EXCEPT:

Answer 35

protect the producer

Question 36

G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the intoxicants and narcotics exclusion in G’s policy, who is responsible for paying the medical bills?

Answer 36

the insured

Question 37

T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the change of occupation provision, which of the following actions may her insurance company take?

Answer 37

increase her policy’s coverage amount

Question 38

An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period beings on the date that the:

Answer 38

insurer dates the policy

Question 39

T files a claim on his accident and health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim’s validity. The provision that limits the time period during which the company may dispute a claim’s validity is called:

Answer 39

Time limit on certain defenses

Question 40

J, an accidental death and dismemberment (AD&D) Policy holder, dies after injuries sustained in an accident. J’s age, as stated on the application five years ago, was found to be understated by ten years. Which of the following actions will the insurance company take?

Answer 40

The insurer will adjust the benefit to what the premiums paid would have purchased at the insured’s actual age

Question 41

Which of the following BEST describes a short term medical expense policy?

Answer 41

nonrenewable

Question 42

An insurance company receives E’s application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?

Answer 42

Consideration clause

Question 43

M’s insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force??

Answer 43

45 days

Question 44

What must the policyowner provide to the insurer for validation that a loss has occurred?

Answer 44

proof of loss

Question 45

What type of renewability guarantees premium rates and renewability?

Answer 45

noncancellable

Question 46

K has a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered:

Answer 46

guaranteed renewable

Question 47

The insured and insurance company will share the cost of covered losses under which health policy feature?

Answer 47

payment of claims provision

Question 48

The _____ clause identifies which losses resulting from an accident or sickness are insured by the policy.

Answer 48

insuring

Question 49

Which of the following statements BEST describes what the legal actions provision of an accident and health policy requires?

Answer 49

AN insured must wait at least 60 days after proof of loss has been submitted before a lawsuit can be filed

Question 50

T sends proof of loss to her insurer for an acceptable medical expense claim under her individual health insurance policy. Upon receipt, the insurer must pay the benefits

Answer 50

immediately

Question 51

S is the policyowner of a major medical policy. The premiums are paid monthly and due on the 1st of each month. S fails to make September’s payment and is hospitalized October 15th. When S files the claim for this hospitalization, the insurer will likely

Answer 51

deny the claim

Question 52

Insurers may request a hearing within ____ if their policy is rejected