Chapter 6: Policy Provisions

Question 1

What is NAIC Model Health Insurance Policy Provision?

Answer 1

• National Association of Insurance Commissioners developed a model Uniform Individual Accident and Sickness Policy Provision Law
• There are 12 mandatory provisions required to be in all health insurance laws

Question 2

1. Entire Contract

Answer 2

Protects Policy owner in the following ways:

1. Includes actual policy and application
2. Nothing outside contract can be considered part of the contract
3. No changes will be made/no provisions waived after contract has been issued
4. Changes must be made with the approval of an executive officer

Question 3

2. Time Limit on Certain Defenses

Answer 3

Policy is incontestable after it has been in force for a certain period if time

Unless guaranteed renewable fraud statements can be detested at anytime

Question 4

3. Grace Period

Answer 4

1. Given a number of days after premium due date where premiums have not been paid
2. Unpaid premium may he deducted from reimbursement when a claim is made during grace period
3. Typically 7 days where premiums are paid weekly, 10 days on monthly and 31 days for other policies

Question 5

4. Reinstatement

Answer 5

• Policy that has lapsed may be reinstated

- Reinstatement is usually automatic

Question 6

5. Notice of Claim

Answer 6

• Insurer needs to provide notification of loss within a reasonable period of time
• typically 20 days after loss

Question 7

6. Claim Forms

Answer 7

• Insurance company needs to provide a claim form within 15 days after receiving notice of claim
• If fails to do so, claimant may submit claim in any form

Question 8

7. Proof of Loss

Answer 8

• Insured must give insurance company to show that a loss actually occurred
• 15 days to do so

Question 9

8. Time of Payment of Claims

Answer 9

Provides immediate payment of the claim after the insurer receives notification and proof of loss

Note: If the claim involves disability income payments they must be paid at least monthly

Question 10

9. Payment of Claims

Answer 10

In a health insurance contract specifies how and to whom claim payments are to be made

Question 11

10. Physical Exam and Autopsy

Answer 11

Entitles a company, at its own expense, to make a physical examination of the insured at reasonable intervals during the period if a claim, unless ifs forbidden by state law

Question 12

11. Legal Actions

Answer 12

Insured cannot take legal action against the company in a claim dispute until after 60 days from the time the insured submits proof of loss

• Allows insurer adequate time to research claim

Question 13

12. Change of Beneficiary

Answer 13

• Policyowner may change the beneficiary at any time unless a beneficiary has ben named irrevocable

Question 14

Optional Provisions

Answer 14

There are 11. Companies may use them or not

The other 12 are mandatory

Question 15

Optional: 1. Change of Occupation

Answer 15

Reduce benefit if insured switches to hazardous job

Increase benefit if insured switches to safer job

Question 16

Optional: 2. Misstatement of Age

Answer 16

Allows insurer to adjust the benefit payable if the age of the insured was misstated when application for the policy was made

• if they are actually older then benefits would be reduced

Question 17

Optional 3. Other Insurance with This Insurer

Answer 17

Total amount of coverage to be underwritten by a company for one person is restricted to a specified max amount (to protect insurance company)

Question 18

Optional 4. Insurance with Other Insurer

Answer 18

To avoid overinsurance, expenses incurred will be prorated if the insurance company was not notified of other coverage the insured had

Question 19

Optional: 5. Insurance with Other Insurers

Answer 19

• allows an insurer to pay benefits to the insured on a pro-rata basis when the insurer was not notified of other health coverage

Question 20

Optional: 6. Relation if Earnings to Insurance

Answer 20

Insurers is liable only for the proportionate amount of benefits as the insureds earnings bear to the total benefits under such coverage where loss exceeds monthly earnings of insured

Question 21

Optional: 7. Unpaid Premiums

Answer 21

If there are unpaid premium at the time a claim becomes payable the amount of the premium is to be deducted from the sum payable to the insured

Question 22

Optional: 8. Cancellation

Answer 22

Insurance company has a right to cancel the policy any time with 45 days notice to the insured

Question 23

Optional: 9. Conformity with State Statutes

Answer 23

Any policy provision in conflict with state law is issued a amended to conform with minimum statutory requirements

Question 24

Optional: 10. Illegal Occupation

Answer 24

Specifies that the insurer is not liable for losses attributed to the insureds beings connected with a felony or participation in any illegal occupation

Question 25

Optional: 11. Intoxication and Narcotics

Answer 25

Insurer is not liable for any loss attributed to the insured while intoxicated or under the influence of narcotics

Question 26

Free Look Clause

Answer 26

30 day free look period to see if policy meets insureds needs

Any premium paid is refunded

Question 27

Availability of Coverage

Answer 27

Authorizes insurer to issue group health insurance policies to small employers (2-50 employees) to cover their employees

Question 28

Insuring Clause

Answer 28

Part of the health insurance policy that states the kind if benefits provided and the circumstances which they will be paid

Question 29

Consideration Clause

Answer 29

In health insurance, insurance company exchanges promise to pay benefits for a valid contract that the first premium is paid and the application was fully filled out

Question 30

Conversion Privilege for Dependents

Answer 30

Beginning Oct. 1, 2010 the Affordable Health Care Act mandates that all policies and plans must provide dependent coverage up to age 26

Question 31

Waiver of Premium

Answer 31

In the event that insured becomes completely disabled premiums are waived for a period of time

Question 32

Probationary Period

Answer 32

health insurance contract becomes effective at the inception of the policy

Question 33

Preexisting Conditions

Answer 33

Usually exclude paying benefits for losses due to a preexisting condition

Must be clearly stated in application beforehand