Chapter 6: Policy Provisions Flashcards
What is NAIC Model Health Insurance Policy Provision?
- 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
- Entire Contract
Protects Policy owner in the following ways:
- Includes actual policy and application
- Nothing outside contract can be considered part of the contract
- No changes will be made/no provisions waived after contract has been issued
- Changes must be made with the approval of an executive officer
- Time Limit on Certain Defenses
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
- Grace Period
- Given a number of days after premium due date where premiums have not been paid
- Unpaid premium may he deducted from reimbursement when a claim is made during grace period
- Typically 7 days where premiums are paid weekly, 10 days on monthly and 31 days for other policies
- Reinstatement
- Policy that has lapsed may be reinstated
- Reinstatement is usually automatic
- Notice of Claim
- Insurer needs to provide notification of loss within a reasonable period of time
- typically 20 days after loss
- Claim Forms
- 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
- Proof of Loss
- Insured must give insurance company to show that a loss actually occurred
- 15 days to do so
- Time of Payment of Claims
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
- Payment of Claims
In a health insurance contract specifies how and to whom claim payments are to be made
- Physical Exam and Autopsy
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
- Legal Actions
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
- Change of Beneficiary
- Policyowner may change the beneficiary at any time unless a beneficiary has ben named irrevocable
Optional Provisions
There are 11. Companies may use them or not
The other 12 are mandatory
Optional: 1. Change of Occupation
Reduce benefit if insured switches to hazardous job
Increase benefit if insured switches to safer job
Optional: 2. Misstatement of Age
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
Optional 3. Other Insurance with This Insurer
Total amount of coverage to be underwritten by a company for one person is restricted to a specified max amount (to protect insurance company)
Optional 4. Insurance with Other Insurer
To avoid overinsurance, expenses incurred will be prorated if the insurance company was not notified of other coverage the insured had
Optional: 5. Insurance with Other Insurers
- allows an insurer to pay benefits to the insured on a pro-rata basis when the insurer was not notified of other health coverage
Optional: 6. Relation if Earnings to Insurance
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
Optional: 7. Unpaid Premiums
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
Optional: 8. Cancellation
Insurance company has a right to cancel the policy any time with 45 days notice to the insured
Optional: 9. Conformity with State Statutes
Any policy provision in conflict with state law is issued a amended to conform with minimum statutory requirements
Optional: 10. Illegal Occupation
Specifies that the insurer is not liable for losses attributed to the insureds beings connected with a felony or participation in any illegal occupation
Optional: 11. Intoxication and Narcotics
Insurer is not liable for any loss attributed to the insured while intoxicated or under the influence of narcotics
Free Look Clause
30 day free look period to see if policy meets insureds needs
Any premium paid is refunded
Availability of Coverage
Authorizes insurer to issue group health insurance policies to small employers (2-50 employees) to cover their employees
Insuring Clause
Part of the health insurance policy that states the kind if benefits provided and the circumstances which they will be paid
Consideration Clause
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
Conversion Privilege for Dependents
Beginning Oct. 1, 2010 the Affordable Health Care Act mandates that all policies and plans must provide dependent coverage up to age 26
Waiver of Premium
In the event that insured becomes completely disabled premiums are waived for a period of time
Probationary Period
health insurance contract becomes effective at the inception of the policy
Preexisting Conditions
Usually exclude paying benefits for losses due to a preexisting condition
Must be clearly stated in application beforehand
