Chapter 6 Review (Health): Health Insurance Policy Provisions

Question 1

The _____ _____ provision in a health an accident policy contract assures the policyowner that no changes will be made to the contract or waive any of the provisions after it has been issued, even if the insurer makes policy changes that affect all policy sales in the future. This, however, does not prevent a mutually agreeable change or modifying the contract after it has been issued.

Answer 1

Entire Contract

Question 2

This provision limits the time during which the insurance company may challenge the validity of an insurance claim based on a _____made on the insured’s application.

Answer 2

The Time Limit on Certain Defenses

misstatement

Question 3

This is similar to the incontestable clause in a life insurance policy. Unlike life policies, a _____ statement on a health insurance application is grounds for contest at any time, unless the policy is _____ _____.

Answer 3

fraudulent

guaranteed renewable

Question 4

There is a _____ _____ for which you must _____ yourself. This applies to the contestable period (application), preexisting conditions, and new claims (conditions that must be met while a claim is pending.

Answer 4

TIME LIMIT

DEFEND

Question 5

Depending on the state, the minimum grace periods typically specified are _____ days for policies with weekly premium payments (i.e., industrial policies), _____ days for policies with premiums payable on a monthly basis, and _____ days for policies payable on an annual basis.

Answer 5

7

10

31

(remember, 7-10-31)

Question 6

• Reinstatement is automatic if the delinquent premium is accepted by the company or its authorized agent and the company does not require an application for reinstatement.
• If it takes no action on the application for _____ days, the policy is reinstated automatically.
• To protect the company against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least _____ days after the reinstatement date.

Answer 6

45

10

Question 7

To reinstate any policy, you need:

Answer 7

A reinstatement application, statement of good health, all back premiums.

Question 8

• The _____ _____ _____ provision describes the policyowner’s obligation to notify the insurance company of a claim in a reasonable period of time
• Typically, the period is _____ days after the occurrence or a commencement of the loss, or as soon thereafter as is reasonably possible

Answer 8

notice of claim

20 days

Question 9

It is the company’s responsibility to supply a claim form to an insured within _____ days after receiving notice of claim

Answer 9

15

Question 10

After a loss occurs, or after the company becomes liable for periodic payments (e.g., disability income benefits), the claimant has _____ days in which to submit proof of loss.

Answer 10

90 days

Question 11

• This provision provides for immediate payment of the claim after the insurer receives notification and proof of loss.
• If the claim involves disability income payments, they must be paid at least _____ if not at more frequent intervals specified in the policy
• The purpose of the provision is to prevent the insurance company from _____ _____ _____.

Answer 11

time of payment of claims

monthly

delaying claim payments

Question 12

• The _____ _____ _____ provision in a health insurance contract specifies how and to whom claim payments are to be made.
• Payments for loss of life are to be made to the _____ _____.
• If no beneficiary has been named, death proceeds are to be paid to the _____ _____ estate. Claims other than death benefits are to be paid to the _____.

Answer 12

payment of claims

designated beneficiary

deceased insured’s

insured

Question 13

• The insured cannot take legal action against the company in a claim dispute until after _____ days from the time the insured submits proof of loss.
• The _____ ______ provision in a health contract is limited to no more than _____ years.

Answer 13

60 days

legal action

5 years

Question 14

The Legal Action provision provides the insurer adequate time to

Answer 14

research a claim

Question 15

Under this provision, the total amount of coverage to be underwritten by a company for one person is restricted to a specified maximum amount, regardless of the number of policies issued. This provision is designed to protect the insurer by controlling over insurance through its own policies.

Answer 15

Other Insurance with This Insurer

Question 16

In attempting to deal with the potential problem of over insurance, the _____ _____ _____ _____ provision states that benefits payable for expenses incurred will be prorated in cases where the company accepted the risk without being notified of other existing coverage for the same risk.

Answer 16

Insurance with Other Insurer

Question 17

Similar to the previous, the _____ _____ _____ _____ provision allows an insurer to pay benefits to the insured on a pro-rata basis when the insurer was not notified prior to the claim that the insured has other health coverage.

Answer 17

Insurance with Other Insurers

Question 18

If disability income benefits from all disability income policies for the same loss exceed the insured’s monthly earnings at the time of disability, the _____ _____ _____ provision states that the insurer is liable only for that proportionate amount of benefits as the insured’s earnings bear to the total benefits under all such coverage.

Answer 18

relation of earnings (to insurance)

Question 19

• Though prohibited in a number of states, the provision for _____ gives the company the right to cancel the policy at any time with _____ days’ written notice to the insured
• This notice must also be given when the insurer refuses to renew a policy or change the premium rates
• If the cancellation is for nonpayment of premium, the insurer must give _____ days’ written notice to the insured, unless the premiums are due monthly or more frequently
• The _____ provision also allows the insured to cancel the policy any time after the policy’s original term has expired by notifying the insurer in writing

Answer 19

cancellation

45 days

10 days

Question 20

• Accident and Health insurance policies must be issued and approved by the _____.
• If the _____ does not reject the policy within _____ days it is considered approved as is
• Insurers may request a hearing within _____ days if their policy is rejected

Answer 20

commissioner

90 days

20 days

Question 21

The _____ _____ contains a summary of the type of policy and the coverage provided by the policy. It Identifies the insured, the term of the policy (the effective date and termination date), and how the policy can be renewed.

Answer 21

Policy face

Question 22

• This provision gives a specified number of days after an insurance policy’s issue date during which coverage is not afforded for _____.
• A _____ _____ provision in a health insurance contract becomes effective at the inception of the policy

Answer 22

sickness

Probationary Period

Question 23

A beneficiary can be either _____ (a person identified by name and relationship), or a _____ _____ (a group of individuals such as the “children of the insured”).

Answer 23

specific

class designation

Question 24

Dependent children must be covered by their parents health insurance plan until a certain age. Coverage may also continue for children who are incapable of earning their own living due to a:

Answer 24

mental or physical disability.

Question 25

Under an this form of assignment, the transfer is complete and irrevocable, and the assignee receives full control over the policy and full rights to its benefits.

Answer 25

Absolute assignment

Question 26

This form of assignment is one in which the policy is assigned to a creditor as security, or collateral, for a debt. If the insured dies (or sometimes becomes totally\permanently disabled), the creditor is entitled to be reimbursed out of the benefit proceeds for the amount owed. The insured’s beneficiary is then entitled to any excess of policy proceeds over the amount due to the creditor.

Answer 26

collateral assignment

Question 27

Limits the way a court can review a claim denial and makes it difficult for the court to conduct a fair review of the claim. Some states have enacted laws that prohibit _____ provision because they are designed to protect the insurance company.

Answer 27

Discretionary

Question 28

• A _____ provision may provide a fixed amount for childbirth or a benefit based upon a specified multiple of the daily hospital room benefit
• Frequently, the _____ benefit is available only as an added benefit for an additional premium

Answer 28

maternity

Question 29

States that have ______ _____ _____ _____ provision laws require a replacing policy to pay for ongoing claims under the policy it replaces

Answer 29

“no loss no gain”

Question 30

Help safeguard against the financial burden of long-term care. In addition to that, it provides an Help safeguard against the financial burden of long-term care. In addition to that, it provides an _____ _____ _____ _____ _____ to help pay for costs involved with long-term care.

Answer 30

Long Term Care Rider

acceleration of the death benefit

Question 31

Medical expense and disability income policies usually exclude paying benefits for losses due to _____ _____ pertaining to illness, disease, or other physical impairments

Such exclusions are subject to the “time limit on certain defenses” provision. Any preexisting condition that the insured has disclosed clearly in the application usually is not excluded or, if it is, the condition is named specifically in an _____ _____ _____.

Answer 31

preexisting conditions

excluding waiver or rider

Question 32

When an insurance company does not cover a loss due to a specific condition the insured has. This is usually called an _____ rider.

Answer 32

impairment

Question 33

• May be terminated by either the insured or the insurer
• The _____ provision in a _____ policy allows the insurer to cancel or terminate the policy at anytime
• _____ policies also allow the insurer to increase premiums
• This is the ONLY type of _____ where the insurer can cancel at any time. This type of _____ is illegal in most states.

Answer 33

Cancelable Policies

renewability

Question 34

The renewability provision in an _____ _____ policy gives the insurer the option to terminate the policy on a date specified in the contract.

Answer 34

optionally renewable

Question 35

• A _____ _____ policy allows an insurer to terminate the coverage but only in the event of one or more conditions stated in the contract
• They typically are related to the insured reaching a certain age or losing gainful employment
• A _____ _____ policy can increase premiums at _____ _____ _____.

Answer 35

conditionally renewable

time of renewal

Question 36

• The renewal provision in a _____ _____ policy specifies that the policy must be renewed (as long as premiums are paid) until the insured reaches a specified age, such as _____ or _____.
• _____ _____ policies normally have increasing premiums
• If rates are increased on a ______ ______ policy, the must be increased for an _____ _____ _____

Answer 36

guaranteed renewable

60 or 65

entire rate class

Question 37

This is the common renewability for Medicare Supplement and Long-term care policies.

Answer 37

Guaranteed renewable

Question 38

_____ policies are normally associated with _____ _____ _____ _____. These are policies that are for established policy lengths of a year or less and are considered temporary.

Answer 38

Nonrenewable

short-term health insurance

Question 39

• A _____ policy cannot be cancelled nor can its premium rates be increased under any circumstances (other than reaching a specific age or non-payment of premiums)
• _____ provisions are most commonly found in disability income policies. They are rarely used in medical expense policies
• _____ policies may not be changed in anyway by the insurer (sometimes up to a specified age), so long as the premiums are paid.

Answer 39

noncancelable

Question 40

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

Answer 40

Claim will be denied.

(If a person is injured while committing an illegal act, health insurance will not cover the expense of the injury.)