Chapter 7 - Health Insurance Policy Provisions, Clauses, and Riders

Question 1

A policy that is written on a noncancellable basis with the right to renew guaranteed

Answer 1

Guaranteed renewable

Question 2

Inability of the insured to perform any occupation for which the insured is reasonably suited by education, training or experience

Answer 2

Total disability

Question 3

What provisions must insurers include in individual health insurance policies

Answer 3

All the standard provisions established under the NAIC’s Uniform Individual Accident and Sickness Policy Provision Law

Question 4

What are the mandatory grace periods for all accident and health insurance policies?

Answer 4

• 7 days for weekly premium policies (industrial policies)
• 10 days for monthly premium policies
• 31 days for all other modes

Question 5

Whose duties are a notice of claim and proof of loss?

Answer 5

The insured’s

Question 6

Whose duties are claims forms and the time of payment of claim?

Answer 6

The insurer’s

Question 7

In Florida, what is the time of payment of claims?

Answer 7

45 days after first received

Question 8

What happens in response to a misstatement of age on an insurance application?

Answer 8

Benefits are adjusted per the current premium

Question 9

What two areas does the insuring clause define?

Answer 9

• The scope of coverage
• The rights and duties of each party of the contract

Question 10

What are the six main mandatory provisions of all health insurance policies?

Answer 10

• Entire contract
• Grace period
• Reinstatement
• Change of beneficiary
• Claims
• Legal action

Question 11

Coinsurance vs deductible vs copay

Answer 11

Coinsurance is a percentage of cost for the sharing of expenses

Deductible is a specified amount that must be paid first by the insured before benefits kick in

Copay is a set dollar amount paid per visit

Question 12

What three renewability options apply to individual health insurance?

Answer 12

• Non-cancellable: a type of insurance policy that cannot be canceled, and the insurance company cannot change the policy terms or reduce the benefits
• Cancellable: an insurance policy that can be terminated at any time by either the insurance company or the policyholder
• Guaranteed renewable: an insurance policy that allows the policyholder to renew their coverage as long as they pay their premiums on time

Question 13

What is the equivalent of the life insurance incontestability clause and how does it work?

Answer 13

Time Limit on Certain Defenses.

Insurers have two years to contest misrepresentations. After two years, liars win.

Age, gender and identity are excluded

Question 14

How long does the insured have to provide notice of claims?

Answer 14

20 days

Question 15

How quickly must insurers send out claim forms after receiving notice of claim?

Answer 15

“Promptly”

Question 16

How quickly must the insured provide proof of loss?

Answer 16

Within 90 days of the loss

Question 17

What health policy provision states to whom the claim benefits must be paid?

Answer 17

Payment of claims

Question 18

What health policy provision prevents the insured from bringing a lawsuit against the insurance company for at least 60 days after proof of loss is provided?

Answer 18

Legal actions

Question 19

What health policy provision describes the insured’s right to cancel coverage?

Answer 19

Renewability provision

Question 20

According to the Time Limit on Certain Defenses provision in health insurance policies, when can an insurer contest fraudulent misstatements on a health insurance application?

Answer 20

Any time while the policy is in force

Question 21

What is the name of the act by the insured to voluntarily give up insurance?

Answer 21

Cancellation

Question 22

Who decides which optional provisions would be included in a health policy?

Answer 22

The insurance company

Question 23

What are usual/reasonable and customary charges based on?

Answer 23

Average charge for a given procedure in the specific geographic area

Question 24

A waiver of premium provision may be included with what type of health insurance policies?

Answer 24

Disability income

Question 25

What is a probationary period in group health insurance?

Answer 25

The period of time that must lapse before an employee is eligible for group health coverage

Question 26

Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses?

Answer 26

Stop-loss limit

Question 27

What may insurers change on a guaranteed renewable health insurance policy?

Answer 27

Rates by class

On a guaranteed renewable health insurance policy, the insurer may increase premiums on a class basis only and not on an individual policy

Question 28

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss?

Answer 28

Legal actions

Question 29

The relation of earnings to insurance provision allows the insurance company to limit the insured’s benefits to the insured’s average income over the last

Answer 29

24 months

Question 30

Which provision states that the insurance company must pay Medical Expense claims immediately?

Answer 30

Time Payment of Claims

Question 31

If the insured notifies the agent 12 days after the loss but the agent doesn’t notify the insurer until 60 days after the loss, what happens?

Answer 31

The insurer is considered to be notified since the notification to agent equals notification to the insurer

Question 32

While a claim is pending, how often may an insurance company require an independent medical examination?

Answer 32

As often as reasonably required

Question 33

Can the Uniform Individual Accident and Sickness Policy Provisions Law be reworded by the insurer?

Answer 33

Yes, provided that the changes would not be detrimental to the policyholder or beneficiary

Question 34

An insurer would like to add a provision to its individual health insurance policies. This particular provision would be consistent with uniform provisions. What happens next?

Answer 34

The provision would be allowed, as long as it is approved by the state

Question 35

Is physical examination and autopsy mandatory for health insurance policies?

Answer 35

Yes

Question 36

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?

Answer 36

45 days

Question 37

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is

Answer 37

Monthly

Question 38

Accidental injury vs sickness coverage after the reinstatement of a policy

Answer 38

Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date