Health Policy Provisions, Clauses, and Riders 14%

Question 1

Which law established standard provisions that are to be included in all individual health insurance policies?

Answer 1

The Uniform Individual Accident and Sickness Policy Provisions Law (developed by the National Association of Insurance Commissioners (naic) )

Question 2

What are the purpose of provisions?

Answer 2

To define rights and duties of both insurer and policyholder

Question 3

Which provision states that the health insurance policy, together with a copy of the signed application and attached riders and amendments, constitutes the entire contract?

Answer 3

Entire Contract

Question 4

Which provision prevents lapses of the policy during a period of time after the due date of a premium if payment has not been made (and can be made within that time period)?

Answer 4

Grace Period

Question 5

What are the different Grace Periods in different policies?

Answer 5

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

Question 6

Which policy stipulates under which certain conditions a lapsed policy may be reinstated if failure of premiums paid after grace period?

Answer 6

Reinstatement

Question 7

What provision allows the policy owner to change beneficiary at any time by providing written request to the insurer, unless stated otherwise.

Answer 7

Change of Beneficiary

Question 8

Which beneficiary designation can be changed without consent of the beneficiary?

Answer 8

Revocable

Question 9

Which beneficiary designation needs the beneficiaries written consent for change?

Answer 9

Irrevocable

Question 10

Which provision spells out the insureds duty to provide the insurer with reasonable notice in the event of a loss?

Answer 10

Notice of Claims provisions

Question 11

When should a notice of claim be submitted?

Answer 11

within 20 days of loss or as soon as reasonably possible (notice to agent = notice to insurer)

Question 12

When should a claimant submit proof of loss after a loss occurs?

Answer 12

within 90 days or as soon as reasonably possible, not exceeding one year limit (unless claimant is not legally competent to comply with provision)

Question 13

Which provisions specifies that claims are to be paid immediately upon written proof of loss?

Answer 13

The Time of Payment of Claims

Question 14

What are the different policies dates specified in different policies for payment of claims to be made? Unless claims involve disability incomes

Answer 14

60 days, 45 days, or 30 days

for disability incomes, benefits must be paid not less frequently than monthly

Question 15

Which provision specifies to whom claims payments are to be made?

Answer 15

Payment of Claims

Question 16

To whom will the payments of claims me made to in event of the claimants death? All the steps

Answer 16

Beneficiary, if beneficiary dies, goes to insureds estate, unless stated otherwise to a hospital or doctor who rendered services

Question 17

Which provision, if allowed, gives insurers the right to expedite payments of urgently needed claims funds and pay up to a specified limit in benefits to a relative or individual who is considered to be equitably entitled to payment?

Answer 17

Facility of Payment

Question 18

Which provision gives the insurer the right to examine the insured (at own expense) as often as reasonably necessarily while a claim is pending?

Answer 18

Physical Examination and Autopsy

Question 19

Which provision states that no statement or misstatement (except fraudulent) made in application at time of issue will be used to deny a claim after the policy has been in force for 2 years.

Answer 19

Time limit on certain defenses

similar to incontestability clause (found in life insurance)

Question 20

Which provision limits the time in which a claimant may seek recovery from an insurer under a policy?

Answer 20

Legal Actions

Question 21

What is the time period the insured must wait after proof of loss before legal action can be brought against the company?

Answer 21

60 days but no later than 3 years

Question 22

What would happen to the benefits in a policy if the insured misstated her age or gender at time of application?

Answer 22

Benefits would be adjusted according to what the premium paid would have been purchased at the correct age

Question 23

Which provision allows the insurer to adjust benefits if the insured changes occupation?

Answer 23

Change of Occupation

Question 24

What would happen if insured changes to a more hazardous occupation and also to a less hazardous occupation?

Answer 24

More hazardous occupation- benefits reduced to that which premiums paid would have been in this occupation

Less hazardous occupation_ the insured is entitled for a rate reduction

Question 25

Which provision states that liability will be denied if insured is injured while committing an illegal act or engaged in illegal occupation?

Answer 25

Illegal Occupation

Question 26

Which provision allows the insurance company to limit the insured’s benefits to his/her average income over the last 24 months?

Answer 26

Relation of Earnings to Insurance

Question 27

Which policy is a general statement that identifies the basic agreement between the insurance company and the insured usually on the first page?

Answer 27

Insuring Clause or Insuring Provision

Question 28

What is stated in the Insuring Clause provision?

Answer 28

It identifies the INSURED and the INSURANCE COMPANY and states what kind of loss (peril) is COVERED

Question 29

Which provision allows the insured a period of several days to look over the policy, and if dissatisfied for any reason, may return it for a full refund?

Answer 29

Free Look (right to examine)

Question 30

What is the common period of time for a Free Look provision from the date of policy delivery?

Answer 30

10 days but may vary for different types of policies

Mandated provision

Question 31

What provision makes it clear that both parties to the contract must give some valuable consideration, usually located on first page?

Answer 31

Consideration Clause

Question 32

What are the considerations for both the applicant and the insurer?

Answer 32

Applicant- payment of the premium & statements in the application
Insurer- promise to pay in accordance with the contract terms

Question 33

Which provision states that a period of time must lapse before coverage for specified conditions goes into effect?

Answer 33

Probationary Period

Question 34

Where does the Probationary period apply to?

Answer 34

common in disability income policies

applies to new employees who must wait a certain period of time before they can enroll in group plan

Question 35

What is the main purpose of the probationary period clause?

Answer 35

to avoid unnecessary administrative expenses in cases of employee turnover

Question 36

What type of deductible states that a period of days must expire after the onset of an illness or occurrence of an accident before benefits will be payable?

Answer 36

Elimination Period

Question 37

What happens if the elimination period is longer?

Answer 37

The lower the cost of average

Question 38

What provision/rider provides that in the event of permanent and total disability, premiums will be waived for the duration of the disability?

Answer 38

Waiver of Premium

Question 39

What are the qualifications for waiver of premiums provision/rider?

Answer 39

insured must be totally disabled for a specified period of time, usually 3 to 6 months, during which premium is still paid, but refunded later

Question 40

When does the Waiver of Premium expire?

Answer 40

When insured attains age 65 unless insured becomes disabled prior to age 65, premiums continued to be waived for duration of disability

Question 41

What are Pre-existing conditions?

Answer 41

conditions for which the insured has received diagnosis, advice, care, or treatment during a specific time period prior to application for health coverage

Question 42

Even with ACA eliminating restrictions of Pre-existing conditions restrictions in individual and group health plans, where do the limitations still apply for the conditions?

Answer 42

in Medicare Supplement policies and Long-term care insurance

Question 43

Which provision specifies the period of time that must lapse between two illnesses in order for a new set of benefits to be available for the second illness?
(In health insurance or disability income)

Answer 43

Recurrent Disability

Question 44

Why is it to the insureds benefit to consider any relapse as a continuation of the prior claim in recurrent disability?

Answer 44

Any elimination period or deductible would not have to be satisfied again

Question 45

Which provision, in most major medical policies, provides for the sharing of expenses between the insured and the insurance company?

Answer 45

Coinsurance

Question 46

What is the purpose of the Coinsurance provision?

Answer 46

for the insurance company to control costs and discourage over utilization of the policy

Question 47

What is the purpose of a stop-loss limit?

Answer 47

It is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses. Company pays 100% of expenses that are above the specified limit

Question 48

What is a deductible?

Answer 48

A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits

Question 49

What is the purpose of a deductible?

Answer 49

to have the insured absorb the smaller claims, while coverage provided under the policy will absorb the larger claims

Question 50

What happens when the deductible is larger?

Answer 50

Lower premiums to be paid

Question 51

What is an annual deductible?

Answer 51

calendar year deductible paid once a year regardless amount of claims in that year

Question 52

What is a Individual Deductible?

Answer 52

insured is personally responsible for a specified deductible amount each year

Question 53

What is a Family deductible?

Answer 53

annual deductible is satisfied if two or more family members pay a deductible in a given year, regardless of the amount of claims incurred by additional family members

Question 54

What is a Per occurrence deductible / flat deductible?

Answer 54

insured is required to pay for each claim, possibly resulting is more than one deductible being paid in a given year

Question 55

What is a common accident provision?

Answer 55

when more than one family member is injured in a single accident, only one deductible applies for all family members involved in same accident

Question 56

What is a integrated deductible?

Answer 56

amount of the deductible may be satisfied by the amount paid under basic medical expense coverage

Question 57

What is a carry over provision?

Answer 57

states that if the insured did not occur enough expenses during the year to meet the deductible, any expense incurred during the last 3 months may be carried over to the next policy year to satisfy the new annual deductible

Question 58

What do disability income and long-term care policies have in the form of a elimination period?

Answer 58

Time deductible

Question 59

What are exclusions?

Answer 59

will specify for what the insurer will not pay, are causes of loss that are specifically excluded from coverage.

Question 60

What are reductions?

Answer 60

are decrease in benefits because of certain specified conditions.

Question 61

What are the most common exclusions in health insurance plans?

Answer 61

War, military duty, self-inflicted injury, dental expense, cosmetic expenses, eye refraction, care in governmental facilities,

Question 62

When would coverage of a health insurance be suspended?

Answer 62

while an insured resides in a foreign country or while serving the military

Question 63

What are eligible expense?

Answer 63

medical expenses covered by a health insurance plan, specified in a policy

Question 64

Which provision has a set dollar amount that the insured will pay each time certain medical services are used and that the insured shares part of the cost of services with the insurer?

Answer 64

Copayment

Question 65

What must an insured do to be sure that the policy will cover the expenses of medical?

Answer 65

insured must obtain insurers approval before the procedure, test, or hospital stay

Question 66

What is a benefit schedule?

Answer 66

states exactly what is covered in the plan and for how much

Question 67

What is Usual/Reasonable/Customary (URC)?

Answer 67

insurance company will pay an amount for a given procedure based upon the average charge for that procedure in that specific geographic area

Question 68

What is a maximum benefit and the 3 limits it can be expressed as?

Answer 68

the largest benefit amount a policy will pay.

Expressed as a lifetime limit, annual limit, or per-cause limit

Question 69

What is a lifetime limit?

Answer 69

specifies a benefit amount that is the most a policy will pay during the lifetime of the insured

Question 70

What is an annual limit?

Answer 70

most a policy will pay each year that the policy is in force

Question 71

What is a per-cause limit?

Answer 71

the most a policy will pay for expenses incurred from the same or related causes.

Question 72

What is a rider?

Answer 72

a provision added/attached to a contract

Question 73

Which rider may be attached to a contract for the purpose of eliminating coverage for a specifically defined pre-existing condition (like a back injury)?

Answer 73

Impairment (exclusion) riders

Question 74

What would happen if an exclusion rider is attached?

Answer 74

would exclude coverage for a condition that would otherwise be covered.
Also may be the only means to purchase an insurance at a reasonable cost if the insured has an existing impairment

Question 75

Riders are attached insurance for some additional coverage and sometimes there is extra cost, when would happen if the exclusion rider is added since it takes something away?

Answer 75

Nothing, there would be no extra charge nor is there any reduction like a premium reduction to reflect

Question 76

Which policy rider allows the insured to purchase additional amounts of disability income coverage without evidence of insurability?
and the 2 other referred names?

Answer 76

Guaranteed Insurability rider

a.k.a Future Increase Option or Guaranteed Purchase Option

Question 77

The insured is usually allowed a certain option date for the Guaranteed Insurability rider, but at what age will the insured not be able to exercise this rider?

Answer 77

usually age 50

Question 78

What will the premium on the guaranteed insurability rider be based on?

Answer 78

the insureds attained age at the time of purchase

Question 79

What must the face page of an individual health insurance contract clearly state?

Answer 79

under what conditions the policy may be renewed

Question 80

What is a noncancellable policy?

Answer 80

an insurance company cannot cancel this type of policy nor can the premium be increased beyond what is stated in the policy

Question 81

When is the only time there can be an increase in a certain year in a noncancellable pollicy?

Answer 81

when it is clearly stated in the original contract

Question 82

In a noncancellable policy, at which time is the right to renew coverage guaranteed?

Answer 82

when the insured reaches 65 at which time they are eligible for Medicare

Question 83

When is the only time a noncancellable policy be renewed beyond age 65?

Answer 83

for disability income insurance if the insured has proof of working a full time job

Question 84

Which provision allows the insurer to cancel the policy at any time, or at the end of the policy period, is not very common, and is even illegal in many states?

Answer 84

Cancellable provision

Question 85

What must the insured do in a cancellable provision in case on cancellation?

Answer 85

The insurer must provide insured with proper written notice of cancellation and a refund of any unearned premiums paid.

Question 86

Which policy allows for the insured to have a unilateral right to renew the policy for the life on the contract?

Answer 86

Guaranteed Renewable

Question 87

What happens to the premiums in a Guaranteed Renewable provision?

Answer 87

The insurer can increase the premiums on a CLASS-BASIS only and not on an individual policy

Question 88

What is the age limit that the guaranteed renewable provision may not be renewed beyond?

Answer 88

65 years of age

Question 89

What type of provision is Medicare Supplements and Long-term Care policies written as and cannot be cancelled beyond?

Answer 89

Written as Guaranteed Renewable contracts

and not cancellable beyond age 65