Individual health insurance policy provisions

Question 1

The NAIC developed how many provisions that MUST appear in all health insurance policies?

Answer 1

12

Question 2

These mandatory provisions exist primarily for the protection of whom?

Answer 2

The policyowner

Question 3

Name of the provision that states, if any guarantees, promises, exclusions, or anything else are not included in the policy…then they are not apart of the contract.

Answer 3

Entire contract provision

Question 4

Provision that limits the time an insurer can void a policy or deny a claim for material misrepresentations on the application.

Answer 4

Time limit on certain defenses provision

Question 5

Most states limit the time limit on a contestability period to how long?

Answer 5

two years

Question 6

Provision that gives the policy owner some time after the due date to pay the premium

Answer 6

Grace Period provision

Question 7

The grace period provision usually depends on how often the premium is due. 3 most common ?

Answer 7

7,10, or 31 day depending on the type of policy

Question 8

Provision that lets a policyowner reinstate a lapsed policy within a certain time period?

Answer 8

Reinstatement provision

Question 9

How long is the normal reinstatement period? What are the conditions?

Answer 9

policyowner has 3 years to reinstate. They must pay past premiums with interest and provide proof of insurability.

Question 10

How long does the insurer have to reject the application for reinstatement of a lapsed policy?

Answer 10

45 days

Question 11

If the insurer doesn’t respond to a reinstatement application within their given time period, what happens?

Answer 11

The reinstatement is automatic.

Question 12

Provision that allows the insurer to require a physical exam (for a disability claim), or an autopsy (for a death claim) at the insurers expense?

Answer 12

Physical examination and autopsy provision

Question 13

Provision that sets a period for the policyowner to take legal action against the insurer to dispute a decision on a claim?

Answer 13

Legal action provision

Question 14

What is the time period given, after proof off loss is provided,for the legal action provision?

Answer 14

the policyowner must wait at least 60 days and cannot exceed 3 years after proof off loss.

Question 15

Provision that gives the policyowner the right to change the beneficiary?

Answer 15

Change of beneficiary provision

Question 16

In this provision the policyowner can only exercise the right to change beneficiary if the designation is what?

Answer 16

revocable.

Question 17

What is it called when the beneficiary designation can only be changed with the written consent of current beneficiary?

Answer 17

Irrevocable

Question 18

Provision that explains how claims are paid.

Answer 18

Payment of claims provision

Question 19

If the insured dies, the insurer pays the beneficiary. If the insured did not specify a beneficiary, the insurer pays who?

Answer 19

The insurer will pay the insured’s estate.

Question 20

Provision that is step 1 in the claims process, and requires the insured to notify the insurer within how many days of a covered loss?

Answer 20

Notice of claim provision. must notify within 20 days after loss

Question 21

Provision that is step 2 in claims process, and requires the insurer to provide the claim forms to the insured within how many days from the notice of a claim?

Answer 21

Claim forms provision. Insurer has 15 days to provide the forms.

Question 22

Provison that is step 3 in the claims process, and requires the insured to provide written proof of loss to the insurer within how many days of the loss?

Answer 22

Proof of loss provision. The insured has 90 days to provide written proof of loss.

Question 23

Provision that compels the insurer to pay the claims ‘immediately’ after receiving the written proof of loss?

Answer 23

Time of payment of claims provision

Question 24

States differ on how they define ‘immediate’ payment after proof of loss. Most sates require ____days and some other states ___ days?

Answer 24

most states 60 days and some others 45 days.

Question 25

Insurers must include 12 standard provisions in policies, but they may also include optional provisions.
How many optional provisions are there, and who do they protect?

Answer 25

There are 11 optional provisions, and they are to protect the insurers.

Question 26

True or False: Insurer’s can use none, some, or all of the 11 optional provisions, but they must conform to the minimum of NAIC standards.

Answer 26

True

Question 27

This optional provision covers two situations. 1) When insured changes to a more hazardous job, the insurer can reduce insured’s benefits. 2) When insured changes to a less hazardous job, insurer is required to reduce the insured’s premium.

Answer 27

Change of occupation provision

Question 28

Optional Provision that applies when an insured misstates his/her age or sex on the insurance application. The benefits are then adjusted to reflect the insured’s correct age or sex.

Answer 28

Misstatement of age or sex provision

Question 29

What is true about the misstatement of age or sex provision, in some states?

Answer 29

In some states this is a required provision and not optional.

Question 30

Optional Provision that limits the total coverage the insurer will provide to the insured. (multiple policies with same company)

Answer 30

Other insurance in this insurer provision.

Question 31

Optional Provision that allows the insurer to reduce (pro rate) coverage, if another insurer covers losses from the same event. It keeps the insured from receiving a benefit that is more than the loss. (Different company/or has not notified the primary insurer of other existing coverage)

Answer 31

Insurance with other insurer provision.

Question 32

Optional Provision that applies to coverage with multiple insurers when the primary company knows of them. This provision pro rates each of the insurer’s share of the total benefit due. Usually in the case of Workers comp.

Answer 32

Other insurance with other insurers

Question 33

Optional Provision that applies to disability income insurance. Limits the disability insurance coverage if the insured’s income decreases. Prevents the insured from receiving more income from the insurer than from working.

Answer 33

Relation of earnings to insurance provision

Question 34

Optional Provision that addresses any premiums the insured owes before the claim is to be paid. This allows the insurer to deduct the amount of unpaid premiums from the benefit to be paid to the insured.

Answer 34

Unpaid premium provision

Question 35

Optional Provision that allows the insurer to cancel a policy any time with how many days notice?

Answer 35

Cancellation provision with a 45 days notice.

Question 36

Under this optional provision: If the insurer is cancelling a policy because the insured did not pay the premium, the insurer must give the insured how many days notice?

Answer 36

10 days.

Question 37

Optional Provision that addresses any other provisions that differ from the state’s law. Any policy provisions that are not compliant with the state’s law are automatically changed to meet the state’s minimum requirements.

Answer 37

Conformity with state statutes provision

Question 38

Optional Provision that lets an insurer deny a claim if the cause of loss was from the insured participating in illegal activity.

Answer 38

Illegal occupation provision

Question 39

Optional provision that lets the insurer deny a claim that arises from the insured’s use of illegal narcotics or intoxication.

Answer 39

Intoxicants and narcotics provision