Policy Provisions and Clauses Flashcards
Define uniform provisions
Provisions that have captions and wording that are the same as the captions and wordings in the state statutes or they have been approved by the commissioner because their wording is at least as favorable
What does the entire contract changes provision state
It requires that any policy changes have to have the approval of an executive officer of the insurer endorsed on or attached to the policy.
Under the entire contract changes provision, can the producer make changes
No the producer has no authority to make changes, all changes must be approved by the executive officer
Define the time limit on certain defenses provision
After 2 years from the issue date, only fraudulent statements may be used to void the policy or deny any claims (for example - if someone didn’t disclose that they had a pre-existing condition, then you cannot deny their claims after 2 years from the effective date, however, if someone lied about their SSN, then you could deny coverage after 2 years from the effective date.
How does the two year rule work to void a policy
Say you have someone that didn’t disclose a pre-existing heart condition on their application and then suffered a heart attack six months later, the insurance company would be able to deny their coverage
Define incontestable provision
That if you have a policy that is guaranteed renewable to at least age 50 or if it is issued to a person after age 44 with a guaranteed renewability for at least 5 years, that if the policy has been in force for two years then it is incontestable (you can’t deny coverage for a disease or condition that was excluded)
Are claims still paid during a grace period?
Yes, they are still covered, however, the claims payment may be reduced by the amount that the member still owes in premium
If a policy is reinstated, would it still cover a loss from injury and a loss due to sickness?
It would cover the injury immediately, however, it would not cover a sickness that occurred within 10 days after the reinstatement (waiting period - won’t pay for sickness right away)
Within how many days shoulda claim or notice of a claim be submitted to the producer or the insurer
Within 20 days after the occurrence
Define the claim forms provision
States that if the insurer does not send proof of loss forms within 15 days after the receipt of notice of the claim then the insured can submit some other written proof of the loss
The proof of loss provision gives the insured time to file proof of loss: (4)
- Within 90 days from the date of loss
- Before the 91st day from the date of loss for a continuing loss
- Within one year if the person is physically unable
- No time limit if the person is legally incapacitated
Define the physical examinations and autopsy provision
The insurer at their own expense can examine the dead member as often as reasonably required while a claim is pending
Define a time payment of claims provision
States when benefit payments are going to be made (ie monthly)
Define payment of claims provision
States that benefits will be paid to the insured, or their beneficiary or to the insured’s estate
Define facility of payments clause
States how benefits are paid out (like how much all of your relatives get)
Define assignment of payment scluase
Allows the insurer to pay providers
Define legal actions provision
The member cannot sue the insurance company within 60 days after showing proof of loss or after 3 years if they didn’t show proof of loss when it was required (missed their window)
Define the misstatement of age provision
States that the insurance company cannot void the policy or deny coverage if someone lied about their age, instead they will pay claims based on what they would have paid had the correct age been given
Define a change of occupation provision
The claims will be adjusted if the member moves to a more hazardous jobs, which may mean that benefits will be reduced or if a member moves to a less hazardous job than the premiums may be reduced and excess will be retuned to the member
Under the cancellation provision, how many days out must an insurance company give notice that the policy is going to be cancelled
30 days out and they have to state why and when it will be effective
Define conformity with state statutes
All policies in any state must confirm with that state’s statutes and will be automatically amended to do so
On what policies can a relation of earnings to insurance clause be placed on
It can be placed on disability income policies that are guaranteed renewable until at least age 50 or at least five years
What does the relation of earnings to insurance clause do
It states that the insurer may limit its payments based on a percentage of the total coverage if the monthly disability income benefits from all policies total more than what he was earning when the disability started or his average monthly earnings for the past two years.
Define the other insurance in this insurer provision
It applies when the insured is covered by more than one policy issued by the same insurer, it may limit the total to be paid by all policies to a specified dollar amount or limit one of the policies (in both cases premiums will be refunded)
Define subrogation clause
Health insurance policy allows the insurer to recover the cost of the insured’s medical care from the person that injured them
Define an insuring clause
Specifies the types of expenses covered as the result of an injury or illness and cites how much benefit will be provided
Define a free-look provision
Once the member receives the policy (not when it is issued), then they have a right to look for other coverage and terminate the policy if they find better coverage
What types of policies have longer free look provisions
Policies for old people, like LTC, Medicare Supplements and Medicare Advantage
Where must the free-look provision be placed
It must be on the face of each individual renewable policy
Define the consideration clause
The member’s consideration is the initial premium and the insurer’s consideration is the promise to pay benefits
Define the ownership provision
States that the rights belong to the policyowner, which includes the rights to assign benefits to providers, change beneficiaries and reinstate the policy, etc.
Define the impairment rider
Rider excluding, limiting or reducing coverage or benefits for specified conditions or activities
Define the elimination period
A period that begins on the date of disability, where a member has to be disabled from that date for 90-180 days in order for a waiver of premium to be in effect
What can a guaranteed insurability rider be added too
It can be added to disability income policies
Define a noncancelable policy
The member can renew the policy up to a certain age without having to show proof of insurability and the insurance company cannot change the policy provisions or the premium rate unilaterally
Are premiums for a noncancelable policy high or low
They are high premiums, because they offer the greatest benefits
What is the difference between a noncancelable policy and a guaranteed renewable policy
The guaranteed renewable policy can change the premium rates (but they have to change rates across the entire class of members)
What is special about a conditionally renewable policy
The insurance company can refuse the member from renewing at the policy’s anniversary date under conditions specified in the policy, however, termination cannot be based on the member’s physical condition
Define optionally renewable policy
The insurance company can refuse renewal at the anniversary date or at a premium due date
Define cancelable policy
It can be terminated at any time by either the insurance company or the member
Define a term policy
The member does not have a right to renew upon the expiration date (travel accident and blanket insurance policies)
What is the grace period for a monthly premium policy
10 days
What is the grace period for any policy besides a monthly premium policy
31 days
If a policy was terminated due to the member not paying premiums, and they try to get reinstated, what are the rules
- They will be reinstated automatically (no application needed just the premium)
- They will be reinstated upon approval of an application
- They will be reinstated 45 days after the date of a conditional receipt
