Unit 14 Flashcards
ENTIRE CONTRACT PROVISION
APPLICATION
POLICY
RIDERS/ENDORSEMENTS/AMENDMENTS
INCONTESTABILITY CLAUSE
This provision states that after 2 years from the date of policy issue, no misstatements, except for fraudulent misstatements made by the applicant in the application for the policy, shall be used to void the policy or deny a claim for loss after this time period.
Fraudulent statements are grounds to contest a policy at any time. (Health insurance)
GRACE PERIOD
A grace period is a specified time following the due date of a premium payment in which the premium has not been paid. A loss that occurs during the grace period would be covered minus the premiums that was due.
The grace periods are as follows:
7 days- weekly premiums
10 days- monthly premiums
31 days- all others (annually, semi annually, or quarterly)
REINSTATEMENT
If the premium on the health policy is not paid by the end of the grace period, the policy will lapse and coverage will lapse. The policy is reinstated when the delinquent payment is accepted by the insurer or it’s agent. If the insurer requires a reinstatement application to be submitted, a conditional receipt will be issued for the premium and reinstatement is effective on approval of the application. Coverage is automatically reinstated 45 days after the application is submitted if the insurer has not disapproved the application and notified the applicant by that time.
NOTICE OF CLAIM
Written notice of claim must be given to the insurer within 20 days after occurrence or commencement of any loss covered by the policy or as soon thereafter as is reasonably possible.
If continuing disability, can only be required to provide proof every 6 months.
- Insurers must provide a claim form within 15 days upon receipt of the insureds notice of claim. If the forms are not furnished within 15 days, the insured shall be deemed to have complied with the proof of loss requirement upon submitting written proof that describes the occurrence and the character and extent of loss.
PROOF OF LOSS
Written proof of loss must be provided to the insurer within 90 days of the date of loss. If it is not reasonably possible to furnish proof within 90 days , it does not invalidate nor reduce any claim. Proof of loss may be filed up to one year after the date of loss unless the insured has legal incapacity.
TIME AND PAYMENT OF CLAIMS
Insurers must pay lump sum claims immediately after receiving proof of loss. For claims involving periodic payments such as disability income, payments must be made at least monthly.
- All benefits are payable to the insured while they are alive unless the policy designates a different payee. Death benefits will be paid to either:
- The named beneficiary
- The insureds estate if no beneficiary is named or beneficiary deceased.
PHYSICAL EXAMINATION AND AUTOPSY
Insurers may require insureds to submit a physical examination. Insurers may also require an autopsy to be performed to a deceased insured. The insurer pays the cost of the physical exam and autopsy.
LEGAL ACTIONS
No action at law can be brought to recover on the policy:
- prior to 60 days after filing a written proof of loss, or
- after the expiration of 3 years after filing a written proof of loss.
CHANGE OF BENEFICIARY
The right to change beneficiaries is up to the policyowner. If the beneficiary is designated as irrevocable, changes may not be made to the policy without the beneficiary’s permission.
CHANGE OF OCCUPATION
The risk involved in an occupation affects the chances of an insured being disabled. This provision states that the insurance company may make changes to the premium rates or benefits if the insured changes occupations.
If the insured changes to a MORE hazardous occupation, the insurer will REDUCE benefits to whatever the premium would have purchased at the higher risk occupation.
If the insured changes to an occupation classified as LESS hazardous, the insurer will REDUCE the premium rate accordingly and return the excess pro rata unearned premium to the insured.
MISSTATEMENT OF AGE
If an insureds age is misstated on the application, all amounts payable shall be adjusted to the amount the premium paid would have purchased at the correct age. The insurer will adjust benefits based of the correct information.
- Younger than stated in application, benefits increased.
- Older than stated, benefits reduced.
OTHER INSURANCE WITH THIS INSURER
If an insured has more than one policy of a similar type with an insurance company, the insurer can limit the amount of benefits that will be paid under all contracts. Insurance over a specified amount is considered to be void and the premium paid for these benefits will be returned to the insured or their estate.
INSURANCE WITH OTHER INSURERS
If an insured has coverage with another insurer providing benefits for the same loss, the amount paid by the 2 insurers will be prorated. Any excess premium will be refunded to the policyowner.
CANCELLATION
The insurer may cancel a policy at ANY time by giving the insured 5 days written notice. If an insured cancels a policy, cancellation is effective when written notice is received by the insurer, In either case, cancellation does not affect any pending claim.
If the insurer cancelled the policy, unearned premium will be returned to the insured on a pro rata basis. If the insured cancelled the policy, the insurer is allowed to calculate the unearned premium on a short rate basis, unearned premium minus company expenses will be returned to the policyowner.
