Unit 14: Health Insurance Policy Provisions

Question 1

Uniform Policy Provisions - Health Insurance

Answer 1

Mandatory in every insurance contract

Insurance companies are not required to use the exact working of theses provisions, they are allowed to reword them as long as the wording is not LESS FAVORABLE TO THE INSURED.

Question 2

Entire Contract Changes

Answer 2

insurance policy represents a contract between the insurer and the insured and consists of:

• application-copy of the application, if attached to the policy
• insurance policy-the actual insurance contract
• riders (endorsements) and any other papers or amendments attached to the policy

in order for something to be included in the contract, if must be in writing, and it must be attached to the policy

an agent or producer may not change a policy or waive any of its provisions. For a change to be made, it must be approved in writing by an executive officer of the insurance company and attached to the policy in the form of an amendment

Question 3

Incontestability Clause

Answer 3

time limit on contesting application information:

• two years after application
• Fraud in the application can void the policy when discovered

Question 4

Grace Periods

Answer 4

7 days - weekly premium

10 days - monthly premium

31 days - all other policies

• insurance still in force during
• unpaid premiums deducted from a claim

Question 5

Restatement

Answer 5

if you don’t pay premium after grace period, policy will lapse

application and receipt

must deny within 45 days after applications or policy is in effect

accident claims covers immediately

sickness claims covered 10 days after reinstatement

Question 6

Notice of Claim

Answer 6

written _____ must be given to insurer within 20 days after occurrence or commencement of any loss covered by the policy or as soon thereafter as is reasonable possible

If continuing disability (for at least two years) can only be required to provide proof every six months

Question 7

claim forms

Answer 7

insurers provide the claim form to the insured

must be furnished to insured within 15 days of notice of loss

Question 8

proof of loss

Answer 8

must be given with 90 days

Question 9

time of payment of claims

Answer 9

insurer to pay IMMEDIATELY

at least monthly if periodic claim such as a long term disability policy or long term care policy

Question 10

Payment of claims

Answer 10

any death benefits to beneficiary or estate

faculty of payment $1000 to family member

Question 11

medical exams and autopsy

Answer 11

insurer pays all costs if either of these are necessary: company requires and state law requires

Question 12

Legal Action Against Insurer

Answer 12

Earliest this can happen is 60 days after proof of loss

maximum three years after proof of loss

Question 13

Change of Beneficiary - Revocable

Answer 13

change any time by owner

Question 14

Change of Beneficiary - Irrevocable

Answer 14

permission of beneficiary needed to change

Question 15

Change of Occupation

Answer 15

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 a less hazardous occupation, the insurer will reduce the premium rate accordingly and return the access pro rata unearned premium

Question 16

Misstatement of Age- Benefits Increase

Answer 16

Younger than stated on application

Question 17

Misstatement of Age- Benefits Reduced

Answer 17

Older than stated in application

Question 18

Other insurance with this insurere

Answer 18

if an insured has more than one policy of a similar type with an insurance company, the insuere can limit the amount of befits that will be paid under all contracts.

total of all policies exceeds maximum:

• benefits reduced
• excess premiums refunded

Question 19

insurance with other insurer

Answer 19

each company pays a proportionate share

excess premiums are refunded

Question 20

Relation of earnings to Insurance (average earnings)

Answer 20

disability benefit exceeds earnings =
benefit reduced
excess premiums refunded

Question 21

unpaid premium

Answer 21

the amount of the premium will be deducted from the benefit payable under the claim

claim - premium = payment to insured

Question 22

Cancellation

Answer 22

company must give at least a five day notice
unearned premium must be refunded pro rata
insured cancels short rate penalty will apply

Question 23

conformity with state statutes

Answer 23

Minimum requirements must be met

makes policy comply with laws of the insured’s state of residence

Question 24

Right to Examine (Free Look)

Answer 24

when a policy is delivered to the insured, they have the right to look it over and decide where or not to keep it.

• 10 days from receipt or 30 days for senior products (Medicare supplements, LTC)
• Begins date received by policy holder
• If policy returned-complete refund of money

Question 25

Renewablity

Answer 25

five types of provisions (cancelable, optionally renewable, conditionally renewable, guaranteed renewable, non-cancelable)

more favorable for insured = higher premium

Question 26

Renewability - cancelable

Answer 26

the insurer can cancel at any time

Question 27

Renewability - optionally renewable

Answer 27

the insurer has the option to renew or not for any reason on a premium due or anniversary date. Premiums may be increased on the policy anniversary for a class of insureds

Question 28

Renewability - conditionally renewable

Answer 28

the insurer may terminate coverage but only for reasons not based on the insurer’s health such a s a reaching a certain age. premiums may be increased on the policy anniversary for a class of insureds

Question 29

Renewability - guaranteed renewable

Answer 29

the policy cannot be canceled except for non-payment of premiums, and premiums may increase on a renewal date if the insurer has a raised premiums for all insureds in that coverage classification

Question 30

Renewability - non-cancelable

Answer 30

the insurer cannot cancel coverage (except for non-payment of premium) or raise premiums