Unit 14 Health Insurance Policy Provisions

Question 1

entire contract

Answer 1

mandatory policy provision
includes application, insurance policy, riders. changes must be signed and attached to the policy

Question 2

incontestability

Answer 2

mandatory policy provision
time limit on contesting application information. 2 years after application. fraud in the application can void the policy when discovered

Question 3

grace period

Answer 3

mandatory policy provision
follows the due date of the premium
-if paid weekly, 7 days
-if paid monthly, 10 days
-if paid annually, semiannually, or quarterly, 31 days

insurance is still in force during this time
unpaid premiums are deducted from a claim

Question 4

reinstatement

Answer 4

mandatory policy provision
application and receipt
must deny within 45 days after application or the policy is in effect
accident claims are covered immediately
sickness claims are covered 10 days after reinstatement

days 1-60 need to pay premium to gain coverage back
days 61+ need to apply, prove medical, and pay last 60 days premium

Question 5

notice of claim

Answer 5

mandatory policy provision
written notice must be provided within 20 days after loss
if continuing disability can only be required to provide proof every six months

Question 6

claim forms

Answer 6

mandatory policy provision
must be furnished to insured within 15 days of notice of loss

Question 7

proof of loss

Answer 7

mandatory policy provision
written proof of loss within 90 days

Question 8

time payment of claims

Answer 8

mandatory policy provision
immediately after receiving proof of loss
at least monthly if a periodic claim, such as a long-term disability policy or long-term care policy

Question 9

payment of claims

Answer 9

mandatory policy provision
states how and to whom payments will be made
any death benefits (beneficiary or insured’s estate)
facility of payment ($1,000 to a family member)

Question 10

medical exams and autopsy

Answer 10

mandatory policy provision
if the company requires and state law allows
insurer pays all costs if either of these are necessary

Question 11

legal action against insurer

Answer 11

mandatory policy provision
earliest 60 days after proof of loss
maximum 3 years after proof of loss

Question 12

change of beneficiary

Answer 12

mandatory policy provision
revocable - anytime by the owner
irrevocable - permission of the beneficiary needed

Question 13

change of occupation

Answer 13

optional policy provision
more hazardous - reduction of benefits
less hazardous - refund of excess premiums

Question 14

misstatement of age

Answer 14

optional policy provision
younger than stated in application - refund premium
older than stated in application - benefits reduced

Question 15

insurance with other insurer

Answer 15

optional policy provision
each company pays a proportionate share
excess premiums are refunded

Question 16

relation of earnings

Answer 16

optional policy provision
disability benefit exceeds earnings
benefit reduced
excess premiums refunded

Question 17

unpaid premiums

Answer 17

optional policy provision
can be deducted from the claim

Question 18

cancellation

Answer 18

optional policy provision
company must give at least a 5 day notice
unearned premium must be refunded pro rata

Question 19

conformity with the state

Answer 19

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

Question 20

illegal occupation

Answer 20

optional policy provision
no benefits if committing a felony or engaged in an illegal occupation

Question 21

alcohol and narcotics

Answer 21

optional policy provision
no benefits if loss is caused by alcohol or narcotics unless doctor’s orders

Question 22

free look

Answer 22

10 days from receipt of delivery of policy
30 days for senior products (Medicare supplements, long-term care)
begins on the date the policy is received by the policyholder
if policy returned, complete refund of money

Question 23

insuring clause

Answer 23

promise to pay
conditions of payment

Question 24

consideration clause

Answer 24

company promises to pay
applicant provides information and pays the premium

Question 25

renewability

Answer 25

extension of policy
five types of provisions
-cancelable at any time
-optionally renewable (company may not renew, anniversary or premium due date)
-conditionally renewable (nonrenewal can occur only under certain conditions such as reaching age 65)
-guaranteed renewability (insurer must renew, premiums can be raised by classes)
-noncancelable (insurer must renew, premiums cannot be raised)
more favorable for insured = higher premium

Question 26

military suspense provision

Answer 26

temporary suspension while in military
reactivated after leaving military