Unit 14 Part 1: Mandatory Health Insurance Policy Provisions

Question 1

Entire contract; changes

Answer 1

•application + insurance policy + riders = the entire contract
•agent or producer may NOT change a policy or waive any of its provisions
•to make a change, it must be approved in writing by an executive officer of the insurance company & attached to the policy in the form of an amendment

Question 2

Time limit on certain defenses (incontestability clause)

Answer 2

•2 years after application, no misstatements made by the applicant in the application of the policy can be used to void the policy or deny a claim
•fraud in the application can void the policy when discovered, any time

Question 3

Grace period

Answer 3

•specified time following the due date of the premium payment in which the premium has not been paid
•insurance still in force during grace period
•a loss that occurs during the grace period would be covered minus the premium that was due
•7 days if premium paid weekly
•10 days if premium paid monthly
•31 days if premium paid annually, semi-annually, or quarterly

Question 4

Reinstatement

Answer 4

•premium not paid by end of grace period—>policy lapses
•policy reinstated when delinquent payment accepted
•if insurer requires a reinstatement application to be submitted, a conditional receipt will be issued for the premium & reinstatement is effective on approval of the application
•coverage automatically reinstated 45 days after application is submitted (as long as the insurer has not disapproved the application & notified the applicant by that time)
•premium may be applied to a previous period unpaid coverage, but that unpaid period may not be more than 60 days before the date of reinstatement
•once a policy is reinstated, there is a 10-day probationary period for sickness coverage (sickness claims covered 10 days after reinstatement)
•there is no probationary period for accident coverage (accident claims covered immediately)

Question 5

Notice of claim

Answer 5

•written notice of claim must be given to the insurer within 20 days of occurrence
•if there is continuing disability, must give notice to the insurer once every 6 months

Question 6

Claim forms

Answer 6

Insurers must provide a claim form to the insured within 15 days of notice of loss

Question 7

Proof of loss

Answer 7

•written proof of loss must be provided to the insurer within 90 days of the date of loss

Question 8

Time of payment of claims

Answer 8

•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

Question 9

Payment of claims

Answer 9

•states how & to whom payments were to be made
•death benefits paid either to the beneficiary or insured’s estate if no beneficiary named
•if insured was receiving monthly payments & some accrued benefits remain, they’ll be paid to beneficiary or insured’s estate
•policies may also include an optional provision allowing payment up to $1,000 in benefits to any relative of the insured or beneficiary by blood or marriage that appears to be entitled to them
•another optional provision can allow the payment of benefits directly to a medical provider

Question 10

Physical examination & autopsy

Answer 10

•insurers may require insureds to submit to a physical exam
•insurers may also require an autopsy to be performed on a deceased insured
•insurer pays the cost of these

Question 11

Legal actions

Answer 11

No legal action can be brought to recover on the policy:
•prior to 60 days after filing a written proof of loss
•after expiration of 3 years after filing a written proof of loss

Question 12

Change of beneficiary

Answer 12

•right to change beneficiaries is up to policyowner
•if beneficiary is designated as irrevocable, changes may NOT be made to the policy without the beneficiary’s permission

Question 13

What are the 12 mandatory health insurance provisions?

Answer 13

1. Entire contract; changes
2. Time limit on certain defenses (incontestability clause)
3. Grace period
4. Reinstatement
5. Notice of claim
6. Claim forms
7. Proof of loss
8. Time of payment of claims
9. Physical examination & autopsy
10. Legal actions
11. Payment of claims
12. Change of beneficiary