Unit 14 Part 2: Optional Health Insurance Provisions

Question 1

Change of occupation

Answer 1

•insurance company may make changes to the premium rates or benefits if the insured changes occupations
•more hazardous occupation —> reduced benefits
•less hazardous occupation —> reduced premium & refund of excess premiums

Question 2

Misstatement of age

Answer 2

•younger than stated in application —> benefits increased
•older than stated in application —> benefits reduced

Question 3

Other insurance with this insurer

Answer 3

•if total of all policies exceeds maximum
—>benefits reduced
—>excess premiums refunded

•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 & the premium paid for these benefits will be returned to the insured or their estate

Question 4

Insurance with other insurers

Answer 4

•each company pays a proportionate share
•excess premiums are refunded

•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

Question 5

Relation of earnings to insurance (average earnings)

Answer 5

•disability benefit exceeds earnings
—>benefit reduced
—>excess premiums refunded

•if an insured’s total disability income benefit exceeds the greater of the insured’s earnings at the time of disability or the insured’s average monthly earnings for the past 2 years
—>the benefit payable is reduced & the premium paid for the excess coverage is refunded

Question 6

Unpaid premium

Answer 6

•can be deducted from the claim

•if a premium is due at the time a claim is made under a policy, the amount of the premium will be deducted from the benefit payable under the claim

•[claim] - [unpaid premium] = payment to the insured

Question 7

Cancellation

Answer 7

•insurer may cancel a policy at any time by giving the insured 5 days written notice
•does NOT affect any pending claim
•unearned premium must be refunded pro rata
•if the insured canceled the policy, a short rate penalty will apply

Question 8

Conformity with state statutes

Answer 8

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

Question 9

Illegal occupation

Answer 9

•insurer will not be liable for any loss that was caused by the insured’s commission of or attempt to commit a felony
•insurer is not liable for a loss caused by the insured engaging in an illegal occupation

Question 10

Narcotics

Answer 10

•insurer shall not be liable for any loss sustained by the insured while under the influence of alcohol or a narcotic unless it was taken under the advice of a physician

Question 11

What are the 10 optional health insurance policy provisions?

Answer 11

1. Change of occupation
2. Misstatement of age
3. Other insurance with this insurer
4. Insurance with other insurers
5. Relation of earnings to insurance (average earnings)
6. Unpaid premium
7. Cancellation
8. Conformity with state statutes
9. Illegal occupation
10. Narcotics