Unit 14 Part 3

Question 1

Right to examine (free look)

Answer 1

•insured has the right to look over the policy when it’s insured & return for a full refund of premium for any reason
•most common health insurance free look period is 10 days
•long-term care insurance & Medicare supplements have 30-day free-look periods

Question 2

Insuring clause

Answer 2

•states the insurer’s promise to pay under the conditions described in the policy
•identifies the type of loss covered by the contract

Question 3

Consideration clause

Answer 3

•exchange of value & necessary to form a legal contract
•insurer’s consideration is its promise to pay benefits
•insured’s consideration are the statements made in the application & the premiums

Question 4

Renewability

Answer 4

•health policies have to be renewed periodically
•policyowner has the right to cancel a policy or allow it to lapse
•more favorable for insured—>higher premium

5 types of renewability provisions:
1. Cancelable-insurer can cancel it at any time
2. Optionally renewable-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
3. Conditionally renewable-insurer may terminate coverage but only for reasons not based on the insured’s health such as reaching a certain age
-premiums may be increased on the policy anniversary for a class of insureds
4. Guaranteed renewable-policy cannot be canceled except for non-payment of premium, & premiums may increase on a renewal date if the insurer has raised premiums for all insureds in that coverage classification
5. Non-cancelable-insurer cannot cancel coverage (except for non-payment of premium) or raise premiums

Question 5

Military suspense provision

Answer 5

•coverage is temporarily suspended if the insured is serving in the military
•coverage is deactivated when the insured leaves military service