Flashcards in Ch. 6* - Health Insurance Policy Provisions Deck (29)
states the insurance policy itself, any riders, and endorsements/amendments, and the application comprise the entire contract between all parties. Insurance producers cannot make changes to a policy. The entire contract provision is found at the beginning of every insurance policy issued. Only an authorized officer of the insurer is permitted to make changes to the contract. We can't send you additional paperwork later. THE ENTIRE POLICY AND APPLICATION is sent to you and that makes up your ENTIRE CONTRACT.
The Time Limit on Certain Defenses
States the policy is incontestable after it has been in force a certain period of time, usually two years. This is similar to the incontestable clause. Unlike life policies, a fraudulent statement on a health insurance application is grounds for contest any any time, unless the policy is guaranteed renewable. There is a TIME LIMIT for which you must DEFEND yourself. This applies to the contestable period, pre-exisiting conditions, and new claims. If you file a claim that you broke your leg yesterday, and the insurance company sees you moving a grand piano up 5 flights of stairs, you will probably have to DEFEND your claim. However, at some point it is expected your leg will heal.
is a period after the due date of a premium during which the policy remains in force without penalty. If an insured dies during the grace period of a life insurance policy before paying the required annual premium, the beneficiary will receive the face amount of the policy minus any required premiums. For health insurance, remember Aunt Grace's Birthday 7 (makes payments more than once a month)-10 (makes premium payments once a month-31(makes premium payments less than monthly (quarterly, semiannually, etc)
is putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required. It permits the policyowner to reinstate a policy that has lapsed- as long as the policyowner can provide proof of insurability and pays all back premiums, outstanding loans, and interest. However, some states are 5-7 years. to reinstate any policy, you need: a reinstatement application, statement of good health, and all back premiums.
Notice of Claim
is a policy provision that describes the policy owner's obligation to provide notification of a claim to the insurer within a reasonable period of time. Typically, the period is 20 days after the occurrence or a commencement of the loss, or as soon thereafter as is reasonably possible.
Claim Forms Provision
specified the formal request to an insurance company asking for a payment based on the terms of the insurance policy. It is the company's responsibility to supply a claim form to an insured within 15 days after receiving notice of claim. If it fails to do so within the time limit, the claimant may submit proof of loss in any form, explaining the occurrence, the character, and the extent of the loss for which the claim is submitted. Policyowner can submit the claim using a napkin and crayons as long as it has the required information.
Proof of loss
is a mandatory health insurance provision stating that the insured must provide a completed claim form to the insurer within days of the date of loss
Time of payment claims
is a provision that requires claims be paid immediately, or within a stated number of days. If the claim involves disability income payments, they must be paid at least monthly if not at more frequent intervals specified in the policy. You did your part (paid your bill and got injured/sick/etc) now we have to immediately do our part (pay you) and it can't be less often than monthly, or you wouldn't be able to pay your bills.
Payment of Claims provision
in an insurance contract specified how and to whom claim payments are to be made. Payments for loss of life are to be made to the designated beneficiary. If no beneficiary has been named, death proceeds are to be paid to the deceased insured's estate, claims other than death benefits are to be paid to the insured or ANY OTHER NAMED PARTY (medical professional, hospital, etc.)
Physical exam and autopsy provisions
is a standard health insurance policy provision allowing the insurer to examine the insured when a claim is pending, in the event of death perform an autopsy where not prohibited by law. This entitles a company, at its own expense, to make physical examinations of the insured at reasonable intervals during the period of a claim, unless it's forbidden by state law.
Legal Actions Provisions
states the insured cannot take legal action against the company in a claim dispute until after 6 days from the time the insured submits proof of loss. At least give us 2 months before you take us to court.
Change of beneficiary
is a provision that permits the insured to change the beneficiary as often as he or she wishes, except in policies where the beneficiary is irrevocable.
Change of occupation provision
allows the insurer to reduce the maximum benefit payable under the policy if the insured switches to a more hazardous occupation or to reduce the premium rate charged if the insured changes to a less hazardous occupation
Misstatement of age or sex provision
allows the insurer to adjust the policy benefits if the insured's age or sex is misstated on the policy application. The misstatement of age provision allows the insurer to adjust the benefit payable if the age of the insured was misstated when application for the policy was made. If the insured was older at the time of application than is shown in the policy, benefits would be reduced accordingly. The reverse would be true if the insured were younger than listed in the application.
Other insurance in this insurer provision
states that the total amount of coverage to be underwritten by a company for one person is restricted to a specified maximum amount, regardless of the number of policies issued.
Insurance with other insurer provision
states that the benefits payable for expenses incurred will be prorated in cases where the company accepted the risk without being notified of other existing coverage for the same risk. This is done in attempt to deal with the potential problem of over insurance.
insurance with other insurers provision
calls for the prorating of benefits that are payable on any basis other than expenses incurred
relation of earnings provision
outlines that if disability income benefits from all disability income policies for the same loss exceed the insured's monthly earnings at the time of disability, the relation of earnings provision states that the insurer is liable only for that proportionate amount of benefits as the insured's earnings bear to the total benefits under all such coverage
Unpaid premiums provision
states if there is an unpaid premium at the time a claim becomes payable, the amount of the premium is to be deducted from the sum payable to the insured or beneficiary is a provision that permits unpaid premiums to be taken from claim payments.
Conformity with state statues provision
simply states that any provision of this policy that is in conflict with state statutes in the state where the insured lives at the time the policy is issued is automatically amended to conform with the minimum statutory requirements.
is a clause that states the insured is not covered for losses that arise if he or she tries to commit a felony. Coverage is also voided if the insured is working at an illegal occupation
Intoxicants and narcotics
is a provision that states the policy is not liable for losses that occur as a result of the policyholder being intoxicated or taking a narcotic without a physician's supervision and recommendation
are insurance contracts that may be terminated by the company or that is renewable at its option
policy loan or cash value provisions
are found in whole life policies and some long-term care policies. These policies must begin to build cash value after a certain number of years. In most states, this is 3 years. These loans with interest, cannot exceed the guaranteed cash value or the policy is no longer in force. The policyowner has the right to the policy's cash value. Policy loans are not taxable. Any loans with interest due at the time of death will be deducted from the insured's policy proceeds.
Automatic premium loans
allow the insurer to automatically use the policy cash value to pay an overdue premium. There is no cost for this provision. The automatic premium loan rider allows the insurance company to deduct overdue premium from an insured's cash value by the end of the grace period if a payment is missed on a life policy. The insurance company can AUTOMATICALLY take out a LOAN for you against your CASH VALUE to cover your PREMIUM in the event they don't receive payment from you. This can continue for as long as they don't receive payment and you still have cash value. Once all of your cash value is gone, if you don't start paying, our policy will lapse. This is just like any other cash value loan.
are features of an insurance policy stating that the policy will not cover certain risks. There are 6 common exclusions in insurance:
-war or military service
-commitment of a felony/illegal occupation
-hazardous occupation or hobby
are the options you have for your cash value if you terminate a policy that has cash value. You are closing your account (surrendering your policy), what do you want us to do with your cash (so you don't forfeit it)? when a policyowner decides, he does not want his insurance policy anymore, he has the option to surrender his policy. If there is cash value remaining, he must use one of the following nonforfeiture options
-extended term option
-reduced paid-up option
-one year term option
Twelve Mandatory Policy Provisions
1. Entire Contract
2. Time Limit on Certain Defenses
3. Grace Period
5. Notice of Claim
6. Claim Forms
7. Proof of loss
8. Time of Payment of Claims
9. Payment of claims
10. Physical Exam and Autopsy
11. Legal Actions
12. Change of Beneficiary