Chapter Three: Policy Provisions, Clauses, and Riders

Question 1

What does the Uniform Individual Accident and Sickness Policy Provision Law do?

Answer 1

Insurers must include in individual health insurance policies the standard provisions established under the National Association of Insurance Commissioners (NAIC)

Question 2

What is the purpose of the provisions outlined in the Uniform Individual Accident and Sickness Policy Provisions Law?

Answer 2

The purpose of these provisions is to define the rights and duties of both the insurer and the policyholder.

Question 3

Can an insurer reword the provisions?

Answer 3

Yes, BUT they cannot make the provision less favorable to the policyholder or beneficiary.

Question 4

What constitutes the ENTIRE CONTRACT?

Answer 4

The health insurance policy + a copy of the signed application and attached riders and amendments.

Question 5

Who has the authority to make changes to the policy?

Answer 5

Only an executive officer of the company.

Question 6

Can the insurer change the policy without the insured’s consent?

Answer 6

No, and any changes that are made to the policy need to be added to the ENTIRE CONTRACT

Question 7

Define: Grace Period

Answer 7

The grace period is the period of time after the premium due date in which premiums may still be paid before the policy lapses for nonpayment of the premium.

Question 8

Is coverage continued during the grace period?

Answer 8

Yes in force

Question 9

What dictates how long the grace period is?

Answer 9

The premium payment mode e.g. how often are you paying your premium. If every week, you have 7 days, if every month you have 10 days….

Question 10

What does the provision covering reinstatement dictate?

Answer 10

It answers the question of under what condition can the now uninsured be reinstated for coverage.

Question 11

How long does an insurer have to refuse to reinstate an uninsured after they have let their policy lapse?

Answer 11

45 Days from the date the conditional receipt was issued.

Question 12

After an uninsured is reinstated how long do they have to wait to have sickness covered again?

Answer 12

10 days

Question 13

What must a policyholder do to change the beneficiary according to the provision?

Answer 13

They must provide a written request to the insurer.

Question 14

Does the insurer need to get consent from the beneficiary if/when the policyholder decides to change their beneficiary?

Answer 14

No. Unless the beneficiary designation is IRREVOCABLE

Question 15

Who’s responsibility is it to file a notice of claim?

How long do they have to do it?

Answer 15

The insured- making a claim is just telling the insurance company that an accident has occurred.

The INSURED has 20 days to file the claim from the day of the accident (or illness)

Question 16

How long does the insurance company have to supply the insured with claims forms?

Answer 16

15 days (can vary)

Question 17

Who’s responsibility is it to provide proof of loss?

Answer 17

The insured
they have 90 Days

Question 18

What does the time of payment of claims do?

Answer 18

It is a provision that specifies that claims are to be paid immediately upon written proof of loss.

Question 19

What does the payment of claims provision do?

Answer 19

It specifies to whom claims payments are to be made.

Question 20

What does the physical examination and autopsy provision do?

Answer 20

The physical exam and autopsy provision gives the insurer the right to examine the insured, at its own expense, as often as may be reasonably necessary while a claim is pending.

Question 21

What does the time limit on certain defenses (incontestable) provision do?

Answer 21

It outlines how NO statement or MISSTATEMENT (except fraudulent misstatements) made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years,.

Question 22

What is the time frame in which an insured can seek legal action against the insurance company over a claim?

Answer 22

Insured must wait 60 days (allow the company time to process claim) but cannot wait longer than 3 years.

Question 23

What would be the response of an insurer if they find out there was a misstatement of age or gender?

Answer 23

In response to a misstatement of age on an insurance application, benefits are adjusted per the current premium.

Question 24

How does an insurer adjust benefits if the insured changes occupations to a MORE hazardous occupation?

Answer 24

If the insured makes a change to a more hazardous occupation, upon claim, benefits will be reduced to that which premiums paid would have purchased assuming the more hazardous occupation.

Question 25

How does an insurer adjust benefits if the insured changes occupations to a LESS hazardous occupation?

Answer 25

If the change is to a less hazardous occupation, the insured is entitled to apply to the insurer for a rate reduction.

Question 26

What does the illegal occupation provision state?

Answer 26

That liability will be DENIED if the insured is injured while committing an illegal act or is engaged inn an illegal occupation.

Question 27

What does the relation of earnings to insurance provision detail?

Answer 27

That the insurance company can limit the insured's benefits to his/her average income over the last 24 months.

Question 28

What does the insuring clause define?

Answer 28

It defines the scope of coverage, as well as identifies the rights and duties of each party of the contract.

Question 29

What is the free look provision?

Answer 29

The free-look or right to examine provision allows the insured a period of several days to look over the policy, and if dissatisfied for any reason, return it for a full refund. 10 days .

Question 30

What is the consideration clause?

Answer 30

A clause that makes it clear that both parties to the contract must give some valuable consideration.

Question 31

What is the probationary period provision?

Answer 31

This provision states that a period of time must lapse before coverage for specified conditions goes into effec.t

Question 32

What is the elimination period?

Answer 32

It is a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable.

Question 33

What does the waiver of premium provision do for the insured?

Answer 33

It is common in DISABILITY INCOME POLICIES. It provides that in the event of permanent and total disability, premiums will be waived for the duration of the disability.

Question 34

What is a stop-loss limit?

Answer 34

A specific dollar amount beyond which the insured no longer participates in sharing the expenses. The insurance company pays 100% of the expenses that are above the specified stop-loss limit.

Question 35

What is a deductible?

Answer 35

A specified dollar amount that the insure must pay first before the insurance company will pay the policy benefits.

Question 36

What is the common accident provision?

Answer 36

A provision that outline that only one deductible applies for all family members involved in the same accident.

Question 37

What is an integrated deductible?

Answer 37

Can be included in some supplemental major medical plans. This deductible may be satisfied by the amount paid under basic medical expense coverage.

Question 38

What is the carry-over provision?

Answer 38

A provision that states that if the insured did not incur enough expenses during the year to meet the deductible, any expenses incurred during the last 3 months may be carried over to the next policy year to satisfy the new annual deductible.

Question 39

What are exclusions?

Answer 39

These specify for what the INSURER WILL NOT PAY. Loss do to: War Military duty Self-inflicted injury Dental expense Cosmetic medical expenses

Question 40

What are reductions?

Answer 40

Reductions are a decrease in benefits because of certain specified conditions. Like AD&D only paying out 70% of the claim because the insured lost one hand vs two arms

Question 41

What is recurrent disability?

Answer 41

Specifies the period of time that must lapse between two illnesses in order for a new set of benefits to be available for the second illness.

Question 42

What is coinsurance?

Answer 42

Provides for the sharing of expenses between the insured and the insurance company; expressed as a percentage after the insured pays the policy deductible.

Question 43

What is the impairment or exclusion rider?

Answer 43

Eliminates coverage for a specifically defined pre-existing condition, such as back injuries. Can be temporary or permanent part of the policy.

Question 44

What is a guaranteed insurability rider?

Answer 44

Allows the insured to purchase additional amounts of coverage without evidence of insurability. Premium for additional amount is based on insured's attained age at the time option is exercised.

Question 45

What is a NONCANCELLABLE policy?

Answer 45

A policy in which the insurer cannot cancel OR raise premiums beyond amount stated in the policy.

Question 46

What is a CANCELLABLE policy?

Answer 46

A policy in which the insurer may cancel the policy at any time or at end of policy period with proper written notice and a refund of any unearned premium paid.

Question 47

What is a GUARANTEED RENEWABLE policy?

Answer 47

A policy in which the insurer can increase the policy premium (on a class basis only) on the policy anniversary date; insured has the unilateral right to renew the policy for the life of the contract.