Chapter 7: Health Policy Provisions, Clauses, And Riders Flashcards

A policy that is written on a non-cancellable basis with the right to renew guaranteed.

A beneficiary who has a vested interest in the policy and therefore, the policy owner may not exercise certain rights without the consent of the beneficiary.

NAIC [National Association of insurance commissioners]

And organization composed of insurance commissioners from all 50 states, the district of Columbia and the 4 U.S. territories, formed to resolve insurance regulatory issues.

Inability of the insured to perform any occupation for which he or she is reasonably suited by reason of education, training or experience.

Waiver [The voluntary abandonment of a known or legal right or advantage by an insurer]

Relinquishment of a right or interest.

What is the uniform individual accident and sickness policy provisions law?

This law established standard provisions that are to be included in our individual health insurance policies. Although the wording may be far from one in sure to another, the basic provisions are the same.

Entire contract provision

The entire contract provision states that the health insurance policy, together with a copy of the signed application and attached riders and amendments, constitutes the entire contract.

Grace Period Provision

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 non-payment of the premium.

What are the typical grace periods, all though they differ according to individual state laws?

seven days for weekly premium policies [industrial policies]; 10 days for monthly premium policies; and 31 days for all other modes. Coverage will continue in force during the grace period.

This provision stipulates under what conditions the insured may reinstate coverage if the premium has not been paid by the end of the policy’s grace period because the policy has terminated.

When is reinstatement automatic?

Reinstatement is automatic if the company or an authorized representative accepts the policy premium and does not require a reinstatement application.

What is covered immediately following the reinstatement and what is covered only after 10 days?

Accidents will be covered immediately following the reinstatement; however, sickness is covered only after 10 days. This helps to protect the insurer from adverse selection.

Change of beneficiary provision

The change of beneficiary provision stipulates that the policy owner may change the beneficiary at any time by providing a written request to the insurer, unless the beneficiary is designated as irrevocable.

Claims procedures provision

The notice of claim provision spells out the insurance duty to provide the insurer with reasonable notice in the event of a loss. Notice is required within 20 days of the loss. Notice to the agent equals notice to the insurer.

Upon receipt of a notice of claim, the company must supply what to the insured within a specified number of days which is usually how many days?

Upon receipt of a notice of claim, the company must supply claims forms to the insured within a specified number of days [usually 15 days], but may vary from state to state.

After a loss occurs, the claimant must submit proof of loss within how many days of the loss?

The claimant must submit proof of loss within 90 days of the loss, but not to exceed one year. However, the 1-year limit does not apply if the claimant is not legally competent to comply with this provision.

Explain the time of payment of claims provision

The time of payment of claims provision specifies that claims are to be paid immediately upon written proof of loss. The time of payment for claims is usually specified in different policies as 60 days, 45 days, or 30 days. However if the claim involves disability income benefits, the benefits must be paid in not less frequently than monthly.

What is the facility a payment clause?

Some policies allow a provision that gives the insured the right to expedite payments of urgently needed claim funds and pay up to a specified limit in benefits to a relative or individual who is considered to be equitably entitled to payment.

Explain Physical examination and autopsy provision

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 why a claim is pending. The insurer also usually has the right to conduct an autopsy, if not for bidden by a state law.

What is the time limit on certain defenses provision?

The time limit on certain defenses provision is similar to the incontestability provision. 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.

Explain may not be reduced or denied.

A claim for loss incurred or disability commencing after two years from the date of policy issue may not be reduced or denied on the ground that a disease or physical condition not specifically excluded from coverage had existed prior to the effective date of coverage of this policy.

Legal actions provision

This provision limits the time in which they claim it makes seek recovery from an insurer under the policy. The insured must wait 60 days, but not later than three years [in most states] at the proof of loss, before legal action can be brought against the company.

Misstatement of age or sex provision

If the insured misstated his or her age or gender at the time of application, the benefits paid under the policy would be adjusted to what the premium paid would have been purchased at the correct age.

Change of occupation provision

Provision that allows insurer to adjust benefits if the insured changes occupations. Benefits can be reduced if the change is to a more hazardous occupation.

Illegal occupation provision

This provision states that liability will be denied if the insured is injured while committing an illegal act or is engaged in an illegal occupation.

Explain The relation of earnings to insurance provision.

The relation of earnings to insurance provision allows the insurance company to limit the insured’s benefits to his/her average income over the last 24 months.

All individual health insurance policies are required to include certain standard provisions called what?

uniform mandatory provisions

The insuring agreement or clause identifies the insured and the insurance company and states what kind of loss is covered.

What is the free-look period provision and how long is it?

The free-look all right to examine provision allows the insured a period of several days to look over the policy, and if dissatisfied for any reason, return for a full refund. It is commonly 10 days from the date the policy is delivered.

What is the consideration clause?

The consideration clause makes it clear that both parties to the contract must give some valuable consideration. The payment of premium and the statements on the application are the consideration given by the applicant. The promise to pay is that insurers consideration

What is the probationary period Provision?

The probationary period Provision states that a period of time must lapse before coverage for specify conditions goes into effect. This provision is most commonly found in disability income policies and it also applies to new employees who must wait a certain period of time before they can enroll in the group plan. The purpose of this visit is to avoid unnecessary administrative expenses in case of employee turnover.

What is the waiver of premium provision or rider?

The waiver of premium provision or rider is usually included with guaranteed renewable and noncancelable disability income policies.

It provides that in the event of permanent and total disability, premiums will be wasteful of the ration of the disability. Insured must be totally disabled for usually 3 to 6 months. During these months, premiums must still be paid and any premiums paid will be refunded. This rider expires when the insured attains age 65.

What are pre-existing conditions?

Pre-existing conditions are conditions for which the insured has received diagnosis, advice, care, or treatment during a specific time period prior to the application for health coverage.

What does the coinsurance provision provide?

Most major medical policies include a coinsurance provision that provides for the sharing of expenses between the insured and the insurance company.

At the insured satisfies the policy deductible, the insurance company we usually pay the majority of the expenses, typically 80%, with the insured paying the remaining 20%.

What is the purpose of the coinsurance provision for the insurance company?