Chapter 12-Individual Policy Provisions

20 days

It is the insured's responsibility to notify the insurer of a claim. It must be given in writing and is required within ____ days of loss or as soon as reasonably possible (notice of claim)

60 days 3 years

An insured must wait ____days to take legal action, but can not wait more than __ years.

Pre-authorization or Prior Approval

Requires the insured to notify his/her insurer in advance of certain procedures (not emergency) to receive pre-authorization, or prior approval, of coverage. The physician may submit claim information prior to treatment to know in advance if the procedure is covered and at what rate benefits will be paid.

The entire contract

includes the policy and provisions, a copy of the application, and any riders, waivers, or endorsements.

True

A notice to the agent is the same as notice to the insurer (True or False)

10 days

Accidents are covered immediately and sickness coverage generally begins ____days after reinstatement.

Be increased for all similarly classified insureds based on age

In a guaranteed renewable policy, the premiums may:

Insuring Clause

The insurer's promise to pay benefits is expressly stated in the:

limitation

The only exception to the time limit is for fraud; fraudulent statements can be used to deny coverage without ________.

Change of Occupation provision

-If the insured changes to a more hazardous occupation without notifying the insurer prior to submitting a claim, the benefits will be reduced to that benefit which premiums paid would have purchased at the more hazardous occupation. -If the insured changes to a less hazardous occupation, the benefits will pay as stated in the policy and the insured may apply for a rate reduction. If the insured works at two occupations, rates for the most hazardous occupation will be charged.

Time of Payment of Claims

All claims are to be paid immediately upon written proof of loss. Loss of time benefits (disability income) will be paid not less frequently than monthly.

Impairment Rider

An impairment rider is a temporary or permanent rider added to a policy that will exclude specific conditions that would normally cause a policy to be declined or rated substandard. The use of this rider allows an insured to qualify for a policy with the exclusion attached, where they would otherwise be declined altogether

The insured will have to pay the premium for 3 months (90 days) before qualifying for the waiver of premium. The waiver is retroactive to the date of disability, so the insurer will refund the $300 premium to the insured.

An individual is covered under an individual disability income policy with a 90-day waiver of premium provision and a $100 monthly premium. If the insured becomes disabled due to a serious illness and is unable to work for 6 months, which of the following statements will apply?

Pre-existing condition

Applies to prior conditions when the applicant received (or should have received) medical advice or treatment within a specified period before the effective date of the policy.

Relation of Earnings to Insurance Provision

If an insured's disability income (loss of time) benefits exceed the insured's monthly earnings at the time of the disability, the benefits will be reduced based on the insured's current income and the excess premium paid for the higher benefit will be refunded.

6 months

If the insured is receiving continuing disability benefits, the insurer can require notice of continuance of claim every ___ months. (notice of claim)

Cost containment measure specific to managed health care plans

Mandatory second opinions, utilization review and preventive care are all considered cost containment measures.

Coordination of Benefits

Provides that if more than one plan covers a loss, the plans will coordinate so the insured does not get paid more than the entire loss. For example, if a disability occurs on the job, Workers' Compensation will be the primary payor and will coordinate benefits with Social Security disability and any other private disability insurance.

NAIC

The Mandatory Uniform Provisions were developed by the __________and must, by law, be included in every individual accident and health insurance policy.

7 days

The grace period varies based on frequency or mode of premium. The grace period must not be less than ____ days for weekly premiums, 10 days for monthly premiums, and 31 days for all other modes of premium.

90 days

Whats the longest the insured has to submit proof of loss usually?

illegal occupation provision

When this provision is included, a claim will be denied if the insured is injured while committing or attempting to commit a felony or engaging in an illegal occupation.

Comprehensive Case Management

A case manager may be assigned to a case to determine the current appropriate course of action for an insured. The case manager may require a referral or a second opinion before approving a procedure. The case manager will also manage the utilization review of a subscriber's stay in the hospital and may provide assistance with a future course of action during recovery of the insured.

Reduce the benefit based on what the premiums paid would have purchased at the correct age

A policy is issued based on an insured's age of 40. After a disability occurs, the insurer discovers that the age was understated and the insured was actually 45 years old at the time of application. The insurer will most likely:

Change of Beneficiary

Consent of beneficiary is not required unless the beneficiary is irrevocable. The change becomes effective on owner's signature date, upon the insurer's recording the change.

Physical Exam and Autopsy

Gives the insurer the right to examine the insured or require an autopsy at insurer's expense, where not prohibited by law.

Misstatement of Age Provision

If the age on the application is stated younger than the actual age (understated), benefits paid will be reduced based on what the premium paid would have purchased at the correct age. If the age is overstated and the insured is really younger, the benefit will remain the same and the insurer will reduce the premium

Legal Actions

Insured must wait 60 days, but no later than 3 years after providing proof of loss, before legal action can be brought against the insurer. In other words, the statute of limitations for taking action against the insurer is 3 years from proof of loss. If applicable, additional information about this topic is presented in the state law chapter.

2 years

No statement or misstatement (except fraudulent misstatements) made in the application at the time of issue shall be used to deny a claim after the policy has been in force for ___ years.

Cancellable

The Insurer may cancel the policy at any time after providing notice to the insured (typically one month's notice). Any unearned premium must be refunded to the insured if the policy is canceled midway through the term. This is the least favorable to the insured.

45 days

The insurer may also require a reinstatement application to prove insurability. If the insurer does not reject the reinstatement application within _____ days, coverage will be automatically reinstated.

Elimination or waiting period

The time period that must elapse after a loss before benefits are payable under a policy is the:

Free Look (Right to Examine)

This allows the insured, upon delivery of the policy, a specified number of days to look over the policy and if dissatisfied, return it for a full refund. Typically the free look period is 10 days, or 30 days for senior plans. If applicable, additional information about this topic is presented in the state law chapter.

Retrospective Review

A review of claims for services already received. A retrospective review may be used to confirm medical necessity of services, identify coordination of benefits opportunities, and to determine if a non-precertification penalty applies.

Assignement of Benefits

_________ ___ __________allows the person receiving medical benefits (the insured) to assign or transfer the payment of those benefits directly to the provider of services (a physician or hospital).

Prospective Review

A utilization review conducted prior to the delivery of the requested medical service. Prospective reviews include the initial review conducted before treatment starts, and the initial review for treatment to a different body part. During prospective (or concurrent) review, copies of medical records shall be required only when necessary to verify that the health care services being considered are medically necessary.

The insuring clause

The insuring clause is found on the first page of the policy and specifically expresses the insurer's promise to pay benefits according to the provisions in the policy. The clause also identifies the named insured, the insurer, the amount of coverage, the time period of coverage, and the covered perils or losses.

Preventative Care

Managed care plans are known for stressing preventive care. This is care designed to prevent illness or disease. The basic premise is that it is more cost-effective to prevent losses than to treat losses after they occur. Examples of preventive care include covering well child care visits, immunizations, mammography screenings, as well as nutrition and weight loss programs.

Time Limit on Certain Defenses (Incontestable)

No statement or misstatement (except fraudulent misstatements) made in the application at the time of issue shall be used to deny a claim after the policy has been in force for 2 years. If applicable, additional information about this topic is presented in the state law section. False statements on the application may exclude coverage for the first 2 years when material to the risk. In other words, if the insurer had the correct information at the time of application, they would not have issued the policy in the first place. The only exception to the time limit is for fraud; fraudulent statements can be used to deny coverage without limitation. This provision also provides that a preexisting condition cannot be excluded beyond the 2-year time limit unless specifically excluded by name in the contract.

Reinstatement

___________ allows the insured, at the insurer's discretion, to put back in force a policy that has lapsed for nonpayment of premium by paying past due premiums plus interest.

probationary period

A specified period of time before coverage goes into effect for preexisting conditions. This is designed to protect the insurer for losses due to a sickness that occur immediately (such as 10 - 30 days) after the policy is issued. Losses due to an accident are not preexisting and are covered immediately with no waiting period.

concurrent review

A utilization review conducted while services are being provided. The insurer monitors the insured's hospital stay to make certain that everything is proceeding according to schedule. The length of hospital stay is monitored.

Elimination Period

A waiting period often found in disability insurance and long-term care policies before benefits are payable after a loss occurs. This acts as a time deductible and eliminates claims for losses that do not last a minimum period of time. The policyowner can choose the elimination period in the policy and the time period selected will affect the premium. The longer the elimination period chosen, the lower the cost of coverage.

True

Assignment of benefits makes the claims process easier by granting the health care provider permission to file the claim on behalf of the insured. (True or False)

Consideration Clause

Consideration, by definition, is the exchange of value in a contract. The insured pays a premium in exchange for the insurer's promise to pay benefits within the terms of the contract. This clause states the amount and frequency of the premium, including statements in the application that determine the premium.

Noncancellable

Guaranteed renewable for the life of the policy. The benefits cannot be changed and the premiums cannot be altered. This is the one most favorable for the insured, because only the owner can terminate the policy and rates never increase. The insurer cannot cancel the plan once issued.

Claim Form Provision

If the insurer requires a claim form, it must be received by the insured from the company within 15 days after notice of claim. If forms are not furnished, the insured may submit written proof of occurrence, character, and extent of the loss.

Emergency Services

In a bona fide emergency, when loss of life or serious complications may result if treatment is delayed, an insured will not be required to obtain permission from a Primary Care Physician to use a hospital emergency room. An "emergency" is whatever the insured believes it to be, but the insured is expected to not use the emergency room for routine healthcare needs.

Owner's Rights (Ownership Provision)

The Policyowner retains all rights in the policy. Unless the insured is also the policyowner, the insured does not have rights. The policyowner has the right to name or change revocable beneficiaries, assign the policy, and make all decisions regarding the policy. It is also the owner's responsibility to make the premium payments.

Grace Period

The ________ period is the period of time after the premium due date before the policy lapses for nonpayment of premium.

Waiver of Premium

The insurer will waive the premiums if an insured becomes disabled and qualifies for the benefit. In order to qualify for benefits, the insured must be disabled for a specified time period, typically 90 days to 6 months. During the waiting period, premiums must continue to be paid. Once the qualifications have been met, the premiums are waived retroactively to the start of the disability and the insured receives a refund of any premiums paid during the waiting period. Premiums continue to be waived until the insured has recovered from the disability, at which time the premiums are resumed at the same amount and frequency.

Modes of Premium Payment

The mode of premium payment refers to the frequency of payments. Health insurance premiums may be made weekly, monthly, quarterly, semi-annually, or annually. The more frequent the owner pays the premium, the higher the overall cost, since a service fee is included in each payment. For example, an annual premium mode is less expensive overall than a monthly mode of premium for the same policy.

Primary and Contingent Beneficiaries

The owner of a health insurance policy may name a beneficiary if benefits may be payable after the death of the insured. The first named beneficiary is the primary beneficiary. If the primary beneficiary predeceases the insured, the contingent beneficiary is the next in line to receive the benefits.

Guaranteed Renewable

The policy is guaranteed to renew without proof of insurability, at insured's option, up to a specified date. The insurer cannot cancel the policy or change the coverage during the policy term. Premiums are not guaranteed, and may be changed on a class basis only, not an individual basis.

Utilization Review

The review that determines whether provided or proposed health care services were or are medically necessary. This does not apply to emergency services but involves "before, during and after" medical services.

Proof of Loss

This provision limits the amount of time the insured has to submit proof of a loss to the insurer. Proof of loss is required within 90 days of loss or in the shortest period of time possible, but not to exceed 1 year unless the insured suffers legal incapacity.

Mandatory Second Surgical Opinion

This requirement may be included in policies that offer surgical expense benefits, requiring the insured to consult a physician, other than the attending physician, to determine the necessity of surgery and/or alternate methods of treatment. If the insured should fail to obtain the second opinion, benefits are greatly reduced.

Guaranteed Insurability Rider

This rider, which may also be referred to as the Future Insurability Option, is commonly found in disability income and long-term care policies. It will allow an insured to purchase additional benefits, for a limited amount, at specified intervals in a policy without evidence of insurability. Typically the rider drops from the policy around the insured's age 50. This rider is added to the policy for an additional premium.