18 - Policy Provisions

The insuring clause does all of the following EXCEPT A) describe the insured B) describe the general scope of coverage C) provide any definitions required D) set forth the conditions under which benefits will be paid

A The insuring clause does not describe the insured

Which of the following statements is TRUE? A) An exclusion is a provision that eliminates coverage for a specified condition; a reduction is a provision that decreases benefits as a result of a specified condition B) a reduction is a provision that eliminates coverage for a specified condition; an exclusion is a provision that decreases benefits as a result of a specified condition. C) a reduction is a provision that eliminates coverage for a specified condition; an exception is a provision that decreases benefits as a result of a specified condition D) a reduction is another term for an exception

A An exclusion is a provision that eliminates coverage for a specified condition; a reduction is a provision that decreases benefits as a result of a specified condition.

Mike allows his policy to lapse, then applies for reinstatement using the company's required application. The company does not inform Mike either that the policy has been accepted or that the policy is being rejected. At what point can Mike consider the policy reinstated? A) Not until the insurer notifies him that it has be reinstated B) As soon as the application has been submitted C) After 45 days D) After 90 days

C Mike can consider the policy reinstated after 45 days

The grace period varies according to A) premium payment frequency B) premium payment amount C) method of premium payment D) type of policy

A The grace period is determined by the premium payment mode or frequency

George has a noncancelable policy. Which of the following may the insurer do? A) Cancel the policy if George fails to pay premiums B) Increase the premiums on all members of George's class C) Increase the premiums on George's policy only D) Cancel the policy if the insurer chooses no longer to do business in George's state

A The insurer may cancel the policy if George fails to pay premiums

The optional provisions that deal with multiple insurance policies of the same type on a single insured deal with the problem of A) underinsurance B) overinsurance C) inappropriate insurance D) incorrect insurance

B The optional provisions that deal with multiple insurance policies of the same type on a single insured deal with the problem of overinsurance

Cindy has a claim for $2,000 and a past due premium of $200. The insurer will A) refuse to pay the claim until the past due premium is paid B) pay the claim minus the past due premium C) pay the claim and forgive the past due premium D) pay the claim and bill Cindy for the past due premium

B The insurer will pay the claim minus the past due premium

Which of the following is NOT a required provision under the Uniform Provisions Model Act? A) Grace Period B) Change of occupation C) Time of payment of claims D) Proof of loss

B Change of occupation is not a required provision under the Uniform Provisions Model Act

Because the insurer needs time to respond to a claim, the law provides the insurer with a window during which the insured cannot sue to recover under the claim. This window lasts for A) 30 days B) 60 days C) 90 days D) 120 days

B The window is 60 days

If there is no beneficiary listed on a policy, benefits will be paid to A) the state B) the insurer's estate C) the insured's nearest blood relative D) the insured's nearest relative by marriage or blood

B If there is no beneficiary listed on the policy, benefits will be paid to the estate

Which of the following is an optional provision under the Uniform Provisions Model Act? A) Cancellation B) Physical examination and autopsy C) Legal actions D) Reinstatement

A Cancellation is an option provision under the Uniform Provisions Model Act

In most states, the policy becomes incontestable after A) 2 years B) 3 years C) 4 years D) 5 years

A In most states, the policy becomes incontestable after 2 years.

Consideration for a health policy includes A) the premium only B) the statements made in the application only C) the statement made in the application and the insuring clause D) the statements made in the application and the premium

D Consideration for a health policy includes the statements made in the application and the premiums

A reinstated policy will cover A) sickness immediately and accidents after 10 days B) both sickness and accidents after 10 days C) accidents after 10 days and sickness after 30 days D) accidents immediately and sickness after 10 days

D A reinstated policy will cover accidents immediately and sickness after 10 days

Carmen gets her health insurance policy on May 1, and on May 3 she decides she doesn't want it and returns it to the company. On May 6, she is hit by a car. The company will A) pay any resulting claim because she was insured within the 10-day free-look period B) pay any resulting claim only if the premium has not yet been returned to Carmen C) pay any resulting claim minus the amount of the returned premium D) only return any premium Carmen has paid and not any resulting claim

D The company will only return any premium Carmen has paid and not any resulting claim

Normally, written proofs of loss must be furnished within how many days after the loss A) 15 B) 45 C) 60 D) 90

The written proof of loss must be furnished within 90 days of the date of loss.

All insurance policies may be cancelled at any time by A) the insurer only B) the insured only C) neither the insurer or the insured D) neither the insurer nor the insured

B All insurance policies may be canceled at any time by the insured only.

A revocable beneficiary A) has the right to refuse assignment of the policy B) may stop the policyowner from disposing of the policy C) may be changed without the beneficiary's consent D) is assigned for life

C A revocable beneficiary may be changed without the beneficiary's consent.

A pro rata return is one in which the insurer returns A) all of the unearned premium B) some of the unearned premium C) both earned and unearned premium D) neither earned nor unearned premium

A A pro rata return is one in which the insurer returns all of the unearned premium

According to the entire contract provisions, the entire contract includes all of the following Except A) the insurance policy B) the premium payment C) any endorsements D) any attatchments

B The entire contract clause specifies what is included in the contract and that all parts must be in writing and attached. The premium is not part of the entire contract.

When Betty purchased her insurance policy, her age was recorded as 32 when she was actually 34. Assuming her policy includes the misstatement of age provisions and the insurance company discovers this 4 years later. Betty's policy A) will be canceled for misrepresentation B) will be unchanged because the incontestable period has expired C) limits will be lowered D) limits will be raised

C Because her age was understated, her limits would be lowered

Julia worked as a race car driver until recently, when she took a job in the promotions office handling media inquiries. If she has the same health insurance, her premiums are more likely to A) stay the same B) go up C) go down D) stop because the policy will be cancelled

C Her premiums are more likely to go down because of a change of occupation provision

Joel is hit by a car while crossing the street against a light. If Joel's policy contains the illegal occupation provision, the insurer A) is not liable for the claim because Joel was engaged in illegal activity at the time of the accident B) is not liable for the claim because Joel's illegal activity was the direct cause of the accident C) will pay the claim because crossing the street against the light is not a felony or a regular occupation D) may or not pay the claim, depending on Joel's occupation

C If Joel's policy contains the illegal occupation provision, the insurer will pay the claim because crossing the street against the light is not a felony or a regular occupation

If an insured is disabled for at least 2 years, the insurer may require proof of continuance of disability every A) month B) 2 months C) 6 months D) year

C If an insured is disabled for at least 2 years, the insurer may require proof of continuance of disability every 6 months

Jennifer takes out an optionally renewable health policy with an annual premium due on June 14. The insurer decides it no longer wants to insure people with first names longer than 5 letters. The insurer may A)not cancel the policy because it does not have a good reason B) not cancel the policy unless the number of letters in the first name is a condition specified in the policy C) cancel the policy, but only on June 14 of the next year D) cancel the policy whenever it wants to

C The insurer may cancel the policy, but only on June 14 of the next year

CeeCee's policy is guaranteed renewable. Which of the following may the insurer NOT do? A) Refuse to renew the policy if CeeCee fails to pay the premium B) Increase the premiums on all members of CeeCee's class C) Increase the premiums on CeeCee's policy only D) Refuse to renew the policy when CeeCee reaches a specified age

C The insurer may not increase he premiums on CeeCee's policy only

The maximum time during which suit can be filed is how many years after written proof of loss is finished? A) 1 B) 2 C) 3 D) 4

C The maximum time during which suit can be filed is 3 years after written proof of loss is furnished

If a policy includes the provisions on conformity with state statutes, and the state changes the law to be in conflict with another provision of the policy A) the policy will automatically be void B) the provision will be automatically grandfathered and able to stay the same C) the insurer will be ably to apply for a grandfather provision for those policies already in force D) the provision will automatically be amended to conform to the minimum requirement of the statute

D If a policy includes the provision on conformity with state statutes, and if the state changes the law to be in conflict with another provision of the policy, the provision will automatically be amended to conform to the minimum requirement of the statutes.

If a policyholder has two or more policies from different companies that cover the same expenses and the insurers were not notified that the other coverage existed, each insurer will A) have the option to cancel the policyholder's policy without notice B) have the option to cancel the policyholder's policy with appropriate notice C) pay the claim regardless, as long has the premiums have been paid D) pay a proportionate share of the claim

D If a policyholder has two or more policies from different companies that cover the same expenses and if the insurers were not notified that the other coverage existed, each insurer will pay a proportionate share of any claim.

Joe took a disability policy working as a very successful stockbroker. A few years later, he decides to take a less stressful job at a not-for-profit organization, writing about financial issues. He loves his new job and doesn't mind the fact that he makes a lot less money. When he becomes disabled 3 years later, his disability benefit is more than he has made in salary in 3 years. If the policy contains an average earnings clause, Joe's benefit will be A) the same as listed in the policy B) the lesser of Joe's monthly earnings at the same time the disability started, or the average monthly earnings for the period of 2 years immediately preceding his disability C) the greater of Joe's monthly earnings at the same time the disability started, or the average monthly earnings for the period of 2 years immediately preceding his disability D) the greater of Joe's monthly earnings at the time the disability started, or the average monthly earnings for the period of 2 years immediately preceding his disability. In addition, the insurer will return some of the excess premiums that paid for the benefit Joe is not eligible to receive

D If the policy contains an average earnings clause, Joe's benefit will be the greater of Joe's monthly earning at the onset of disability, or the average monthly earnings for the period of 2 years immediately preceding the onset of disability. In addition, the insurer will return some of the excess premiums that were paid for the benefit Joe is not eligible to receive.

The insurer may generally require an autopsy at its own expense unless A) the deceased requests in writing that an autopsy not be performed B) the deceased's relatives request that an autopsy not be performed C) the deceased's relatives have proven religious objections to an autopsy being performed D) the state has an applicable law that forbids autopsy

D The insurer may generally require an autopsy at its own expense unless the state has an applicable law that forbids autopsy

If Lois cancels her health insurance policy, the insurer will issue A) a pro rata refund of all the unearned premium B) a pro rata refund of most of the unearned premium C) a short-rate refund of all of the unearned premium D) a short-rate refund of most of the unearned premium

D The insurer will issue a short-rate refund of most of the unearned premium.