Accident & Health Insurance: Field Writing Procedures

Agent

- A legal representative of an insurance company - The agents of the insurer

Proposed Insured

- Also called "applicant" - A person applying for insurance

Initial Premiums with the Application

- Generally an initial premium is collected for a health insurance policy and sent to the insurer with the application - A conditional receipt is given to the applicant by the agent - The coverage DOES NOT begin UNTIL the INSURER has APPROVED the application and ISSUED the policy

Consent

permission to do something

Adhesion

- A contract of adhesion is prepared by one of the parties (insurer) and accepted or rejected by thee other party (insured). - Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions - Insurance contracts are offered on a take-it-or-leave-it bases by an insurer

Producer

- A legal representative of an insurance company

Elements of a Contract

1. Agreement (offer & acceptance) 2. Consideration 3. Competent parties; and 4. Legal Purpose

Medical Information Bureau (MIB)

An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to this database for underwriting purposes - a nonprofit trade organization which receives adverse medical information form insurance companies and maintains confidential medical impairment information on individuals - may only be used as an aid in helping insurers know what areas of impairment they might need to investigate further - an applicant CANNOT be refuted simply bc of some ADVERSE INFORMATION discovered through the MIB

Signatures

Every health insurance application requires the signatures of the PROPOSED INSURED, POLICYOWNER (if different than insured), and the AGENT who solicits the insurance

Agreement

I. Offer = the applicant usually makes the offer when SUBMITTING the application II. Acceptance = takes place when an insurers UNDERWRITER approves the application and ISSUES a policy

(If) No Initial Premium with the Application

If premium did not accompany the application for insurance, upon delivery, the agent must collect the premium and obtain a STATEMENT OF CONTINUED GOOD HEALTH from the applicant before releasing the policy

Insurable Interest

Is proven by love and affection, economic or financial loss (this is required by the TIME OF POLICY ISSUANCE)

HIPAA Privacy

Under the Privacy Ruler for HIPAA, protected information includes all "individually identifiably health information" health or transmitted by a covered entity or its business associate, in any form or media, whether electronic, paper or oral. This is called PROTECTED HELATH INFORMATION (PHI) - individually identifiable health information including demographic data that relates to past, present or future physical or mental health or condition, or payment information that could easily identify the individual - covered entity must ovarian the individuals written authorization to disclose information that is not for treatment, payment, or health care operations

Unilateral

- A unilateral contract, only one of the parties to the contract is legally bound to do anything. - The INSUREr is legally bound to pay losses covered by the policy in force

Medical Information and Consumer Report

- If policies with higher amounts of coverage or if the application raised additional questions concerning the prospective insurers health, the underwriter may require a medical examination of the insured. There are TWO options: 1. The insurer may only request a PARAMEDICAL REPORT which is completed by a paramedic or a registered nurse 2. The underwriter may require an ATTENDING PHYSICIANS STATEMENT (APS) from a medical practitioner who treated the applicant for a prior medical problem - In addition to an APS, the underwriter will usually request a MEDICAL INFORMATION BUREAU (MIB) report.

Changes in the Application

- Most companies require app to be filled out in INK - Two ways to correct mistakes on an application: 1. Start over with a fresh application 2. Draw a line through incorrect answer and insert correct one but the APPLICANT MUST INITIAL THE CORRECT ANSWER

Submitting Application to Company for Underwriting

- The agent is obligated to check the application to make certain that all questions have been answered and all necessary signatures have been collected - The agent THEN sends the application to the insurer

Competent Parties

- The parties to a contract must be capable of entering into a contract in the eyes of the law - Requires both parties to be of legal age, mentally competent to understand the contract, and not under the influence of drugs or alcohol

Aleatory

- Uneven exchange of amounts or values - The premium paid by the insured is small in relation to the amount that will be paid by the insurer int he event of loss

Unique Aspects of the Insurance Contract

1. Conditional 2. Unilateral 3. Adhesion 4. Aleatory

Misrepresentation

- Untrue statement made by the applicant on the application - If discovered would alter the underwriting decision of the insurance policy - if misrepresentation is INTENTIONAL, they are considered FRAUD

Replacement

- When an agent attempts to replace the insureds currency health insurance policy with a new one, the agent needs to be careful not to mislead the insured or provide coverage that is to the insureds detriment. It is the agents responsibility to carefully compare the benefits, limitations and exclusions found int he current and the proposed replacement policy. THE AGENT ALSO MUST MAKE SURE THAT THE CURRENT POLICY IS NOT CANCELLED BEFORE THE NEW POLICY IS ISSUED - Pre-existing conditions are a very important consideration when replacing a policy. Pre-existing condition is a medical condition for which the insured sought medical advice or treatment within a specified period of time prior to the policy issue. Health conditions covered under the current policy may not be covered under the new policy because of pre-existing condition limitations, or new waiting periods may be required in a new policy -UNDERWRITING = is important when replacement is involved. It is an underwriters duty to evaluate risk and decide whether or not a person is eligible for coverage. The insured may be under the assumption that a replacing policy is in his/her best interests, but after being evaluated by an underwriter, where premium and risk are exchanged, an insured may not be paying the same premium or receiving the same benefits

Explaining Sources of Insurability Information and HIPAA Privacy

1. Attending Physician Report 2. Medical Information and Consumer Reports 3. Medical Exam Report 4. Fair Credit Reporting Act 5. HIPAA Privacy

Completing the Application

1. Completeness and Accuracy 2. Signatures 3. Changes in the Application 4. Premiums with the Application 5. Submitting Application to Company for Underwriting

Legal Purpose

1. Must have insurable interest 2. Must have insurable consent

Conditional

A conditional contract requires that certain conditions must be met by the policy owner and the company in order for the contract to be executed, and therefore each party fulfills its obligations

Insurance Policy

A contract between a policy owner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for a loss caused by specific events

Insured

A person covered by the insurance policy; may or may not be the policyowner

Completeness and Accuracy

Agent must take special care with the accuracy of the application in the interest of both the company and the insured. Because the application is often the main source of underwriting information, it is the agents responsibility to make certain that the application is filled out completely, correctly, and to the best of the applicants knowledge.

Policy Delivery

Although policy delivery may be accomplished without physically delivering it in the policy owners possession, an agent should personally deliver policies whenever possible. Once the DELIVERY of a POLICY is made, the FREE-LOOK PERIOD begins

Warranty

An absolutely true statement upon which the validity of the insurance policy depends. Breach of warranties can be considered grounds for voiding the policy or a return of premium. Because of such strict definition, statements made by applicants for life and health insurance policies, for example, are usually not considered warranties, except in cases of fraud.

Attending Physician Report

If the underwriter deems it necessary, an attending physicians statement (APS) will be sent to the applicants doctor to be completed. This source of info is best for accurate information on the applicants medical history. The physician can explain exactly what the applicant was treated for, the treated required, the length of treatment and recovery, and the prognosis.

Fair Credit Reporting Act

Passed in 1970, this act established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used. - Protects consumers against the circulation of inaccurate or obsolete personal or financial information - The acceptability of a risk is determined by checking the individual risk against many factors directly related to the risks potential for loss - Besides these factors, an underwriter will sometimes request additional information about a particular risk from an outside source. These reports generally fall into 2 categories: 1. Consumer Reports: include written and or oral information regarding a consumers credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources 2. Investigative Consumer Reports: similar to consumer reports in that they also provide information on the consumers character, reputation, and habits. The primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer. Unlike consumer reports, these reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested. The consumer must be advised that they have a right to request additional information concerning the report, and the interest or reporting agency has 5 days to provide the consumer with the additional information. - investigative consumer reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested

Representation

Statements made by the applicant on the insurance application that are believed to be true to the best of ones knowledge, but are not guaranteed to be true

Explaining Policy and its Provisions, Riders, Exclusions, and Ratings

The agent has a responsibility to provide the insured with an explanation of the policy's principal benefits and provisions - if policy is issued with any changes or amendments, the agent is required to explain these changes and obtain the insured's signature acknowledging receipt or these amendments

Consideration

The binding force in any contract. 1. INSURED = payment of premium and the representations made in the application 2. INSURER = the promise to pay in the event of a loss

Insurer

The company who issues an insurance policy

Premium

The money paid to the insurance company for the insurance policy

Policyowner

The person entitled to exercise the rights and privileges in the policy

Insurable Interest

The policy owner facing the possibility of losing something of value in the event of loss

Underwriting

The process of reviewing applications for insurance and the information on the application

Medical Exam Report

When required by the insurance company are conducted by physicians or paramedics at the INSURANCE COMPANIES EXPENSE - Not usually required with regard to health insurance - More common with life insurance underwriting - Underwriting for HIV and AIDS is permitted as long as it is not unfairly discriminatory, an adverse underwriting decision is not permitted if based solely upon the present of symptoms, but only if HIV is confirmed in relation to the symptoms. - a separate written consent form must be obtained prior to an HIV exam. HIV exam results may be disclosed to underwriters but not agents