Health Insurance Chapter 7-8

If your premium is $120 paid in advance for the year, after 6 months the insurer will have "earned" only $60 of the $120 you paid. If you were to cancel your policy after 6 months, the insurance company would have to refund you

$60 as they didn't earn that amount

USA Patriot Act

Antiterrorism law that allowed the government certain rights to help chase and capture terrorists

Every insurance company conducting business must appoint an agent responsible for receiving any legal action. ____________________ will act as the appointed agent if there is not with the company, charge of no more than $500 per violation per day.

Commissioner

What are the three basic parts to a typical life insurance application

Part I - General Part II - Medical Part III - Agents Report

Representation

are statements an applicant makes being substantially true to the best of the applicant's knowledge and belief, but which are not warranted to be exact in every detail. Representations must be true only to the extent that they are material to the risk.

Substandard

is a person who is considered an under average or impaired insurance risk because of physical conditions, family or personal history of disease, occupation residence in unhealthy climate, or dangerous habits.

DC Life Laws - Contestable Period

up to 2 years from the date of issue

Regulations - Medical Examinations and Lab testing (results may only be disclosed to)

- proposed insured - legal guardian of the proposed insured - anyone authorized by the proposed insured or legal guardian - a court, if ordered by the court

Policy fee

A small transaction fee charged by some insurers for the first or subsequent years of the life of an insurance policy, in addition to the regular premium. paid annually or only once at the time the policy was issued depending on the policy,

Examination of Records

Mayor or an appointed examiner (Commissioner) may conduct a financial examination of any insurance company as often as deemed appropriate. The commissioner must exam each insurance company conducting business in DC at least once every FIVE years.

DC Life Laws - Group Life Insurance Certificate

Participants under a group plan are issued certificates of insurance as evidence that they have coverage. Must contain: -Group Policy Number -Description of the insurance protection to which the certificate-holder is entitled -The name of the insured, beneficiaries and dependents -The rights and conditions

Agents Report (Part III)

The agent reports personal observations about the proposed insured. Provides additional information about the applicant's financial condition an character, the background and purpose of the sale, and how long the agent has known the applicant. Insured will ask if any insurance will b replaced, most states have procedures for replacements.

Credit Life or Health Insurance

The amount of credit life insurance cannot exceed the initial indebteness. The term of any credit life or health insurance begins when the debtor becomes obligated to the creditor and cannot extend more than 15 days beyond the scheduled maturity date of the indebtedness. The indebtedness is discharged before the schedule maturity date the insurance must be terminated and a refund paid.

Is the first premium payment a consideration for the application?

Yes. An insurer will not allow an applicant to possess a policy without receipt of the initial premium.

What are the most common sources of underwriting information include:

application, medical report, APS, MIB, special questionnaires, inspection reports, credit reports

Binding Receipts

are given by a company upon an applicant's first premium payment.

Conditional Receipt

given to the policy owners when they pay a premium at time of application. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt.

standard

is a person who, according to a company's underwriting standards, is entitled to insurance protection without extra rating or special restrictions

Earned Premium

is a pro-rated amount of paid-in-advance premiums that has been "earned" by the insurance company for providing the insured coverage.

Unearned premium

is a pro-rated amount of paid-in-advance premiums that has not been "earned" by the insurer. Appears as a liability on the insurer's balance sheet, since unearned premiums are paid back upon cancellation of the policy.

Material Misrepresentation

material fact that, had it been known by the insurer at the time of application, would have caused the insurer to reject the application, if intentional it would be fraud.

DC Health Laws - LTC Nonforfeiture Benefit Shopper's guide Long-term care rider

- A long-term care insurance policy must offer the option of purchasing a policy that includes a nonforfeiture benefit. The nonforfeiture benefit begins no later than the end of the 3rd year following policy issue date. - An applicant for a long-term care insurance policy must be given a shopper's guide in the format developed by the National Association of Insurance Commissioners, or approved by the Commissioner. - Long term care riders are designed to allow insureds who qualify for long-term care benefits to apply a portion or even their entire death benefit to these costs.

DC Life Laws - Group Life Insurance Conversion

Group life policies must contain a conversion privilege that allows for conversion to an individual policy for a specified period of time. Converted policies do not require evidence of insurability.

Regulations - Address/Name Change

Producers must report a change in address or name to the Insurance Commissioner within 30 days of the change

Any producer is required to act in a fiduciary capacity when collecting premiums or dealing with the public. This means that all producers possess a fiduciary responsibility when engaging in insurance transactions. A producer who has made an unintentional error or honest mistake has committed a tort known as an __________________ _______________________.

error and omission

Only by personally delivering a policy does the agent have a timely opportunity to review the contract and its provisions, ___________, ______________ and ________.

exclusions endorsements and riders

By reading and signing the insurance application, the applicant should realize that any false statements on an insurance application could lead to loss of coverage. These statements on an application are know as

executing agreements - because they place the policy into effect.

Rider

is an additional attachment to a policy that broadens benefits for additional premium.

Endorsement

typed onto the standard policy. Explaining the policy and how it meets the policyowner's specific objectives helps avert misunderstandings, policy returns, and potential lapses.

DC Health Laws - LTC Home Health Care Benefits Limitations and Exclusions

- Long term care policies must pay for at home care at the dollar amount equivalent of 50% of one year's nursing home benefits if the insured meets the qualifications for nursing home care - Exclusion or limitation of benefits on the basis of Alzheimer's Disease or dementia is NOT permitted. However, limits and exclusions may be placed on: * Preexisting conditions or diseases * Alcoholism and drug addiction * War or acts of war * Participation in a felony, riot or insurrection * Suicide or self-inflicted injury * Aviation (except for fare-paying passengers)

Tax Treatment of Health Insurance Premiums and Benefits

- employer paid premiums for health insurance are not included as part of an individual's taxable income. Not tax deductible for the individual but might be for employer. - Taxed before income tax is in effect. Cant claim as tax deduction. - Usually you cannot deduct the premiums paid on an individual health insurance policy. However, if your medical expenses including premiums paid exceed 10% of your adjusted gross income in any tax year, you may be able to take a deduction on the amount exceeding 10%. _ Generally aren't taxed on the health insurance benefits you receive. Includes reimbursements for medical care. - Premiums paid for personal disability income insurance are not deductible by the individual insured, but the disability benefits are tax-free to the recipient. - Group Disability Income: Premiums are deductible by the employer if the insurance plan is paid for entirely by the employer and benefits are paid directly to individual employees who qualify. - If an employee contributes to any portion of the premium, the benefit will be received tax-free in proportion to the premium contributed.

Moral Hazards are

- excessive drinking and use of drugs - accident prone - poor credit rating - Dishonest business practice

DC Life Laws Age, Beneficiary, Standard Nonforfeiture Law

15 years old to sign If an individual or group policy is made payable to a named beneficiary, a creditor can make no claim on the proceeds. Life insurance policies delivered in DC must include nonforfeiture provisions the specify what happens to the policy's cash value if the policyholder defaults in their premium payments.

DC Life Laws - Grace Period

30 days or one month after the due date. If the insured dies during this time the company may deduct any premium due from the death benefit.

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. Will identify life insurance in force with other carriers, as well as, lifestyle habits such as drug use. drugs, drinking, overeating and smoking. This can be released to the proposed insured's physician.

risk classification

Grouping of different risks according to their estimated cost or likely impact, likelihood of occurrence, countermeasures required, etc. Credit risk, or example, is classified according to the likelihood of the collection of accounts receivable.

Who are not considered members of the life and health guaranty association: ____________, Fraternal Benefit Societies, Mutual Assessment Companies, Insurance Exchanges, risk retention groups

HMOS

In DC can you contain exclusions, reductions, or other limitations related to AIDS, ARC, HIV or any illness or disease arising from those medical conditions as a cause of death

No

DC Health Laws - Notice of Claim Claim Forms Proof of loss Time payment of claims Physical Exams and Autopsies

Written notice of a claim must be given within 20 days after a covered loss starts or as soon as reasonably possible. An insurance company will send forms for filing proof of loss to a claimant within 15 days after company receives notice of claim. Written proof for any loss must be given to the insurance company within 90 days The time payment of claims provision states that indemnities payable under the policy will be paid immediately upon receipt of the written proof of loss. The minimum schedule of time in which claims MUST be made to an insured under an Individual Disability policy is monthly. The insurer has the right to examine the insured during the claim process and to an autopsy when death is involved and where it is not forbidden by law.

DC Health Laws Time limit on certain defenses (incontestable period) Grace Period Reinstatement

a health or disability policy is incontestable after it has been in force for a period of 3 years. Only fraudulent misstatements in the application may be used to void the policy or deny any claim at this point. no less than 7 days for weekly premium policies, 10 days for monthly and 31 days for all other policies. If paid coverage remains in effect. Reinstated after it had lapsed for nonpayment, there is a waiting period of 10 days before a claim covering sickness will be covered. Injuries sustained from an accident, however, will be covered immediately. If the insurer takes no action within 45 days after receiving the reinstatement application, the policy is considered automatically reinstated.

Inspection Reports

are reports of an investigator providing facts required for a proper underwriting decision on applications for new insurance and reinstatements.

What is considered a special questionnaire

aviation (most common) or avocation foreign residence finances military service occupation

Policy Summary

is a summary of the terms of an insurance policy, including the conditions , coverage limitations, and premiums. Often used with life insurance, long-term care insurance, and annuities. Preferred is a risk whose physical condition, occupation, mode of living, and other characteristics indicate a prospect for longevity for unimpaired lives of the same age.

Substandard Risk

is one below the insurers standard or average risk guidelines. Rated this for many reasons: poor health, dangerous occupation, attributes and habits that could be hazardous. Some are rejected outright, or approved but has increase in the premium or a coverage exclusion.

DC Health Laws - LTC Outline of coverage Renewability provision Inflation Protection

- An outline of coverage must be delivered to a prospective applicant for long-term care insurance by the producer at the time of initial solicitation. This must prominently direct the attention of the recipient to the document and its purpose. - Individual long-term care insurance policies must contain a renewability provision printed on the first page of the policy that states: * The duration of renewability * The duration of the coverage for which the policy is issued - All insurers issuing long-term care insurance policies must offer, as an optional benefit, an inflation protection feature which provides for automatic future increases in the level of benefits without evidence of insurability. Adjustments must be at a level which provides reasonable protection from future increases in the costs of care for which benefits are provided. *Increases benefit levels annually in a manner so that the increases are compounded annually at the rate of at least 5% * No evidence of insurability required

Regulations - Insurance Transaction includes any of the following

- Solicitation or inducement to purchase insurance - Negotiations toward the sale of insurance - Executing a contract of insurance - Advising on coverages and claims Licensee may not transact insurance business in this state until the licensee is appointed by an insurer.

Part I - General

- Type of policy -amount of insurance name and relationship of the beneficiary -other insurance the proposed insured owns -Additional insurance applications the insured has pending Does the client smoke, hazardous hobbies, foreign travel, aviation, etc are also asked.

Licensing Process for DC - Resident Producer License in this state must:

- be at least 18 years of age - Not have committed any act that is grounds for denial, suspension, or revocation - Completed a prelicensing course - Have passed the state exam for the lines of authority in which licensure is sought - Submit the application with fees ($100) - Not intend to use the license primarily to write controlled business.

Licensing - continuing education

Every 24-months, resident producers must complete 24-hours of continuing education, 3 which must be related to ethics, to keep their license active. Non-resident don't have to do an exam as long as their resident state is met.

DC Life Laws - Reinstatement

Insurance company that requires an application for reinstatement has 45 days to reject the application before reinstatement is automatic. In other words, if the insurer takes no action within 45 days, the policy is considered reinstated automatically. A policy may be reinstated within three years from the default date the insurer may request payment of all back premiums (with interest not to exceed 6% per year).

DC Health Laws - LTC Notice to buyer Suitability Pre-existing Conditions Free Look

- A notice to buyer must be on the first page of each long-term care policy delivered in. It explains that some long-term care costs may not be covered. - Every issuer of long-term care insurance must develop and use suitability standards to determine whether the purchase or replacement of a long-term policy is appropriate for the applicant's needs. Issuers and producers must present to the applicant at or before the application. - Pre-existing conditions are those for which medical advice or treatment was recommended by or received from a health provider within six months preceding the effective date of an individual long-term care policy. - A 30 day free look period is required for long-term care policies.

DC Life Laws

All life insurance policies must contain a policy loan provision stating that after premiums have been paid for three years, the company can loan the policyowner an amount equal to or less than the policy's nonforfeiture value. This provision does not apply to: term, temporary, or group insurance. Fixed policy loan rates may not exceed 8% per year.

Stock and Mutual Company

Stock - company owned and controlled by stockholders. The stockholders provide the capital and share in profit or losses. Stock insurance companies are considered nonparticipating because the policyowners do not share in the profits of the company. The objective is to produce profits for the owners, the stockholders. Mutual - owned and controlled by its policyowners. Owners do share in the profits of the company. The objective is to provide insurance to its owners, the policyowners, at the lowest net cost.

Warranties

are statements that are guaranteed to be correct. A warranty that is not literally true in every detail, even if made in error, is sufficient to render a policy void.

Inspection reports may be obtained by an insurance company from

neighbors, employees, associates of the applicant as well as the applicant. Applicant as the right to receive the report.

Insurable Interest An insurable interest exists if the applicant is in a position to suffer a loss should the insured incur medical expenses or be _________________ _____ __________ due to a disability. As with life insurance, insurable interest is a ____________________ for issuing a health insurance policy.

unable to work prerequisite

Standard Risk

used for individuals who fit the insurer's guidelines for policy issue without special restrictions or additional rating. These individuals meet the same conditions as the tabular risks on which the insurer's premium rates are based.

Part III Agents Report

- Agent becomes eyes and ears of the underwriter - Agent must also state if the policy being applied for is a replacement policy - Write down observations and anything that is important to the underwriting process If the answer is yes, most states demand that certain procedures be followed to protect the rights of consumers when policy replacement is involved: - Discussing the underwriting requirements that may impose new premium due to the insureds' new age and possible new medical conditions. -Pre-existing conditions that may impose limited coverage in the new policy and other benefit limitations.

DC Life Laws - Variable Products

- An agent who wants to sell Variable annuities must be licensed by the state, which includes examinations in Life and Variable contracts. - Agents marketing variable life insurance must be licensed and appointed as a life and variable. - Contract agent, and a broker-dealer or registered representative. - Variable annuities are regulated by both the Department of Insurance and the Securities Exchange Commission/FINRA - A variable annuity policyholder must be informed of the accumulated value of the contract during the premium payment period at least once each year.

DC Health Laws - Medicare Supplements The marketing of Medicare Supplements is regulated to prevent sales of excessive insurance, inaccurate policy comparisons, and the failure to display notice of limitations to the buyer

- The producer who solicits the application is primarily responsible for determining the appropriateness of a Medicare supplement policy for a proposed insured. - Insurers must deliver a Medicare Supplements Buyer's Guide at the time of application - When a Medicare supplement policy is purchased during the open enrollment period, the policy must be issued regardless of health status. - A medicare supplement policy must be delivered to an applicant with 7 days after producer has received it for delivery. - To verify if replacement is involved in a Medicare Supplement sale, insurance law requires that a question about replacement appear on the application form. - When a Medicare Supplement insurance policy is being replaced, the producer and applicant must sign the not of replacement, notify the replaced insurance company, and give a list of all health policies the producer sold to applicant in the past. - Medicare Supplement policy must be guaranteed renewable and cannot be cancelled due to individual's health status. - Free-look period for Medicare Supplements is 30 Days. - The open enrollment period for Medicare (and Medicare Supplements) begin 3 months before your 65th birthday and lasts for 7 months. - All Medicare beneficiaries are entitled to 6 month open enrollment period beginning on the date they first enroll for benefits under Medicare Part B. - An insurer may exclude coverage for a preexisting condition on a Medicare Supplement Policy for up to 6 months. - There must be prior state approval for Medicare Supplement information used in: insurance company brochures and radio/television advertisements made by the insurer - Insurers can use government publications for communicating Medicare Supplement information without prior state approval. - The insurer must provide an offer of conversion to individual coverage to certificate holders when a group Medicare Supplement insurance policy is terminated and not replaced. - A medicare supplement policy must disclose: the right to return the policy for a full refund; any limitations on pre-existing conditions; the right of the insurer to increase premiums - An insurer must notify the policyholders of any benefit changes within 30 days - A Medicare select policy is a medicare supplement policy that contains restricted network provisions

Buyer's Guide

A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision. Mostly used for life insurance, LTC and annuities

DC Health Laws - LTC Activities of Daily Living

Activities of Daily Living are considered the basic tasks of everyday life, such as dressing, eating, bathing, continence, toileting, and mobility. The inability to perform activities of daily living and the impairment of cognitive ability are used to determine eligibility for long-term care. Eligibility for benefits will require an inability to perform no more 3 ADLs

Penalties

After the hearing, if the Commissioner determines that those involved are responsible, a fine can be levied If the violation was committed flagrantly, the penalty can be more. Any person who violates an Unfair Trade Practice may be fined, upon conviction, not more than $1,000 for each offense.

DC Health Laws - Cancer Prevention

All health plans must provide benefits for preventative measurers (NOT SUBJECT TO A DEDUCTIBLE OR COINSURANCE) including: - Baseline mammogram - Annual screening mammogram - Annual cytologic screening (pap test) - Cytologic screening whenever medically necessary - Colorectal cancer screening - Prostate cancer screening

DC Health Laws - Substance Abuse Mental Health

All health plans must provide benefits when an insured is confined for treatment of alcoholism or drug abuse in a licensed medical care facility. - An insurer or HMO must cover dependency on alcohol or drugs for at least 12 days per year. If the insured requires inpatient or residential care, coverage will extend to at least 60 days per year.- - An insurer must pay a minimum of 75% for the first 40 outpatient visits each year and 60% for any outpatient visits thereafter that year. All health plans must provide benefits when an insured is confined for in-patient treatment of mental illness in a licensed medical care facility. - An insurer is required to cover treatment of mental illness for at least 60 days per year. - An insurer must pay a minimum of 75% for the first 40 outpatient visits each year and 60% for any outpatient visits thereafter that year.

Types of Receipts and Policy Delivery

Conditional Receipts - most common. Indicates that certain conditions must be met in order for the insurance coverage to go into effect. The conditional receipt provides that when the applicant pays the initial premium, coverage is effective on the conditions that the applicant proves to be insurable either on the date the application was signed or the date of the medical exam. If the applicant proves to be uninsurable as of the date of application or of the medical exam, no coverage takes effect and the premium is refunded. - Binding receipts coverage is guaranteed until the insurer formally rejects the application, even until rejection. Typically stipulates a maximum amount that would be payable during the special protection period. Constructive Delivery - Can be accomplished without physically delivering the policy into the policyowner's possession. Is accomplished technically if the insurance company intentionally relinquishes all control over the policy and turns it over to someone acting for the policyowner, including the company's own agent. Mailing the policy to the agent for unconditional delivery to the policyowner also constitutes constructive delivery, even if the agent never personally delivers the policy. However, if the company instructs the agent not to deliver the policy unless the applicant is in good health, there is no constructive delivery.

Information and Privacy Protection Act

Each insurer must conform with state and federal laws regarding the dissemination of an applicant's or insured's private information. Prohibits insurers to base their decision solely on the basis of previous adverse underwriting decision from support organizations, such as MIB and medical reports.

Factors in Premium Computation

Eligible Expenses - Each health insurance policy an insurer issues must carry its proportionate share of the costs for employees' salaries, agents' commissions, utilities, rent or mortgage payments, maintenance costs, supplies, and other administrative expenses. Interest - Just as with life insurance, interest is a major element in establishing health insurance premiums. A large portion of every premium received is invested to earn interest. The interest earning reduce the premium amount that otherwise would be required from policyowners. Benefits - The number and kinds of benefits provided by a policy affect the premium rate. The greater the benefits, the higher the premium. To state it another way, the greater the risk to the company, the higher the premium. - Claims Experience - Most practical way to estimate the cost of future claims is to rely on claims tables based on past claims experience. Experience tables have been constructed for hospital expenses based on the amounts paid out in the past for the same types of expenses. Experience tables have also been developed for surgical benefits, covering various kinds of surgery based on past experience. - Community Rating - requires health insurance providers within a geographical area to offer health insurance at the same price to all individual or group plans without medical underwriting regardless of health. Morbidity - This shows the expected incidence of sickness or disability within a given group during a given period of time. Mortality rates show average number of persons within a larger group of people who can be expected to die within a given year at a given age. - Age and Sex of Insured - Occupation and Hobbies

DC Life Laws - Group Life Insurance Eligibility

In the event of termination of a group life plan or of a covered employee. Has the right to convert such coverage to an individual policy within the conversion period (31 days) without proving insurability. If its right, the employee is responsible for the payment of premium. No restrictions regarding the assignment of coverage under a group life insurance policy

License - Reinstatement and Renewal

License expire on the last day of the birth month of the producer every two years. In order to renew the producer must complete any required continuing education and pay and required renewal fees. Can reapply after licensed expired up to 30 days after expiration and pay double the fee. Anything outside would require to file for reinstatement

DC Health Laws Long Term Care: Definition

Long term care insurance is designed to provide coverage for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services in a setting other than an acute care unit of a hospital. - A health insurance agent license is required in order to solicit Long-Term care insurance - Long term care insurance is any policy designed to provide coverage for at least 12 consecutive months for each covered person on an expense-incurred, indemnity, prepaid, or other basis. - Eligibility for benefits may require the inability to perform up to 3 activities of daily living

Preferred Risk

Many insurers reward good risks by assigning them to a preferred risk classification. Companies issue preferred risk policies with reduced premiums with the expectation of better than normal mortality or morbidity experience. Characteristics that contribute to a preferred risk rating include not smoking, weight within an ideal range, and not drinking. - Preferred risks generally receive lower rates than standard risks.

DC Life Laws - Nonforfeiture of Annuities

Must State: paid-up annuity benefit on a plan stipulated in the contract must be granted when all payments stop. A specified cash surrender benefit (deferred for nor more than 6 months, must be paid if a contract provides for a lump-sum settlement at maturity and the contract is surrendered at or before any annuity payments begin. The mortality table and interest rates used to calculate any paid-up annuity, cash surrender, or death benefits available under the contract.

Regulations - Agent/Producer appointments and Termination of producer appointment

Must submit appointment notice with commissioner within 30 days of an agent contract being executed. Insurer pays for the renewal fee appointment. Agent appointment must notify the Commissioner within 30 days of the date of termination. Within 15 days of such notice, the insurer must mail a copy of the notice to the terminated agent, the agent will have 30 days to submit written comments to the Commissioner.

DC Health Laws - Legal Actions Change of Beneficiary Cancellation Newborn Child Coverage

No legal action can be initiated within 60 days after proof of loss has been submitted to the insurance company. In addition, no legal action can be initiated after 5 years from the initial time written proof of loss has been provided. The change of beneficiary provision allows the policyowner to change the policy beneficiary if so desired as long as the beneficiary designation is revocable. This provision also gives the policyowner the right to surrender or assign the policy without obtaining the beneficiary's permission. Policies containing the Cancellation Provision may be cancelled by the insurer at any time after giving the insured at least five days advance written notice to the insurer must return any unearned premiums. All individual and group health plans which provide coverage to family members of the insured must provide coverage for the insured's newborn child at the moment of birth. If a premium is required to continue the newborn's coverage, it must be paid and the insurer must be notified of the birth within the first 31 days to continue coverage. Includes injury and sickness and medical care for diagnosed congenital defects and birth abnormalities. Plans must also include inpatient postpartum treatment and in-hospital stay of at least 48 hours after a vaginal delivery and 96 hours after a Caesarian delivery. Newborn child coverage requirements do NOT apply to the following policy types: Accident only, dread disease, home health care, Medicare supplements, nursing home, and student.

Policy Replacement

Very rare for health insurance policies to be replaced by new ones. However, in some certain circumstances insureds may want to replace an old health policy with a new one to meet their current health needs. It is important for the agent during this process to throughly explain several key points when replacing a policy, such as: - The underwriting process may be stricter to issue a new policy - Pre-existing conditions may limit benefits and coverage that was available under the old policy - There may be new benefit and coverage limitations and exclusions. E&O Liability is created if the agent fails to deliver information above.

Part II Medical

questionnaire of history and family medical history, might be asked to do a medical exam

Premium Mode

refers to the policy feature that permits the policyowner to select the timing of premium payments. Based on the assumption that the premium will be paid annually at the beginning of the policy year and that the company will have the premium to invest for a year. They can also do monthly, quarterly, semi-annually. More charges for policies other than annually due to additional charges for billings. This is also referred as the Mode of Premium provision.

If a change of occupation provision occurs, if the insured changes to a less hazardous job the insurer will

return any excess unearned premium. If they change to a more hazardous job benefits are reduced and premium remains the same.