AH4 Q&A Insurance Provisions

6. Naomi is killed in an auto accident before she is able to pay the semi-annual $80 premium on her $30,000 accident policy. Under the policy's unpaid premium provision, her beneficiary will receive a check for:

a. $0 b. $29,840 c. -> $29,920 d. $30,000 * Under a health insurance policy's unpaid premium provision, any due and unpaid premium (in this case, $80) is deducted from the settlement amount ($30,000). Therefore, Naomi's beneficiary will receive a check for $29,920.

21. Patricia has a health insurance policy for which she pays a semi-annual premium. If the premium is due on July 1, 2011, her grace period will end on:

a. -> 07/31/2011 00:00:00 b. 07/07/2011 00:00:00 c. 07/10/2011 00:00:00 d. 07/30/2011 00:00:00 * A semi-annual premium policy usually has a 31-day grace period in which the policy owner can pay the premium due. For policies with weekly premium payments, the grace period is seven days, and policies with monthly premiums have 10-day grace periods.

24. Under the standard cancellation provision, a company has the right to cancel a policy at any time with how many days written notice to the insured?

a. -> 5 days b. 10 days c. 15 days d. 30 days * Under the standard cancellation provision, the company has the right to cancel the policy at any time with 5 days' written notice to the insured. This provision is nevertheless prohibited in many states.

9. Under an individual disability income (DI) insurance policy, written proof of loss must be furnished to the insurer within how many days after the date of the loss?

a. -> 90 b. 60 c. 30 d. 10 * For a health insurance policy, including DI, written proof of loss must be furnished to the insurer within 90 days after the date of the loss.

3. What part of a health policy contains details about the policy coverage?

a. -> Benefit provisions b. Definitions c. Consideration clause d. Insuring clause * The benefit provisions explains the specific coverage details of the policy.

4. All of the following statements pertaining to health insurance policy notice of claim and claim forms provisions are correct EXCEPT:

a. -> Charlotte is injured January 5. Later, she wishes to file a policy claim for expenses incurred in connection with the injury. Generally, she would be required to submit a notice of claim to the company by February 5. b. Rex, the insured in a disability income policy, has been totally disabled and receiving benefits for 25 months. The notice of claims provision in his policy requires that he submit proof of loss every 6 months. c. Gail submits notice of claim to her insurance company after she becomes totally disabled. The company is to supply a claim form to her within 15 days. d. Furnishing claim forms is the responsibility of the insurance company. * Generally, a claimant must notify the insurance company within 20 days of an accident under a health insurance policy. Proof of loss must be submitted within 90 days of the loss, but if it is not reasonably possible for the insured to do so, the deadline will be extended to 1 year. The company must supply its claim forms to the insured within 15 days of notice of a claim.

1. Thomas, an insured, submits a claim and proof of loss for medical expenses covered by his major medical policy. According to the time of payment of claims provision, how soon must the company pay the claim?

a. -> Immediately b. Within 5 days c. Within 15 days d. Within 30 days * According to the time payment of claims provision of a major medical policy, the company must pay the claim immediately.

26. Any standard health insurance policy provision that is in conflict with a state statute:

a. -> Is automatically amended to conform to the state statute. b. Is deleted entirely from the policy. c. Is kept in the policy verbatim, but with a rider added. d. Supersedes the statute, and remains in force. * In accordance with the Conformity with State Statutes provision, any health insurance policy provision that conflicts with state law is automatically amended to conform to the statute.

17. The optional provision, other insurance with this insurer, is specifically designed to:

a. -> Limit the risk with any one individual insured by the company. b. Avoid issuing two policies on an insured person. c. Restrict an insured's coverage to one type of accident and health insurance. d. Discount the premiums if more than one policy is issued to insure the same individual. * The optional provision, "other insurance in this insurer," is an over insurance provision. It is designed to limit the company's risk with any one individual insured. An important consideration in health insurance underwriting is avoiding issuing a policy that provides too high a benefit, which would be a disincentive to return to work. Therefore, this provision sets a limit on the total indemnity for a particular type of coverage.

7. For a health policy to be reinstated, what must occur first?

a. -> The grace period must end b. A reinstatement application must be completed c. The insured must show proof of insurability d. All past due premiums must be paid * The reinstatement provision outlines the process to be followed after the grace period has ended.

11. According to the claim forms provision, if the insurer fails to supply the insured with claim forms with the specified time limit, the insured may:

a. ->Submit the claim or proof of loss on any form, explaining the occurrence. b. Must wait until the insurer or agent provides the approved claim forms. c. Must contact the insurer and request the approved claim forms again. d. Must contact the department of insurance's customer advocate to file a complaint against the insurer. * The insurer should supply a claim form to an insured within 15 days after receiving notice of loss. If the insurer fails to do so within the time limit, the claimant may submit the claim or proof of loss on any form, explaining the occurrence.

2. Joe failed to mail the premium for his major medical policy to the insurer for two months and his policy lapsed. He decided to apply for reinstatement that was eventually approved on August 20. Joe accidentally broke his leg on August 21. How will the insurer handle this claim?

a. ->The loss will be paid under the terms of the policy b. The loss will not be paid c. The insurer will pay a prorated amount d. The loss will be paid in full * Losses resulting from sickness require a 10 day waiting period after the reinstatement. Accidents are covered immediately.

18. According to the claim forms provision, the insurer should supply a claim form to an insured within how many days after receiving notice of loss?

a. 10 b. -> 15 c. 20 d. 30 * The company must transmit the claim forms to the policy owner/ insured within 15 days of claim notification.

27. A written notice of claim must be given to the insurer or agent within how days after the occurrence?

a. 10 b. 15 c. -> 20 d. 30 * The company must be notified of a loss within 20 days or as soon thereafter as reasonably possible.

25. You must provide written proof of loss to the insurance company within how days of the loss?

a. 15 b. 20 c. 60 d. -> 90 * You must provide written proof of loss to the insurance company within 90 days of the loss, if reasonably possible.

12. By paying your medical insurance premiums monthly, the company will extend a _____ day grace period.

a. 7 b. -> 10 c. 31 d. 60 * A 10-day grace period is extended to those with monthly premiums.

13. Which of the following is the usual grace period for a semi-annual premium policy?

a. 7 days b. 10 days c. -> 31 days d. 60 days * The minimum grace periods that may be specified are typically 7 days for policies with weekly premiums, 10 days for policies with premiums payable on a monthly basis and 31 days for other policies.

23. Which of the following is the usual grace period for a semi-annual premium policy?

a. 7 days b. 10 days c. -> 31 days d. 60 days * The minimum grace periods that may be specified are typically 7 days for policies with weekly premiums, 10 days for policies with premiums payable on a monthly basis and 31 days for other policies.

15. The reinstatement provision requires all of the following EXCEPT:

a. A new application. b. Proof of insurability. c. Past due premium. d. -> An application fee. * Insurers will usually require a reinstatement application, all back premium paid, proof of insurability before a decision is made.

19. Hubert, the insured, changes to a more hazardous job than the one he had when he applied for his disability income policy. According to the policy's change of occupation provision, what will happen when the insurer learns of his job change?

a. A specified percent of benefits penalty will be charged against any future benefit payments. b. There is nothing the insurer can do as long as Hubert pays the premiums for the policy. c. -> Policy benefits will be reduced to an amount the premiums would have purchased originally based on the more hazardous occupation. d. The insurer will cancel the policy unless Hubert pays an additional premium to cover the higher risk. * According to the policy's change of occupation provision, policy benefits will be reduced to an amount the premiums would have purchased originally based on the more hazardous occupation. Had Hubert changed to a less hazardous occupation (one that calls for a lower premium), the insurer would pay the full benefit for the loss and refund the excess premium to him.

22. Under the misstatement of age provision in a health insurance policy, what can a company do if it discovers that an insured gave a wrong age at the time of application?

a. Cancel the policy b. Increase the premium c. -> Adjust the benefits d. Assess a penalty * Under the misstatement of age provision in a health insurance policy, if a company discovers that an insured gave a wrong age at the time of application, it can adjust the benefits. Benefit amounts payable in such cases will be what the premiums paid would have purchased at the correct age.

16. Which of the following statements pertaining to the grace period and reinstatement provisions in health insurance policies is NOT correct?

a. Craig's health policy has a grace period of 31 days. He had a premium come due June 15 while he was on vacation. He returned home July 7 and mailed his premium the next day. His policy would have remained in force. b. Warren's medical expense policy was reinstated on September 30 and he became ill and entered the hospital on October 5. His hospital expense will not be paid by the insurer. c. -> Under a health policy's reinstatement terms, insured losses from accidental injuries and sicknesses are covered immediately after reinstatement. d. States may require grace periods of 7, 10, or 31 days, depending on the mode of premium payment or term of insurance. * Under a health insurance policy's reinstatement terms, insured losses from sickness will not be covered unless they occur at least 10 days after reinstatement. This is to prevent adverse selection against the insurer. Accidental injuries, however, are covered immediately.

29. What renewal provision guarantees you that the insurer cannot make any changes to your premium or policy benefits, to a certain age, unless you request it?

a. Guaranteed Renewable b. Optionally Renewable c. Conditionally Renewable d. -> Non-cancellable * A non-cancellable policy guarantees you that the insurer cannot make any changes to your premium or policy benefits to age 65 or a certain age, unless you request it.

28. According to the optional misstatement of age provision, all of the following statements are correct EXCEPT:

a. If the insured actually was younger at the time of application than shown in the policy, benefits would be increased. b. If the insured actually was older at the time of application than shown in the policy, benefits would be reduced. c. -> If the insured actually was older at the time of application than shown in the policy, the excess premiums paid would be refunded. d. If the age of the insured is misstated at the time of application, all amounts payable under the policy would be what the premiums paid would have purchased at the correct age * According to the optional misstatement of age provision, if the insured was actually older at the time of application than shown in the policy, benefits would be reduced accordingly.

10. All of the following are optional provisions in a health insurance policy EXCEPT

a. Misstatement of age. b. -> Change of beneficiary. c. Unpaid premium. d. Illegal occupation. * All health insurance policies must contain a change of beneficiary provision, which gives the insured the right to change the beneficiary unless the insured makes an irrevocable beneficiary designation. Optional provisions include a misstatement of age provision, which provides that if the insured's age was misstated, the amount payable will be equal to what the premium paid would have purchased at the correct age. An unpaid premium provision is also optional, and allows the insurer to deduct the amount of any unpaid premium or any note or order written against the policy. An illegal occupation provision, which states that the insurer is not liable for losses occurring while the insured committed a felony or engaged in an illegal occupation, is also optional.

30. Under the optional illegal occupation provision, which of the following applies if a loss occurs while the insured is participating in a felony or an illegal occupation?

a. The insured's policy is automatically cancelled. b. -> The insurer is not liable for that specific loss. c. Benefits are reduced by an amount specified in the policy. d. The policy is voided, as if it were never issued. * Under the optional "illegal occupation provision," the insurer is not liable for any loss sustained from the insured's commission of a felony or engagement in an illegal occupation.

5. Joe failed to mail the premium for his major medical policy to the insurer for two months and his policy lapsed. He decided to apply for reinstatement that was eventually approved on August 20. Joe had an emergency appendectomy performed on August 29. How will the insurer handle this claim?

a. The loss will be paid under the terms of the policy. b. -> The loss will not be paid c. The insurer will pay a prorated amount d. The loss will be paid in full * After policy reinstatement, losses resulting from sickness require a 10-day waiting period after the reinstatement. Accidents are covered immediately.

14. Joe failed to mail the premium for his major medical policy to the insurer for two months. His policy eventually lapsed. Joe decided to apply for reinstatement and completed all of the necessary requirements on August 1. As of September 15, Joe had not heard from the insurer. What is the status of Joe's policy?

a. The policy is not reinstated b. -> The policy is reinstated c. The insurer has declined his application d. The policy was not eligible for reinstatement * To reinstate a lapsed policy, the insured must apply for reinstatement and meet the company's insurability requirements. The company may require a new application and has the right to decline the application. The policy is reinstated automatically if the insurer does not take action on the application for 45 days.

20. Joe failed to mail the premium for his major medical policy to the insurer for two months. His policy eventually lapsed. Joe decided to apply for reinstatement and completed all of the necessary requirements on August 1. As of September 10, Joe had not heard from the insurer. What is the status of Joe's policy?

a. The policy is reinstated b. -> The policy is not reinstated c. The policy will be reinstated d. The policy is in the probation period * The company may require a new application and has the right to decline the application. The policy is reinstated automatically if the insurer does not take action on the application for 45 days.

8. The insurer under a health policy is liable for which of the following losses?

a. Those sustained while under the influence of alcohol b. Those sustained while under the influence of an illegal narcotic c. -> Those sustained while under the influence of a prescribed medication d. Those sustained while under the influence of any medication * Under a health insurance policy, the insurer is not liable for any loss attributable to the insured while under the influence of intoxicants, drugs or narcotics (unless such drugs were administered on the advice of a physician), or sustained while committing a felony.