Chapter 12 - Individual Policy Provisions

Which of the following is the correct number of days in the grace period for each premium mode? A 7 days for weekly, 10 days for monthly, 31 for all others B 10 days for weekly, 15 for all others C 10 days for weekly, 15 days for monthly, 31 for all others D 7 days for weekly, 10 days for monthly, 28 for all others

A 7 days for weekly, 10 days for monthly, 31 for all others According to the Grace Period Provision (a Mandatory Uniform Provision), this is the correct response.

An insured should receive necessary claim forms within _____ days after notice of claim. A 5 B 15 C 10 D 20

B 15 According to the Claim Forms Provision (a Mandatory Uniform Provision), the insured should receive the necessary claim forms within 15 days after notice of claim.

If an insurer makes a payment for a claim but the insured is dissatisfied with it, he/she must wait _____ days after proof of loss before he/she might take any legal action. A 90 B 60 C 20 D 45

B 60 According to the Legal Actions Provision (a Mandatory Uniform Provision), the insured must wait at least 60 days after proof of loss before legal action can be brought against the insurer. ***really??*** thought it was 45 or 90

Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as: A Oversight Provisions B Case Management Provisions C Extra-Legal Actions Provisions D Miscellaneous Provisions

B Case Management Provisions They are included as Case Management Provisions or sometimes referred to as Cost Containment Provisions.

Optional uniform provisions found in health insurance policies are designed to protect the: A Insured B Insurer C Agency D Producer

B Insurer

If the insurer cancels an individual health plan, what happens to the unearned premium? A The total is refunded B It is refunded on a pro rata basis C It is refunded on a short rate basis D It is used to offset underwriting costs

B It is refunded on a pro rata basis According to the Cancellation Provision (an Optional Uniform Provision), if the insurer cancels the insured's coverage, unearned premiums must be refunded on a pro rata basis.

Anna has a contract that includes the Non-Emergency Hospital Preauthorization Admissions Provision. For a scheduled hospital stay, she must first get preauthorization through her insurer. If she does not, the insurer may: A Pay the benefit, but send her a bill for additional premium B Reduce her normal benefits C Check her out of the hospital D Cancel her contract

B Reduce her normal benefits If Anna does not comply with this provision, she may have her normal benefit level reduced.

All of the following are required uniform provisions in individual health insurance policies EXCEPT: A Reinstatement B Entire contract C Grace period D Change of occupation

D Change of occupation

What is an impairment rider? A It pays out an additional benefit if the insured cannot perform 2 of the 5 specified functional activities B It guarantees the insured's future insurability C It pays out an additional benefit in cases where the cause of loss is a result of an accident D It excludes specific conditions that normally would cause the entire policy to be declined

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

Based upon Optional Uniform Provisions, an insurer would have the right to deny claim payment in all of the following circumstances, except: A A broken leg injury suffered as the result of ingesting an illegal drug B A claim involving an injury sustained in a bank robbery C A claim is covered by another insurer D Misstatement of age on the application

D Misstatement of age on the application Misstatement of age would not avoid a claim, but could cause a reduced benefit to be paid. The Insurance With Other Insurers, Illegal Occupations and Actions, and Intoxicants and Narcotics are each optional provisions that could allow an insurer to avoid liability for a claim.

Which provision states that the insurance company must pay claims immediately? A Relation of Earnings to Insurance B Payment of Claims C Legal Actions D Time of Payment of Claims

D Time of Payment of Claims

Louise purchased a disability policy when her salary was $4,000 a month. Later, she lost that job and her salary was reduced to $2,000 a month. Three years ago, she became self-employed and now receives $3,500 a month. The maximum disability benefit she might expect will be based on which salary amount? A $3,500 B $4,000 C The weighted average of her income levels over the life of the contract D $2,000

A $3,500 Relations of Earnings to Insurance (an Optional Uniform Provision) establishes that disability benefits may not exceed the monthly earnings of an insured at the time the disability commenced, or his/her average earnings for the 2 years immediately preceding the disability, whichever is greater.

If an insured changes occupations and the new occupation is in a higher risk class than the former occupation, what does the change of occupation provision allow the insurance company to do in the event a disability claim is presented, but the insured failed to inform the insurer of the change? A The insurer will reduce the benefit proportionally in relation to the actual premium paid based on the higher risk classification B The insurer may first collect the past due higher premium before approving the claim C The insurer may deny the claim due to misrepresentation D The insurer must pay the claim according to the contract, as stated in the insuring clause

A The insurer will reduce the benefit proportionally in relation to the actual premium paid based on the higher risk classification When an insured fails to notify the insurance company of a change in occupational to a higher risk classification and suffers a covered loss, the insurance company's only course of action is to reduce the benefit payable in relation to the premiums actually paid compared to the higher premium which should have been paid.

Which statement concerning individual A&H policy renewal provisions is most correct from the perspective of the insured? A Renewal provisions only apply to property and casualty contracts and are not included under individual A&H policies B The more favorable the renewal provision to the insured, the higher the cost C The more favorable the renewal provision to the insured, the lower the cost D The renewal provision has no impact on the cost of the policy to the insured

B The more favorable the renewal provision to the insured, the higher the cost The more favorable a renewal provision is to the insured, the higher the premium will be. A Noncancellable policy will cost the most because its premium may not be changed in the future.

Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy? A Proof of Loss B Waiver of Premium C Time limit on Certain Defenses D Payment of Claims

B Waiver of Premium Waiver of Premium is a rider (or provision) in a policy. It is neither a mandatory nor optional policy provision under the Model Act.

Harry was hospitalized and in a coma for 6 months. When does proof of loss for this claim have to be submitted? A An executor would be appointed by the courts to handle the necessary paperwork B Within 1 year, unless he suffers legal incapacity C Anytime, since he was in a coma and obviously could not submit a claim D Within 2 years, covered under the contestable period

B Within 1 year, unless he suffers legal incapacity The Proof of Loss Provision (a Mandatory Uniform Provision) stipulates that the insured must provide proof of the loss within 90 days of the loss, or within in the shortest time possible, but not to exceed 1 year unless the insured suffers legal incapacity. Since Harry was in a coma for 6 months, it would not have been possible for him to file a claim within the 90-day time period.

In which ONE of the following situations would an insurance company most likely use an impairment rider? A T, age 70, wants to buy an individual disability income policy, but is retired and receiving home health care B G is looking to obtain a health insurance policy, but is concerned about a current heart condition C F has cancer and is looking to buy a cancer only policy to help with the cost of treatment D S is looking to buy a disability income policy, but is unemployed

B. G is looking to obtain a health insurance policy, but is concerned about a current heart condition An impairment rider excludes coverage for a specific ailment or condition that otherwise would be covered, so the applicant is still able to obtain coverage for other health care needs.

What is the insured's responsibility with regard to notifying the insurance company of a loss under a disability policy? A Notice of claim must be filed not less than 60 days nor more than 1 year following the loss B Notice of claim must be filed within 20 days of the loss, or as soon as possible C It is up to the insured's doctor or the hospital to notify the insurance company of a claim D Notice of a claim may be filed at any time within one year of the loss

B. Notice of claim must be filed within 20 days of the loss, or as soon as possible Unless reasonably prevented from doing so, an insured must notify the insurance company of a claim in writing within 20 days of the loss. In practice, the insured's physician or the hospital makes the notification for the insured, but it remains the responsibility of the insured.

Which of the following is not an example of a cost containment measure? A Utilization review B Replacement C Mandatory second opinion D Precertification for cancer therapy

B. Replacement Mandatory second opinions, utilization review and precertification are all considered cost containment measures. Replacement can apply to any policy that is cancelled when a new policy is issued and is not specific to managed care plans.

Each Health and Disability Income Policy must express the conditions and provisions for _________. A Policy corrections B Conditional coverage C Continuation of the contract D Refunds of premium at maturity

C Continuation of the contract Each policy must express the conditions and provisions for renewal or continuation of coverage.

According to the Proof of Loss provision, how long does an insured have, under normal circumstances, to furnish the insurer with evidence of a claim? A Within 30 days of the loss B Within 60 days of the loss C Within 90 days of the loss D Within 45 days of the loss

C. Within 90 days of the loss

An individual is approved for a health insurance policy effective March 1. On March 4, the insured breaks his arm playing basketball with some friends, is treated at the local emergency room, and submits a bill for $2500 to his insurance company. On March 9, the insured decides to cancel the insurance and requests a refund of the $3000 annual premium he has paid. What will the insurance company do? A The company will send a short rate refund because the insured requested the cancellation B The company will only refund $500 because it is liable for his $2,500 claim C The insurer will not cancel the policy because the insured has already filed a claim D The insurer will refund the insured's $3,000 and has no responsibility to pay his claim

D The insurer will refund the insured's $3,000 and has no responsibility to pay his claim A policy cancelled during the free look period is void from the beginning, and no claims are payable. The Insured must receive a full refund of the premium he paid, and must also retain liability for 100% of the expense for his broken arm.

The 'time limit on certain defenses' generally terminates the insurance company's right to void a claim more than _________ years from the date of policy issue. A 1 B 10 C 5 D 2

D. 2 The time limit on certain defenses provision limits the time period the insurance company has to contest a claim to less than 2 years.

Rank the following renewability provisions in order from least favorable to most favorable in terms of benefit to an insured: A Noncancellable, guaranteed renewable, optionally renewable B Guaranteed renewable, optionally renewable, conditionally renewable C Guaranteed renewable, noncancellable, cancellable D Cancellable, conditionally renewable, guaranteed renewable

D. Cancellable, conditionally renewable, guaranteed renewable The renewability provisions in order from lowest to highest in terms of benefit to an insured/policyowner are: cancellable/nonrenewable, optionally renewable, conditionally renewable, guaranteed renewable, and noncancellable.

What is the purpose of a probationary period in a disability income policy? A It allows the insurance company to avoid any claims due to accidental causes in the first few days of the policy B It allows the insurance company to avoid all claims made in the first 10-30 days of the policy C It allows the employer to fire the employee up to 90 days after being hired without liability for any disability which may have occurred D It allows the insurance company to avoid illness claims made in the first 10-30 days of the policy

D. It allows the insurance company to avoid illness claims made in the first 10-30 days of the policy The purpose of the probationary period is to limit the insurance company's claims liability to sickness that occur immediately (10-30 days) after the policy is issued. Losses due to illness in the probationary period are considered as being caused by a preexisting condition.

How may the premium in a guaranteed renewable policy be increased? A It may be increased according to the increased risk of the insured's health status B It may not be increased at all C It may be increased only in relation to the number of claims paid in the past year D It may be increased for all similarly situated insureds based on age

D. It may be increased for all similarly situated insureds based on age A guaranteed renewable policy must be renewed upon payment of the current premium. If the insurer wants to raise the premium for an individual insured, it must increase the premium for all insureds that are "similarly situated" - persons who are the same age, all persons in the same state, all persons who own the same policy by "form number". Premium increases cannot be the result of an individual's claims history or a change health status.