Chapter 18 Policy Provisions

Proof of Loss (MPP)

After being supplied with proof of loss papers, the insured must submit proof of loss papers within 90 days.

Entire Contract (MPP)

An entire contract is: insurance policy provisions copy of the application riders if any attachments or amendments to the contract Any attachments must be included in writing otherwise they're not valid. Executive officer of the insurance company may change provisions, and that's it.

Unpaid Premium (OPP)

Any premium then due and unpaid or covered by any note or written order may be deducted therefrom. Aka you submit a claim $1500, with about $300 of unpaid premium then the premium will be subtracted from the $1500 to make it $1200.

Conformity with State Statues (OPP)

Any provision of the insurance policy must be altered to meet with state statutes.

Other Policy Provisions: Renewability Clause

Cancelable Policy: insurer may cancel coverage at any time, provided it returns any unearned premium to the insured. Cancellation does not relieve the insurer from paying existing claims. Optionally Renewable: the insurer may elect not to renew the for any reason or for no reason but may exercise that right only on the policy anniversary date or a premium due date. Conditionally Renewable: the insurer may elect not to renew only under conditions specified in the policy. Guaranteed Renewable: renewal is guaranteed with premium payment. Insurer may not cancel unless the insured fails to pay premium. Premiums may not be increased on an individual basis but under entire classifications. Guarantee to renew ends at a specified age. Noncancelable and Guaranteed Renewable: an insurer may not cancel or refuse to renew a noncancelable policy, and the insurer may only increase premiums on terms of the policy.

11 Optional Policy Provisions

1) Change of Occupation 2) Misstatement of Age 3) Other Insurance w/ this Insurer 4) Insurance w/ Other Insurers 5) Relation of Earnings to Insurance - Avg. Earning Clause 6) Unpaid Premium 7) Cancellation 8) Conformity with State Statutes 9) Illegal Occupation 10) Narcotics 11)

Payment of Claims (MPP)

1) Death benefits must be paid to the beneficiary 2) if there's no beneficiary then the company will pay the benefit to the insured's estate 3) If the insured was receiving monthly indemnities and some accrued benefits remain at the time of death, then the company may pay these accruals to the beneficiary or the insured estate 4) while the insured is alive, all other benefits are paid to the insured unless otherwise specifically designated in the policy.

12 Mandatory Policy Provisions

1) Entire Contract 2) Time Limit on Certain Defenses 3) Grace Period 4) Reinstatement 5) Notice of Claim 6) Claim Forms 7) Proof of Loss 8) Time Payment of Claims 9) Payment of Claims 10) Physical Examination and Autopsy 11) Legal Actions 12) Change of Beneficiary

Other Health Insurance Provisions

1) The Policy Face 2) Free Look Period 3) Insuring Clause 4) Consideration Clause 5) Renewability Clause (optionally/conditionally renewable/guaranteed renewable/ noncancelable policies) 6) Benefit Payment Clause 7) Exclusions and Reductions 8) Preexisting Conditions 9) Nonoccupational Coverage 10) Case Management Provisions 11) Waiver of Premium

Claims Forms (MPP)

Claims forms showing proof of loss from the insurance company need to be produced within 15 days.

Other Policy Provisions: Consideration Clause

Consideration is an exchange of something of value on which a contract is based. When BOTH parties exchange consideration, then the contract is validated. In health policies, consideration also states the date that coverage begins, and the length of initial coverage period.

Insurance with Other Insurers (OPP)

Each insurance company pays a Pro Rata (proportionate) amount of the claim

Grace Period (MPP)

Grace period for a weekly premium period: 7 days Monthly: 10 days Any Other: 31 days Remember your Aunt Grace's birthday

Change of Occupation (OPP)

If an insured's occupation is more hazardous than the insurer knew, and resulted in injury or illness, the insurer might be required to pay a larger benefit than the premium warrants. Therefore the benefits would be reduced if inured claims a less risky job than they have (think receptionist who's actually a cop) If overstated, the insured's premium rate will be reduced accordingly, and the insurer returns the excess premium to the insured.

Misstatement of Age (OPP)

If insured has misstated their age on their application, the company may adjust the benefits according to the amount the premiums paid would have bought, had the correct age been known. If insured overstates their name, the insured would increase benefits to compensate. If understated, the company would pay the insured a smaller benefit.

Notice of Claim (MPP)

In a notice of claim provision, the insured has a responsibility and duty to report a claim with 20 days after the loss occurs. Policies providing loss-of-time benefits payable for at least two years should include a provision that an insurer provide every six months a statement that the claim is on-going.

Illegal Occupation (OPP)

Insured will not be covered if the insurer comes to learn the claim was caused during the activities of an illegal occupation.

Cancellation (OPP)

Only way the insurer can cancel a policy is through unpaid premium and with the 5 days notice of cancellation. All unearned premium needs to be repaid pro rata if the insurer cancels the policy. Basically it depends on how many days are left on the unearned premium amount. If insured cancels, then it is returned at short-rate which is a portion of the proportionate pro-rata amount.

Change of Beneficiary (MPP)

Policyowner holds the right to name the beneficiary. Can be either revocable or irrevocable. Revocable you can change at any time. Irrevocable, the beneficiary is set in place.

Other Insurance with Same Insurer (OPP)

The individual is overinsured: The company can establish maximum amounts payable to any one insured for certain coverage so no matter how many policies an insured has with this particular company, there will be a limit on the amount of benefits that will be paid. If insurer chooses the paragraph then it's their responsibility to decide the benefit split, and if insured picks then the insured only uses one coverage.

Time of Payment of Claims (MPP)

The insurance company/insurer is supposed to provide timely payment of claims IMMEDIATELY, however in the state of MI this time period is 45 days.

Reinstatement (MPP)

The insured, not insurer, may cancel a policy at any time. Policy goes into lapse period. A lapsed policy is reinstated when either the company or the company's authorized agent accepts subsequent premiums. A conditional receipt of reinstatement could be required. If applying for reinstatement, and 45 days passes then the individual becomes insured again. 10 day waiting period/probationary period for sickness coverage Accident starts immediately.

Legal Action (MPP)

There is a 60 day grace period for the insurance company to investigate and make certain the claim is valid. A lawsuit against the company must be completed within 3 years from the date that the written proof of loss was submitted.

Other Policy Provisions: Policy Face

This is a standard printed form containing the name of the insurance company and providing enough information to give the insured a capsule summary of what type of policy and what type of coverage are provided by the contract.

Ratings of Earnings to Insurance - Average Earning Clause (OPP)

This provision ensures that the insured will not malinger- remain disabled in order to just collect insurance. Specifically address the relationship between what the insured actually has been earning on the job and the amount of insurance available by failing to return to work. If monthly benefits of all policies exceed the income loss, then the companies and policies will pay proportionate portions.

Other Policy Provisions: Benefit Payment Clause

Under disability policies there is periodic income. Lump-sum reimbursements are paid for expenses incurred in hospital, medical, surgical, and major medical. Lump-sum indemnity payments for death or dismemberment under accidental death and dismemberment policies.

Physical Examination and Autopsy (MPP)

Under this provision, while the insured is still alive and receiving benefits, the insurer may require that the insured submit to physical examinations. Following a death, the insurance can authorize an autopsy but it has to be subject to state law, and the insurer is required to pay for the examination and have to be reasonable.

Time Limit on Certain Defenses (MPP)

Unless an insured's misstatements are fraudulent, after TWO years from the policy date, the policy becomes incontestable. Misstatements cannot be used after two years. Only way contract can be voided is through fraud.

Other Policy Provisions: Insuring Clause

Usually in the initial policy, and in general it represents the insurer's promise to pay under conditions stipulated in the policy. 1) General scope of coverage 2) Any definitions required 3) sets forth conditions for benefit payment

Narcotics (OPP)

When injury or death occurs while under the influence of alcohol or illegal narcotics then generally the benefits will not be paid out.

Other Policy Provisions: Free Look

You receive a free look period of 10 days.