CH8: Individual Health Insurance Policy General Provisions

Which of the following statements is true concerning the alteration of optional policy provisions? A Once any kind of provision is written, it cannot be changed. B An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder. C An insurer may change the wording of optional provisions, regardless of its effect on the policyholder. D An insurer may change the wording of optional policy provisions that would adversely affect the policyholder but must first receive state permission before the change goes into effect.

B An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder.

Which of the following is true regarding a term health policy? A It is noncancellable. B It is nonrenewable. C It is conditionally renewable. D It is guaranteed renewable.

B It is nonrenewable.

Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds? A Guaranteed renewable B Optionally renewable C Conditionally renewable D Cancellable

B Optionally renewable

With respect to the Consideration Clause, which of the following would be considered consideration on the part of the applicant for insurance? A Notice of policy cancellation B Payment of premium C Promise to renew the policy at the end of the policy period D Providing warranties on the application

B Payment of premium

Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss? A Claims Initiation B Consideration C Notice of Claim D Loss Notification

C notice of claim

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid? A 10 days B 25 days C 30 days D 45 days

D 45 days

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the A Incontestability clause. B Consideration clause. C Probationary period. D Insuring clause.

D Insuring clause.

While a claim is pending, an insurance company may require A The insured to be examined only once annually. B An independent examination only once every 45 days. C An independent examination as often as reasonably required. D The insured to be examined only within the first 30 days.

C an independent examination as often as reasonably required

An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued? A Adjust the claim benefit to reflect the insured's true age B Deny any claims and cancel the policy C Deny paying a claim based on misrepresentation D Pay the full amount of a claim because the contestable period has ended

A Adjust the claim benefit to reflect the insured's true age

Which health insurance provision describes the insured's right to cancel coverage? A. Renewal provision B Policy duration provision C Insuring clause D Cancellation provision

A. Renewal provision

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? A 7 days B 10 days C 31 days D 60 days

B 10 days

In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party? A Insurer to the insured B Insured to the insurer C Insurer to the Department of Insurance D Insured to the Department of Insurance

A Insurer to the insured

A policy with a 31-day grace period implies A The policy will not lapse for 31 days if the premium is not paid when due. B The policyholder may return the policy for a full refund within 31 days. C The policy is incontestable after 31 days of delivery. D The policy benefits must be paid within 31 days after a claim is submitted.

A The policy will not lapse for 31 days if the premium is not paid when due.

When the insured initiates the cancellation of a policy, the unearned premium will be refunded on a A Per occurrence basis. B Short rate basis. C Extended term basis. D Pro rata basis.

B Short rate basis.

What is the purpose of coinsurance provisions? A To share liability among different insurance companies B To help the insurance company to prevent overutilization of the policy C To have the insured pay premiums to more than one company. D To ensure payment to the doctors and hospitals

B To help the insurance company to prevent overutilization of the policy

When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision A Amounts payable under the policy will reflect the insured's correct age. B The contract will be deemed void because of the misstatement of age. C The elimination period will be extended 6 months for each year of age misstatement. D Because the misstatement occurred more than 2 years ago, it has no effect.

A Amounts payable under the policy will reflect the insured's correct age.

Which of the following is NOT a feature of a noncancellable policy? A The insurer may terminate the contract only at renewal for certain conditions. B The premiums cannot be increased beyond the amount stated in the policy. C The guarantee to renew coverage usually applies until the insured reaches certain age. D The insured has the right to renew the policy for the life of the contract.

A The insurer may terminate the contract only at renewal for certain conditions.

An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true? A The insured must submit proof of loss to the Department of Insurance. B The insured was in compliance with the policy requirements regarding claims. C The claim most likely will not be paid since the official claims form was not submitted. D The insurer will be fined for not providing the claims forms.

B The insured was in compliance with the policy requirements regarding claims.

An insured owes his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this? A Payment of claims B Unpaid premium C Legal action D Proof of loss

B Unpaid premium

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees A To renew the policy indefinitely. B To renew the policy until the insured has reached age 65. C To charge a lower premium every year the policy is renewed. D Not to change the premium rate for any reason.

B to renew the policy until the insured has reached age 65

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the A Incontestability clause. B Legal action against us clause. C Entire contract clause. D Time limit on certain defenses clause.

C Entire contract clause.

Items stipulated in the contract that the insurer will not provide coverage for are found in the A Benefit Payment clause. B Consideration clause. C Exclusions. D Insuring clause.

C Exclusions.

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? A Entire Contract Clause B Proof of Loss C Payment of Claims D Change of beneficiary

C Payment of Claims

When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. Which of the following statements correctly explains how this claim would be handled? A The insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner. B The insurer may deny the claim since it was not notified within the required 20-day time frame. C The insurer is considered to be notified since the notification to agent equals notification to the insurer. D The insurer may delay the payment of this claim for up to 6 months.

C The insurer is considered to be notified since the notification to agent equals notification to the insurer.

Which of the following will vary the length of the grace period in health insurance policies? A The length of time the insured has been insured B The term of the policy C The mode of the premium payment D The length of any elimination period

C The mode of the premium payment

An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy? A The insured reaches the maximum age limit specified in the policy. B Within two years of the application, the insurer discovers a misrepresentation. C The insured is in an accident and incurs a large claim. D The insured does not pay the premium.

C the insured is in an accident and incurs a large claim

The act of voluntarily giving up insurance by the insured is called A Rescission B Reinstatement C Termination D Cancellation

D Cancellation

An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would A Hold the claim as pending until the end of the grace period. B Deny the claim. C Pay half of her claim because the insured had an outstanding premium. D Pay the claim.

D Pay the claim.

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? A As soon as possible B Within 20 days C Within 60 days D Within 90 days or as soon as reasonably possible, but not to exceed 1 year

D Within 90 days or as soon as reasonably possible, but not to exceed 1 year