Health Insurance Policy Provisions

11 Optional Health Provisions

1. Change of Occupation- The change of occupation provision sets forth the changes that may be made to premium rates or benefits payable if the insured changes occupations. This provision allows the insurer to reduce the maximum benefit payable under the policy if the insured changes to a more hazardous occupation, or to reduce the premium rate charged if the insured changes to a less hazardous occupation. 2. Misstatement of Age- The misstatement of age provision allows the insurer to adjust the benefit payable if the age of the insured was misstated when application for the policy was made. 3. Other Insurance in This Insurer- The purpose of the other insurance in this insurer provision is to limit the company's risk with any individual insured. Under this provision, the total amount of coverage to be underwritten by a company for one person is restricted to a specified maximum amount, regardless of the number of policies issued. 4. Insurance with Other Insurer- In an attempt to deal with the potential problem of overinsurance, the insurance with other insurer provision states that benefits payable for expenses incurred will be prorated in cases where the company accepted the risk without being notified of other existing coverage for the same risk 5. Insurance with Other Insurers- Similar to the previous, the insurance with other insurers provision allows an insurer to pay benefits to the insured on a pro-rata basis when the insurer was not notified prior to the claim that the insured has other health coverage. 6. Relation of Earnings to Insurance- If disability income benefits from all disability income policies for the same loss exceed the insured's monthly earnings at the time of disability (or the average monthly earnings for two years preceding disability), the relation of earnings provision states that the insurer is liable only for that proportionate amount of benefits as the insured's earnings bear to the total benefits under all such coverage. 7. Unpaid Premiums- If there is an unpaid premium at the time a claim becomes payable, the amount of the premium is to be deducted from the sum payable to the insured or beneficiary. Or, if the premium is covered by a note when a claim is submitted, the n

12 Mandatory Health Provisions

1. Entire contract- Includes the actual policy and the application. 2. Time on Certain Defenses- Under the time limit on certain defenses provision, the policy is incontestable after it has been in force a certain period of time, usually two years. 3. Grace Period- Per the grace period provision, the policyowner is given a number of days after the premium due date during which time the premium payment may be delayed without penalty and the policy continues in force. 4. Reinstatement- Under certain conditions, a policy that has lapsed may be reinstated. Reinstatement is automatic if the delinquent premium is accepted by the company or its authorized agent and the company does not require an application for reinstatement. If it takes no action on the application for 45 days, the policy is reinstated automatically. 5. Notice of Claim- The notice of claim provision describes the policyowner's obligation to the insurer to provide notification of loss within a reasonable period of time. 6. Claim Form- It is the company's responsibility to supply a claim form to an insured within 15 days after receiving notice of claim. If it fails to do so within the time limit, the claimant may submit proof of loss in any form, explaining the occurrence, the character, and the extent of the loss for which the claim is submitted. 7. Proof of Loss- After a loss occurs, or after the company becomes liable for periodic payments (e.g., disability income benefits), the claimant has 90 days in which to submit proof of loss. 8. Time of Payment of Claims- The time of payment of claims provision provides for immediate payment of the claim after the insurer receives notification and proof of loss. If the claim involves disability income payments, they must be paid at least monthly, if not at more frequent intervals specified in the policy. In some states, the time payment of claims is 60 days. In other states, it's 30 days. 9. Payment of Claims- The payment of claims provision in a health insurance contract specifies how and to whom claim payments are to be made. 10. Physical Exam and Autopsy- The physical exam and autopsy provision entitles a company, at its own expense, to make physical examinations of the insured at reasonable in

Types of Beneficiaries

1. Primary: First in line. 2. Secondary (contingent): Second in line. 3. Tertiary: Third in line. If no one is named, death benefit will go to insured's estate

Monthly Premium individual health insurance policies must provide a grace period of at least

10 days

Insurers may request a hearing within ___ if their policy is rejected.

60 days

Conversion Privilege for Dependents

A single health policy may insure one or more people if the applicant is an adult family member and the others to be covered are members of her family. Thus, additional persons who may be insured include the spouse, dependent children, and others dependent upon the adult applicant (e.g., grandparents).

Which of the following statements best describes what the legal actions provision of an accident and Health policy requires?

An insured must wait at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed

Which of the following statements best describes what the legal actions provision of an accident and health policy requires?

An insured must wait at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed

Preexisting Conditions

As we have learned, medical expense and disability income policies usually exclude paying benefits for losses due to preexisting conditions pertaining to illness, disease, or other physical impairments. For purposes of issuing individual health policies, insurers consider a preexisting condition to be one that the insured contracted (or one that was manifested) prior to the policy's effective date.

When does a Probationary Period provision become effective in a health insurance contract?

At the policies inception

A producer does not have the authority to change a policy or waive any of its provisions. The health provision that best describes this statement is called the

Entire contract

Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?

Entire contract

Insuring clause

Generally, the insuring clause is a broad statement on the first page of the health policy stipulating conditions under which benefits are to be paid.

With an insurance policy, what is the purpose of the grace period?

Gives the policy owner additional time to pay past due premiums

Which of the following provisions specifies how long a policy owner insurance coverage will remain in effect if the policy owner does mot pay the premium when it is due?

Grace period

Which type of renewability best describes a disability income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class?

Guaranteed renewability

Maternity benefits

Maternity benefits are handled differently in individual health policies than in group health policies. When available for individual policies, a maternity provision may provide a fixed amount for childbirth or a benefit based upon a specified multiple of the daily hospital room benefit. Frequently, the maternity benefit is available only as an added benefit for an additional premium.

freelook clause

Some states mandate that health insurance policies contain a free-look provision permitting policyowners 10 days in which to examine their new policies at no obligation. If they decide not to keep their policies, they may return them within the prescribed time limit and receive full refunds of premiums paid.

Probationary Period

The Probationary Period provision in a health insurance contract becomes effective at the inception of the policy.

Waiver of Premium

The Waiver of Premium provision waives the payment of premiums after the insured has been totally disabled for the specified period of time.

Consideration clause

The consideration clause states the amount and frequency of premium payments. If the first premium has not been paid, even though the application has been completed and signed by the applicant, the necessary consideration is partially lacking. As is the case with life insurance, the legal consideration for a health policy consists of the application and payment of the initial premium.

Owners rights provision

The owner's rights provision defines the person who may name and change beneficiaries, select options available under the policy, and receive any financial benefits from the policy.

Which Accident and Health policy provision addresses preexisting conditions?

Time Limit on Certain Defenses

T files a claim on his accident and health policy after being treated for an illness. This insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claims validity. The provision that limits the time period during which the company may dispute a claims validity is called...

Time Limit on Certain Defenses.

Which of the following insurance policy provisions specifies the benefits or services a policy will provide?

insuring clause -it states the shop and limits of the coverage

Which of these is considered a mandatory provision?

payment of claims

The consideration clause in an insurance policy indicates that a policy owners consideration consists of a completed application and

the initial premium -the consideration clause contains information about the amount of premium payments and when they are due

The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending

time limit on certain defenses