Review - Health Policy Provisions, Options & Riders

Marjorie has notified her insurance company that she has been in the hospital. The insurance company has furnished the form to file a claim. How long does Marjorie have to file proof of her loss? Select one: a. 10 days b. 30 days c. 60 days d. 90 days

Marjorie must file proof of loss within 90 days. The correct answer is: 90 days

Jason is comparing plans for medical insurance. His employer offers two plans. One has an 80/20 coinsurance provision and the alternate plan has a 75/25 coinsurance provision. Jason should expect which of the following? Select one: a. To pay less out of pocket for the 75/25 plan b. To have a lower premium for the 75/25 plan c. To have a better stop loss with the 80/20 plan d. There will be no difference between the plans.

Jason should expect to have a lower premium with the 75/25 plan, because the plan pays less coinsurance benefits. The correct answer is: To have a lower premium for the 75/25 plan

Coinsurance may do any of the following, EXCEPT: Select one: a. Provide insurance for multiple individuals b. Provide a cost sharing between the individual and the insurance company c. Mitigate risk d. Define which party will pay what portion of a medical bill

Coinsurance refers to the mechanics of how the policy pays benefits, not to provide insurance for multiple individuals. The correct answer is: Provide insurance for multiple individuals

Martha decides she does not want the new policy she purchased. She is within her free look period, so she returns the policy. She should receive which of the following? Select one: a. Full refund of all premiums paid b. Full refund less an administrative charge for the paperwork c. Full refund less the basic cost of insurance for the period Martha held the policy d. Full refund less a pro-rata charge for the agent commission

Each insurance policy must provide notice that during the free look period, from the date of delivery to the policyowner, such policy may be returned for cancellation to the insurer, the insurer will refund all premiums paid, including any policy fees or other charges, and the policy will be deemed void, as if no policy had been issued. The correct answer is: Full refund of all premiums paid

Who is the "Other Insurance in this Insurer" provision supposed to protect? Select one: a. Insured b. Insurer c. Beneficiary d. The state

The purpose of the "Other Insurance in this Insurer" provision is to prevent an insured from making a profit from insurance claims, thereby protecting the insurer. The correct answer is: Insurer

All of the following are required provisions in a health policy, EXCEPT: Select one: a. Grace period b. Notice of claim c. Entire contract d. Change of occupation

Change of occupation is an optional provision. This provision is in place to protect the company, not the policyholder. The correct answer is: Change of occupation

All of the following may be exclusions from coverage in a health policy, EXCEPT: Select one: a. Injury while committing a felony b. Sickness while traveling abroad c. Treatment for drug and alcohol abuse d. Self-inflicted injury

Sickness while traveling abroad is not a policy exclusion. The exception to this is Medicare, which does not cover treatment out of the country. The correct answer is: Sickness while traveling abroad

An insured has 20 days to notify the insurance company of a loss. This is called: Select one: a. Notice of claim provision b. Documentation of claim c. Claim form requirement d. Affirmative action provision

Written notice of claim must be given to the insurer within 20 days of the loss, or as soon as reasonably possible. This provision does not require submission of claims. It merely requires the insured to notify the company of a pending claim. The correct answer is: Notice of claim provision

According to the Physical Examination and Autopsy provision, who pays the cost of examining an insured? Select one: a. Insured b. Insurer c. Beneficiary d. The state

If not prohibited by state law, an insurer may request that a physical examination or autopsy of an insured be performed at the insurer's expense while a claim is pending. The correct answer is: Insurer

A policy lapses when: Select one: a. Premiums have not been paid and the grace period expires b. A bank draft is returned for NSF c. The insured pays with a money order d. The insured does not contact his agent for payment instructions

A grace period of at least seven days for weekly premium policies, 10 days for monthly premium policies and 31 days for all other policies, will be granted for the payment of each premium falling due after the first premium, during which grace period the policy coverage will continue in force. None of the other choices automatically creates a lapse. The correct answer is: Premiums have not been paid and the grace period expires

Bruce has a noncancellable health policy. The company may do any of the following, EXCEPT: Select one: a. Pay the benefits when they are due b. Cancel the policy or raise premiums c. Offer different premium modes d. Pay the listed beneficiary any death benefit due

A noncancellable policy guarantees the rate and the renewal from change or cancellation. The correct answer is: Cancel the policy or raise premiums

Mr. Jones wants a health policy that can never be cancelled by the insurance company. He also wants one that will guarantee the premiums for the life of the policy (no premium increases). He should look for a policy that is: Select one: a. Noncancellable b. Guaranteed renewable c. Renewable for life d. Provisionally renewable

A noncancellable policy provides the insured the right to continue coverage by making timely payment of premiums. The insurer cannot make changes to a noncancellable policy without the consent of the insured. The noncancellable renewability provision is the same as the guaranteed renewable provision, except that premiums cannot be increased. The correct answer is: Noncancellable

A company may use a rider or an endorsement to do any of the following, EXCEPT: Select one: a. Add benefits b. Change the insuring clause c. Increase premiums d. Restrict benefits

An insurance company may not use a rider or endorsement to change the insuring clause. The insuring clause contains the insurer's basic promise to pay a sum of money in the event of a covered loss to the beneficiary. The correct answer is: Change the insuring clause

Amanda noticed that the wrong date of birth was recorded on her application for insurance. Health policies have a provision that addresses this issue. If Amanda has a claim, she can expect which of the following? Select one: a. The policy will be cancelled for fraud. b. Claims will be denied until her age is corrected. c. The amount of the claim will be adjusted to reflect the correct premium and benefit. d. The insurance company will ignore this and pay as requested.

If the age of the insured has been misstated, all amounts payable under the policy will be modified to that which the premiums would have purchased at the correct age. The correct answer is: The amount of the claim will be adjusted to reflect the correct premium and benefit.

Is an insurance company required to return unearned premiums on a policy cancellation? Select one: a. Only if the insurance company initiates cancellation b. Only if the policy has a provision allowing this action c. In all cases where the insured has paid for coverage beyond the cancellation date d. Never

In the event of cancellation, the insurer must return the unearned portion of any premium paid. An insurance company is not allowed to charge for coverage it did not provide. The correct answer is: In all cases where the insured has paid for coverage beyond the cancellation date

Cheryl has filed a claim for a hospital stay with her insurance company. She has complied with all time lines, but the insurance company has been unresponsive to date. Her health care providers are calling her for payment and threatening to turn her account over to a collection agency. How long does Cheryl have to wait until she can take legal action against the insurance company? Select one: a. 20 days b. 30 days c. 60 days d. 90 days

No legal action may be brought to recover on the policy until 60 days after written proof of loss is provided to the insurer. The correct answer is: 60 days

What provision of a health policy may cover pre-existing conditions? Select one: a. Time limit for certain defenses b. Entire contract c. Insuring clause d. Exclusions

Note the difference. Exclusions will list the specific conditions that will not be covered. Time limit for certain defenses will provide automatic coverage for a condition that might not have been disclosed after a certain time. The correct answer is: Time limit for certain defenses

Normally, proof of loss for a medical claim must be submitted to the insurance company for consideration within 90 days, UNLESS: Select one: a. The provider fails to submit the claim. b. The insured is not of legal capacity. c. Hospital claims take longer. d. The insured is out of town.

The primary exception is lack of legal capacity of the insured. The correct answer is: The insured is not of legal capacity.

Which of the following is one of the ownership rights of an insurance contract? Select one: a. Pay a claim b. Change a beneficiary c. Consideration provision d. Insuring provision

One of the policyowner's rights is to change the beneficiary. The correct answer is: Change a beneficiary

The incontestable clause in a health policy will provide what protection? Select one: a. After two years, the claim may not be contested by the insurance company, except for fraud. b. The insured may not contest the premiums after two years. c. The policy may not be altered for any reason after two years. d. Premiums may not be waived until the end of two years.

After two years, except for fraud, the claim may not be contested by the insurance company. This is a standard provision in virtually all policies. Note the exception for fraud because there is no limit for that. The correct answer is: After two years, the claim may not be contested by the insurance company, except for fraud.

John has been in the hospital for five days. How long does he have to file a claim form and show proof of loss with his insurance company? Select one: a. 45 days b. 90 days c. 20 days d. 60 days

Although medical providers may file claims on your behalf, it is the responsibility of the insured to be sure that proof of loss is provided within 90 days with a proper claim completed and valid receipts attached. The correct answer is: 90 days

Fred has purchased a cancellable policy. He should understand that: Select one: a. He can keep the policy as long as he makes required premiums. b. The policy may be cancelled by the insured only on the anniversary date. c. The insurance company may cancel the policy at any time with proper notice and refund of all unearned premium. d. The insured can cancel for any reason.

Cancellable polices allow the insurer to cancel the policy at any time provided the insurer returns all unearned premium. The correct answer is: The insurance company may cancel the policy at any time with proper notice and refund of all unearned premium.

Co-insurance is designed to control which of the following situations? Select one: a. Make deductibles higher b. Allow the insurance company to charge higher premiums c. Raise premiums more frequently d. Make the insured responsible for some of the charges to hold down claims payments

Co-insurance will make the insured responsible for some of the charges to hold down claims payments. Medical economics tell us that an individual will use fewer services when he/she is responsible for part of the payment. The correct answer is: Make the insured responsible for some of the charges to hold down claims payments

All of the following provisions are mandatory in health policies, EXCEPT: Select one: a. Coinsurance provision b. Grace period c. Payment of claims provision d. Reinstatement provision

Coinsurance is not a mandatory provision. The correct answer is: Coinsurance provision

Marjorie has notified the insurance company of a claim. How long does the insurance company have to furnish a claim form? Select one: a. 10 days b. 15 days c. 30 days d. 45 days

Once she has notified the company, they must give her a claim form within 15 days. The correct answer is: 15 days

Julia purchases a disability policy that will provide $500 per month if she becomes disabled. The policy requires her to notify the insurance company if she changes occupations. When the policy was issued, Julia was a bank employee. At the time of disability, she had changed occupations to become a welder. What kind of benefit should she expect? Select one: a. A refund of premium since she had not notified the company of the change b. A lower benefit since she had changed to a more hazardous occupation c. $500 per month since that is what she paid for d. More than $500 per month since she had paid premiums for a long time

Julia has changed her job to a more hazardous occupation; therefore, the insurance company would lower the benefit amount. The correct answer is: A lower benefit since she had changed to a more hazardous occupation

Which of the following will you find in the consideration clause of a heath insurance contract? Select one: a. Rules on filing claims b. Frequency of premium payments c. Entire contract d. Conversion options

Premiums are part of the consideration for the insurance contract. Know that both the application and the premium constitute the consideration at the time of application. The correct answer is: Frequency of premium payments

Matilda goes motocross racing over the Memorial Day weekend and suffers a broken leg. She contacts her agent to purchase a major medical policy and files a claim when the policy is issued. The company declines the claim. The grounds for declination is which of the following? Select one: a. Insuring clause does not cover this event b. The premium was not paid until the policy was issued c. The transaction did not meet the consideration requirement d. The broken leg was a preexisting condition

The accident occurred prior to the application for the policy, so it is a pre-existing condition. The correct answer is: The broken leg was a preexisting condition

Which of the following may be an optional provision under the Uniform Provisions Law? Select one: a. Physical exam b. Change in occupation c. Entire contract d. Time limit to file claims

The change of occupation provision is an optional provision. The other provisions are mandatory. The correct answer is: Change in occupation

Nathan has advised his insurance company of a loss covered by his major medical policy. Nathan has not received a claim form. After 15 days, Nathan may: Select one: a. File a complaint with the insurance department b. Hire a lawyer to settle the claim in court c. Submit a description with supporting documents in any form he chooses d. Have his claim paid automatically since the company has not followed the rules

The claims form provision of a health contract states that if claims forms are not provided within 15 days, the claimant may submit the claim on any form they choose. The correct answer is: Submit a description with supporting documents in any form he chooses

The NAIC insurance model includes how many optional standard provisions for health insurance contracts? Select one: a. 10 b. 11 c. 12 d. 13

The current law includes 11 optional provisions. The correct answer is: 11

The NAIC insurance model includes how many mandatory standard provisions for health insurance contracts? Select one: a. 10 b. 11 c. 12 d. 13

The current law includes 12 mandatory provisions. The correct answer is: 12

The entire contract provision in a health policy prevents the insurance company from: Select one: a. Cancelling the policy without written notice b. Increasing premiums for all in this policy type c. Eliminating the need for consideration d. Changing the terms of the contract by referring to documents not included in the policy

The entire contract provision prevents the insurance company from changing the terms of the contract by referring to documents not included in the policy. The correct answer is: Changing the terms of the contract by referring to documents not included in the policy

An insurance company may not modify the policy agreement (contract) without the insured's written permission. The part of the policy that addresses this is called which of the following? Select one: a. Uncontested legal action provision b. Incontestable provision c. Entire contract provision d. Modifying benefits provision

The entire contract provision prohibits any changes in the policy unilaterally. The correct answer is: Entire contract provision

Using the facility of payment clause in a policy, the insurance company may pay an amount up to the maximum limit to which of the following? Select one: a. The people who appear to be entitled to it b. The insured's estate c. Directly to a medical provider without proper assignment d. None of the above

The facility of payment provision states benefits are payable to an individual who is related to the deceased insured by blood or marriage. The limit in this amount is usually less than $3,000. The correct answer is: The insured's estate

The grace period for a health insurance policy may vary according to which of the following? Select one: a. Annual benefit period b. Frequency of premium payment c. Amount of the deductible d. Length of the elimination period

The grace period can vary according to frequency of premium payment. The grace period can be 7 days for weekly premiums, 10 days for monthly premiums and 31 days for all other modes of premium payment. The correct answer is: Frequency of premium payment

The grace period on a health policy is based on: Select one: a. The amount of the benefit maximum b. The amount of the deductible c. The mode of premiums d. The exclusion rider attached

The grace period on a health policy is based on the mode of premiums. The grace period can vary from 7-31 days depending on the mode of premium. The correct answer is: The mode of premiums

The term used for incontestable period for a health insurance contract is which of the following? Select one: a. Grace Period b. Time limit on filing claims c. Consideration clause d. Time limit on certain defenses

The incontestable period for a health insurance contract is called the time limit on certain defenses. The correct answer is: Time limit on certain defenses

Rupert has filed a claim to be reimbursed for a recent hospital stay. He feels the company is either ignoring his claim or is attempting to deny coverage. How long must he wait to initiate legal action? Select one: a. He must use an arbitrator first. b. He must contact the insurance department first. c. He must wait 60 days. d. The company has 45 days to respond.

The insured must wait 60 days after filing the claim before commencing legal action. The correct answer is: He must wait 60 days.

An application for reinstatement of a health insurance policy was submitted with all the proper requirements. The company makes no response. Will the policy automatically reinstate without further company action? Select one: a. No, the company has refused reinstatement. b. Yes, coverage is in effect after 90 days. c. No, the company must take affirmative action. d. Yes, the coverage will be effective in 45 days.

The insurer will reinstate the policy upon the 45th day after all past due premiums are paid, unless the application is denied. The law assumes that the company has approved the reinstatement if they do not take action to the contrary. The correct answer is: Yes, the coverage will be effective in 45 days.

Zack and his friends were celebrating his promotion to manager at a local pub after work. Zack was "over served" at the party and on the way home, Zack was involved in a serious accident that required him to be hospitalized. His blood alcohol level was well above the allowable limit. Zack's insurance policy will most likely pay his benefit at what level? Select one: a. Standard benefits as for any other claim b. A limit of $5,000 total, regardless of claim size c. Nothing, as alcohol related accidents are usually policy exclusion. d. His deductible will be twice the policy schedule.

The insurer would pay nothing. The insurer is not liable for any loss or injury in consequence of the insured's being intoxicated or under the influence of any narcotic, unless administered on the advice of a physician. The correct answer is: Nothing, as alcohol related accidents are usually policy exclusion.

Seth has notified his insurance company that he has a claim. The insurance company must furnish a claim form within how many days to comply with the governing provisions? Select one: a. 15 days b. 21 days c. 10 days d. 30 days

The insurer, upon receipt of the notice, must furnish the forms for filing proof of loss. If the forms are not provided within 15 days, the claimant will be deemed to have complied with the policy's requirements for proof of loss upon submitting written proof of the occurrence, as well as the character and the extent of the loss for which claim is made. The correct answer is: 15 days

What constitutes the "entire contract" for a health policy? Select one: a. The form the insurance company has on file with the insurance commissioner b. The policy, all riders and amendments, the application and all other papers that are required c. All papers the agent has on file applicable to the policy d. The photocopy on file with the insurance commissioner

The only choice is one with all the components of a policy included. These must all be provided to the insured in the form of a policy. The correct answer is: The policy, all riders and amendments, the application and all other papers that are required

A disability policy has lapsed due to non-payment of premium. The insured contacts his/her agent to pay back premium and reinstate the policy. What is the waiting period before coverage resumes? Select one: a. 90 days for accidents and sickness b. 10 days for sickness and immediate for accidents c. 60 days for sickness and 30 days for accidents d. 30 days for both sickness and accidents

The reinstated policy will cover accidents immediately upon reinstatement, but will not cover sickness until 10 days have passed. The correct answer is: 10 days for sickness and immediate for accidents

Joan asked her agent when will she have benefits if she reinstates a lapsed health policy. Her agent would be correct if he told her: Select one: a. 10 days for accidents and 30 days for sickness b. Immediately for accidents and 10 days for sickness c. 30 days for either sickness or accident, but there would be a new pre-existing condition period d. 30 days for accidents and 60 days for sickness

The reinstatement provision states that a reinstated policy will cover accidents immediately, but will not cover sickness until 10 days have passed. The correct answer is: Immediately for accidents and 10 days for sickness

A claim has been filed on a timely basis. The insurer has requested further proof of loss. How long does the insured have to furnish the proof? Select one: a. 60 days, up to one year b. 60 days, up to 5 years c. 90 days, up to 1 year d. 90 days, up to 5 years

The standard time frame is 90 days, but the insured may have up to one year if it's not reasonable to obtain the proof in 90 days. In no event, except in the absence of legal capacity, may proof of loss be submitted later than one year from the date proof of loss was initially required. The correct answer is: 90 days, up to 1 year

Old Reliable issues a policy that may not be cancelled by the insurance company, except for non-payment of premium. The company does have the right to adjust premiums for an entire class of business. This type of policy is called which of the following? Select one: a. Guaranteed level premium b. Non-cancellable and renewable c. Guaranteed renewable d. Variable rate policy

This is the way a guaranteed renewable contract works. This is generally the type of contract for medical benefits, since the claims will be subject to inflation. The correct answer is: Guaranteed renewable

Jim applies for reinstatement after his health policy lapses. He submits all requirements, including the premiums. He hears nothing further from the company. This policy is in effect: Select one: a. When 30 days have passed without notification b. When his agent binds the contract c. Automatically in 45 days if the company takes no action d. Only when the company notifies him he has coverage

Unless the company takes action to the contrary, his coverage is deemed to be effective in 45 days. The correct answer is: Automatically in 45 days if the company takes no action

Mary has been admitted to the hospital for testing. How long does she have to give notice of claim to the insurance company? Select one: a. 15 days b. 20 days c. 30 days d. 45 days

Written notice of claim must be given to the insurer within 20 days of the loss, or as soon as reasonably possible. Notice given by or on behalf of the insured or beneficiary to the insurer or any authorized agent is deemed as proper notice. The correct answer is: 20 days