Chapter 9

Renewability Provisions

Generally speaking, the more favorable the renewability provision is to the insured policyholder, the higher the premium

Claim Forms

It's a 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 the claim in any form, which must be accepted by the company as adequate proof of loss.

Preexisting Conditions

Medical expense and disability income policies usually exclude paying benefits for preexisting conditions. Such exclusions are subject to "time limit on certain defenses" provision. Any preexisting condition that the insured has disclosed clearly in the application usually is not excluded or, if it is, the condition is named specifically in an excluding waiver or rider

Nonrenewable Policies

Normally associated with short-term health insurance

Notice of Claim

Notice of claim provision describes the policy owner's obligation to the insurer to provide notification of loss within a reasonable period of time, typically, the period is 20 days.

Other Health Insurance Policy Provisions

Other clauses

Payment of Claims

Payment of claims provision in a health insurance contract specifies how and to whom claim payments are to be made

Physical Exam and Autopsy

Physical Exam and Autopsy entitles a company, at its own expense, to make physical examinations of the insured at reasonable intervals during the period of a claim, unless its forbidden by state law

Common Exclusions or Restrictions

Policies frequently cite a number of exclusions or conditions that aren't covered. Common ones are injuries due to war or an act of war, self inflicted injuries and those incurred while the insured is serving as a pilot or crew member of an aircraft

Time Limit on Certain Defenses

Policy is incontestable after it has been in force a certain period of time, usually 2 years. A fraudulent statement on a health insurance application is grounds for contest at any time, unless the policy is guaranteed renewable

Guaranteed Renewable Policies

Policy must be renewed (as long as the premiums are paid) until the insured reaches a specified age. Guaranteed renewable policies normally have increasing premiums

Time Payment of Claims

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

Change of Occupation

Provision allows insurer to reduce maximum benefit payable under the policy if the insured switches to a more hazardous occupation or to reduce the premium rate charged if the insured changes to a less hazardous occupation

NAIC Model Health Insurance Policy Provisions (Uniform Individual Accident and Sickness Policy Provision Law

Purpose of the Uniform Individual Accident and Sickness Policy Provision Law was to establish uniform or model terms, provisions and working standards for inclusion in all individual health insurance contracts

Cancelable Policies

Renewability provision in a cancellable policy allows the insurer to cancel or terminate the policy at any time. Cancellable policies also allow the insurer to increase premiums

Cancellation

Though prohibited in a number of states, the provision for cancellation gives the company the right to cancel the policy at any time with 45 day's written notice to the insured. If cancellation is for nonpayment of premium, insurer must give 10 day's written notice to the insured.

Other Insurance with This Insurer

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. Provision is designed to protect the einsurer

Grace Period

- Policy owner is given a number of days after the premium due date which time the premium payment may be delayed without penalty and the policy continues in force - If an insurer pays an individual accident and health insurance claim during a policy's grace period, the amount of unpaid premium may be subtracted from the reimbursement - Depending on the state, the minimum grace periods typically specified are 7 days for policies with weekly premium payments, 10 days for policies with premiums payable on a monthly basis and 31 days for other policies

Entire Contract

- States that nothing outside the contract can be considered part of the contract - Assured policy owner that no changes will be made or will any of the contract's provisions be waived after it has been used - Any change to a policy must be made with the approval of an executive officer of the insurance company whose approval must be endorsed on the policy or attached in a rider

12 Mandatory Policy Provisions

12 Mandatory provisions that are required to be in all health insurance contracts

Noncancellable Policies

A noncancellable policy cannot be cancelled nor can its premium rates be increased under any circumstances, most commonly found in disability income policies

Conversion Privilege for Dependents

Affordable Health Care Act mandated that all policies and plans must provide dependent coverage up to age 26. Adopted children, stepchildren and foster children are usually eligible for coverage. Policy is in force until child marries of reaches limiting age

Conditionally Renewable Policies

Allows insurer to terminate the coverage but only in the event of one or more conditions stated in the contract. Typically related to the insured reaching a certain age or losing gainful employment. A conditionally renewable policy can increase premiums at time of renewal

Misstatement of Age

Allows the insurer to adjust the benefit payable if the age of the insured was misstated when application for the policy was made

Conformity with State Statutes

Any Policy Provision that is in conflict with state statues in the state where the insured lives at the time the policy is issued is automatically amended to conform with the minimum statutory requirements

Probationary period

Becomes effective at the inception of the policy

Eleven Optional Provision

Companies may ignore them or only use those that are needed in their policy forms

Relation of Earnings to Income

If disability income benefits from all disability income polciies for the same loss exceed the insured monthly earnings at the time of disability, the relation of earnings 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.

Reinstatement

If the insurer takes no action on the application for 45 days, the policy is reinstated automatically. To protect the company against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date. Accidents are covered immediately upon reinstatement

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

Illegal Occupation

Illegal occupation provision specifies that the insurer is not liable for losses attributed to the insured's being connected with a felony or participation in any illegal occupation

Insurance with Other Insurer

In attempt to deal with overinsurance, 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.

Insurance with Other Insurer(s)

Insurance with other insurers provisions allows any 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

Legal Actions

Insured cannot take legal action against the company in a claim dispute after 60 days from the time the insured submits proof of loss

Change of Beneficiary

Insured, as a policy owner, may change the beneficiary designation at any time unless a beneficiary has been named irrevocably

Intoxicants and Narcotics

Insurer is not liable for any loss attributed while insured is intoxicated or under the influence of narcotics

Insuring Clause

Insuring Clause is the part of health insurance policy that states the kind of benefits provided and the circumstances under which they will be paid. Purpose is to specify scope and limits of the coverage provided

Proof of Loss

Statement that an insured must give an insurance company to show that a loss actually occurred is a Proof of Loss. Claimant has 90 days in which to submit proof of loss

Consideration Clause

The insurance company exchanged the promises in the policy for a two-part consideration from the insured. 1. The initial full minimum premium is required (premium requirements are set) 2. The statements made in the application

Optionally Renewable Policies

The renewability provision in an optionally renewable policy gives the insurer the option to review the policy and terminate the policy on a date specified in the contract

Waiver of Premium

Waives the payment of premiums after the insured has been totally disabled for the specified period of time.

Waivers for Impairments

When an insured company doesn't cover and insured's loss due to a preexisting condition, this is called an impairment rider