Health Chapter 3 : Health Policy Provisions, Clauses, And Riders

Proof of Loss..........(Mandatory Provisions)

After a loss occurs, the claimant must submit this within - 90 days - of the loss or as soon as reasonably possible, but not to exceed one year.

Uniform Mandatory Provisions

All individual health insurance policies are required to include certain standard provisions.

Reductions

Are a decrease in benefits because of certain specified conditions.

Maternity benefits

Are often optional, and if the insured elects coverage, the benefits are usually limited.

Substance abuse

As with mental and emotional disorders, this outpatient treatment is usually limited to a maximum limit.

Change of Occupation......(Optional Provisions)

Because the occupation of the insured is an important underwriting consideration, particularly for disability income insurance, health insurance policies usually include a provision that allows the insurer to adjust benefits if the insured changes occupations.

Annual limit....(Other Provisions & Clauses)

A limit that is the most a policy will pay each year that policy is in force.

Lifetime limit....(Other Provisions & Clauses)

A limit that specifies a benefit amount that is the most a policy will pay during the lifetime of the insured.

Multiple Indemnity Rider (Double, Triple).....(Riders)

A provision or rider found in some life insurance policies or accidental death policies under which certain benefits are doubled or tripled when death of the insured was due to certain specified circumstances.

Guaranteed Renewable......(Rights Of Renewability)

A provision that is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date.

Stop-loss limit (Coinsurance)

A specified dollar amount beyond which the insured no longer participates in the sharing of expenses.

Deductibles....(Other Provisions & Clauses)

A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.

Elimination Period....(Other Provisions & Clauses)

A type of deductible that is commonly found in disability income policies. It is a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable. - Longer period = Lower $ -

Pre-existing Conditions....(Other Provisions & Clauses)

Coverage usually does not apply to prior conditions for which the insured received (or should have received) medical advice or treatment within a certain amount of time before the date of application.

Time deductible

Disability income and long-term care policies usually have this deductible in the form of elimination period.

Misstatement of Age......(Optional Provisions)

If the insured misstated his or her age or gender at the time of the application, the benefits paid under the policy would be adjusted to what the premium paid would have been purchased at the correct age.

Reinstatement..........(Mandatory Provisions)

If the premium has not been paid by the end of the policy's grace period, the policy will lapse (terminate). This provision stipulates under what conditions the insured may reinstate coverage.

Period of Time

In some cases, an individual may need health insurance for a specified period of time. They are not renewable. They are only effective for a specific period of time, and will be cancelled by the company at the end of the term.

Insuring Clause....(Other Provisions & Clauses)

It is simply a general statement that identifies the - basic agreement - between the insurance company and the insured. It identifies the insured and the insurance company and states what kind of loss (peril) is covered.

Consideration Clause....(Other Provisions & Clauses)

It is usually located on the first page of the policy and it clarifies that both parties to the contract must give some - valuable - consideration.

Entire Contract..........(Mandatory Provisions)

It states that the health insurance policy, together with a copy of the signed application and attached riders and amendments, constitutes the entire contract.

Impairment (exclusion) rider......(Riders)

May be attached to a contract for the purpose of - eliminating coverage - for a specifically defined - pre-existing condition-, such as back injuries.

Usual/reasonable/customary....(Other Provisions & Clauses)

Means that the insurance company will pay an amount for a given procedure based upon the average charge for that procedure in that - specific geographic area -.

Annual deductible

Most major medical policies feature this deductible (also called a calendar year deductible) that, as the name implies, is paid once in any year, regardless of the amount of claims in that year.

Coinsurance....(Other Provisions & Clauses)

Most major medical policies include this provision that provides for the sharing of expenses between the insured and the insurance company.

Pre-authorizations and Prior Approval Requirements....(Other Provisions & Clauses)

Some health insurance policies will require these of certain medical procedures, tests, or hospital stays. Once approved, the policy will cover the expenses.

Benefit Schedule....(Other Provisions & Clauses)

Some medical expense insurance plans contain this, which very specifically states exactly what is covered in the plan and for how much.

Per occurrence deductible or Flat deductible

Some policies contain this deductible, which the insured is required to pay for each claim, possibly resulting in more than one deductible being paid in a given year.

Carry-over provision

Some policies include this provision that states that if the insured did not incur enough expenses during the year to meet the deductible, any expenses incurred during the - last 3 months - may be carried over to the next policy year to satisfy the new annual deductible.

Integrated (non corridor) Deductible

Some supplemental major medical plans also include this deductible in which case the amount of the deductible may be satisfied by the amount paid under basic medical expense coverage.

Exclusions....(Other Provisions & Clauses)

Specify for what the insurer will not pay and are excluded from coverage.

Noncancelable......(Rights Of Renewability)

The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy (note that the policy may call for an increase in a certain year, such as "age 65," but that must be stated in the original contract).

Grace Period..........(Mandatory Provisions)

The period of time after the premium due date in which premiums may still be paid before the policy lapses for nonpayment of the premium.

Common accident provision

The policy may also contain a provision which applies when - more than one family member - is injured in a single accident. In this case, only one deductible applies for all family members involved in the same accident.

Individual deductible

The policy may contain this deductible, in which each insured is personally responsible for a specified deductible amount each year.

Eligible Expenses....(Other Provisions & Clauses)

These expenses are those medical expenses covered by a health insurance plan and they are specified in the policy.

Optionally Renewable

This is similar to conditional renewability, except that the insurer may cancel the policy for any reason, on certain homogeneous classes (not individuals within a class).

Per-cause limit....(Other Provisions & Clauses)

This limit is the most a policy will pay for expenses incurred from the same or related causes.

Guaranteed Insurability Rider......(Riders)

This option, which is also available on life insurance policies, will allow the insured to purchase - additional -amounts of disability income coverage without evidence of insurability.

Legal Actions..........(Mandatory Provisions)

This provision - limits the time - in which a claimant may seek recovery from an insurer under a policy.

Free Look....(Other Provisions & Clauses)

This provision allows the insured a period of - several days - to look over the policy, and if dissatisfied for any reason, return it for a full refund.

Cancelable......(Rights Of Renewability)

This provision allows the insurer to cancel the policy at any time, or at the end of the policy period.

Physical Examination and Autopsy..........(Mandatory Provisions)

This provision gives the insurer the right to examine the insured, at its own expense, as often as may be reasonably necessary - while a claim is pending - . The insurer also usually has the right to conduct an autopsy, if not forbidden by a state law.

Recurrent Disability....(Other Provisions & Clauses)

This provision in a health insurance or disability income policy specifies the period of time that must lapse between two illnesses in order for a new set of benefits to be available for the second illness.

Copayments....(Other Provisions & Clauses)

This provision is similar to the coinsurance feature in that the insured shares part of the cost for services with the insurer.

Time Limit on Certain Defenses (Incontestable) ..........(Mandatory Provisions)

This provision is similar to the incontestability provision found in life insurance policies. No statement or misstatement (except fraudulent misstatements) made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years.

Payment of Claims..........(Mandatory Provisions)

This provision specifies - to whom - claims payments are to be made.

Time of Payment of Claims..........(Mandatory Provisions)

This provision specifies that claims are to be paid - immediately - upon written proof of loss.

Notice of Claim..........(Mandatory Provisions)

This provision spells out the insured's duty to provide the insurer with reasonable notice of - 20 days - in the event of a loss.

Probationary Period....(Other Provisions & Clauses)

This provision states that a period of time must lapse before coverage for specified conditions goes into effect.

Illegal Occupation......(Optional Provisions)

This provision states that liability will be denied if the insured is injured while committing an illegal act or is engaged in an illegal occupation.

Change of Beneficiary..........(Mandatory Provisions)

This provision stipulates that the policyowner may change the beneficiary at any time by providing a written request to the insurer, unless the beneficiary is designated as irrevocable.

Waiver of Premium....(Other Provisions & Clauses)

This provisions or rider is usually included with guaranteed renewable and noncancellable disability income policies. It provides that in the event of permanent and total disability, premiums will be waived for the duration of the disability.

Claim Forms..........(Mandatory Provisions)

Upon receipt of a notice of claim, the company must supply this to the insured within a specified number of days usually - 15 days -, but may vary from state to state

Mental and Emotional Disorders

Usually the lifetime benefit for major medical coverage limits the amount payable for this. The benefit is usually expressed as a separate lifetime benefit and there is frequently a limit on the number of outpatient visits per year. The benefit may also pay a maximum limit per visit.These limitations usually do not apply to inpatient treatment.

The Uniform Individual Accident and Sickness Policy Provisions Law

Was developed by the National Association of Insurance Commissioners (NAIC), has been adopted in all states. This law established standard provisions that are to be included in all individual health insurance policies.

Family deductible

Whereby the annual deductible is satisfied if two or more family members pay a deductible in a given year, regardless of the amount of claims incurred by additional family members.

Conditionally Renewable

With this policy, the insurer may terminate the contract only at renewal for certain conditions that are stipulated in the contract.