Final view - Health Insurance preovisions

1: How long after the date of issue may an insurer cancel an accident and health policy?

A 30 days

B 60 days

C 90 days

D Once a policy is issued, it cannot be cancelled unless the insurer finds a fraudulent misrepresentation in the application.

Once a policy is in effect, an insurer has 90 days to cancel a policy by written notice.

2: 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

The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

4: Which is true regarding the Uniform Individual Accident and Sickness Policy Provisions Law?

A Provisions may be reworded by the insurer.

B The purpose of the provision is to define the right of the policyholder; there is a separate law outlining the rights of insurers.

C There are ten mandatory provisions.

D There are twelve optional policy provisions.

The Uniform Individual Accident and Sickness Policy Provisions Law defines the rights and duties of both the insurer and the policyholder. Although the wording of the provisions may change from insurer to insurer, the provisions are essentially the same and are required by law to be included in all health insurance policies. The wording of the provisions may be altered, provided that the changes would not be detrimental to the policyholder or beneficiary.

5: All of the following are correct about the required provisions of a health insurance policy EXCEPT

A The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract.

B A reinstated policy provides immediate coverage for an illness.

C Proof-of-loss forms must be sent to the insured within 15 days of notice of claim.

D A grace period of 31 days is found in an annual pay policy.

Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date.

6: Twenty-five days after a health insurance policy is delivered, the policyowner decides that she would like to return the policy and receive a refund of premium. Which of the following is true?

A The insurer will provide a prorated refund.

B The policyowner will not receive a refund because the free-look period is over.

C The policyowner will not receive a refund because once a policy is purchased, the premiums cannot be refunded.

D The insurer will provide a full refund.

The free-look provision allows a policyowner to review a new health policy after it has been delivered. If the policyowner decides to return it within a certain time period, the full premium will be refunded. In New York, a free-look period cannot be longer than 20 days.

10: Which of the following is NOT a feature of a noncancellable policy?

A The guarantee to renew coverage usually applies until the insured reaches certain age.

B The insured has the right to renew the policy for the life of the contract.

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

D The premiums cannot be increased beyond the amount stated in the policy.

The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract; however, the guarantee to renew coverage usually only applies until the insured reaches age 65.

12: 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

Renewability provisions are included in each health insurance contract and outlines both the insurer’s and insured’s right to cancel or renew coverage. This is considered to be a very important provision required by HIPAA, the federal Health Insurance Portability and Accountability Act of 1996.

Chapter Recap

This chapter explained different types of policy provisions that modify coverage in individual health insurance policies. Let's recap some of the key concepts:

POLICY PROVISIONS
Uniform Required Provisions	Entire contract - policy (with riders and amendments) and copy of the application Grace period - time period after the premium is due during which the policy will not lapse Reinstatement - a policy can be restored within a specified period of time with proof of insurability Change of beneficiary:  Revocable - can be changed at any time  Irrevocable - can only be changed with the beneficiary's consent Notice of claim - insured must provide insurer with reasonable notice after loss. Notice is required within 20 days of loss, or as soon as possible Claim form - company must supply insured with claims forms within a specific period Proof of loss - claimant must submit proof of loss within 90 days of loss Time of payment of claims -specifies that claims must be paid upon written proof of loss Payment of claims -specifies to whom claims payments will be made Physical examination and autopsy - gives the insurer the right to examine the insured as often as necessary while a claim is pending  Time limit on certain defenses - misstatements on an application cannot be used to deny a claim after the policy has been in force for 2 years Legal action - insured must wait 60 days after written proof of loss before bringing legal action against the company
Uniform Optional Provisions	Misstatement of age - benefits are adjusted according to what the premium paid would be purchased at correct age Change of occupation - allows insurer to adjust benefits if the insured changes occupations Illegal occupation - liability will be denied if the insured is injured while committing an illegal act or is engaged in an illegal occupation Other insurance in this insurer - pro rata benefit reduction in response to overinsurance Insurance with other insurers - separate insurers pay proportionate benefits for any one claim Unpaid premium - past due accounts are deducted from claim amount Cancellation - insurer may cancel policy with a written notice Conformity with state statutes - conflicting policies are automatically amended to meet state requirements Intoxicants and narcotics - insurer is not liable for claims resulting from intoxicants or drug use
Other Provisions and Clauses	Insuring clause - basic agreement between the insurer and the policyowner Free look - policy can be returned for a refund of premium within a specified time period Consideration - parties to a contract exchange something of value Probationary period - states that a period of time must lapse before coverage for specified conditions goes into effect Elimination period - commonly found in disability income policies; a period of days that must pass after the onset of an illness or occurrence of an accident before benefits will be payable Coinsurance - provides for the sharing of expenses between the insured and the insurance company; expressed as a percentage after the insured pays the policy deductible Exclusions - specifies causes of loss for which the insurer will not pay, including losses that result from war, military duty, self-inflicted injuries, dental expense, cosmetic medical expenses, eye refractions, or care in government facilities
RIGHTS OF RENEWABILITY
Noncancellable	Insurer cannot cancel or raise premiums beyond amount stated in the policy
Cancellable	Insurer may cancel the policy at any time or at end of policy period with proper written notice and a refund of any unearned premium paid
Guaranteed Renewable	Insurer may increase the policy premium (on a class basis only) on the policy anniversary date; insured has the unilateral right to renew the policy for the life of the contract