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5 Cards in this Set
Uniform Individual Accident and Sickness Policy Provisions
Mandatory Uniform Provisions
These provisions must, by law, be in every individual policy. They are designed to protect
the insured’s interests.
1. Entire Contract – the policy, a copy of the application, any riders constitute the entire
contract. Only an executive officer of the insurer, not an agent, can make changes to
the policy. Changes in the contract can be made only with the insurer’s written consent.
Only the applicant may alter statements on the application.
2. Time Limit on Certain Defenses (Incontestable) – no statement or misstatement
(except fraudulent misstatements) made in the application at the time of issue shall be
used to deny a claim after the policy has been in force for a specified period of time.
False statements on the application may bar coverage when material to the risk.
In California, The time limit on certain defenses under individual health policies is 2 years.
3. Grace Period – a period of time after the premium due date before the policy lapses
for nonpayment of premium. The grace period must not be less than seven days for
weekly, ten days for monthly and 31 days for all other modes. The grace period varies
with mode of premium.
4. Reinstatement – allows the insured, at the insurer’s discretion, to reinstate a policy
that has lapsed for nonpayment of premium by paying past due premiums. The insurer
may also require a reinstatement application to prove insurability. If the insurer does
not reject the reinstatement application within 45 days coverage will be automatically
reinstated. Accidents are covered immediately and sickness coverage generally begins
ten days after reinstatement.
5. Notice of Claim – is the insured’s responsibility, and it must be given in writing and is
required within 20 days of loss or as soon as reasonably possible. Notice to agent is the
same as notice to insurer. If the insured is receiving continuing disability benefits, the
insurer can require notice of continuance of claim every six months.
87 California Life and Health
6. Claim Forms – must be received by the insured within 15 days after notice of claim. If
forms are not furnished, the insured may submit written proof of occurrence, character,
and extent of loss.
7. Proofs of Loss – is required within 90 days of loss or in the shortest period of time
possible, but not to exceed one year unless the insured suffers legal incapacity.
8. Time of Payment Of Claims – all claims are to be paid immediately upon written
proof of loss. Loss of time benefits will be paid not lesser frequently than monthly.
9. Payment of Claims – death benefits are paid to the beneficiary; other benefits may be
paid directly to provider of services or the insured.
10. Physical Exam and Autopsy – gives the insurer the right to examine the insured at
insurer’s expense, where not prohibited by law.
11. Legal Actions – Insured must wait 60 days, but no later than 3 to 5 years (differs from
state to state) after proof of loss, before legal action can be brought against the insurer.
In California, The period for the pursuit of legal action is 3 years.
12. Change of Beneficiary – consent of beneficiary is not required unless beneficiary is
irrevocable. The change becomes effective on owner’s signature date upon the insurer’s
recording the change.
Optional Uniform Provisions
1. Change of Occupation
a. If the insured changes to a more hazardous occupation, the benefits will be
reduced to that benefit which premiums paid would have purchased at the more
b. If the insured changes to a less hazardous occupation, he/she may apply for a
c. If the insured works at two occupations, rates for the most hazardous occupation
will be charged.
2. Misstatement of Age – benefits paid will be those which premium paid would have
purchased at the correct age. If the misstatement leads the insurer to provide coverage
beyond the age limit, liability is limited to a refund of premiums.
3. Other Insurance with This Insurer – if the insured has more than one policy with
the same company, he/she may elect the policy to be used. Excess premiums for the
excess coverage will be returned. The provision protects insurers against overpayment
4. Insurance with Other Insurers – if the insured has duplicating coverage with other
insurers, any one insurer’s liability is limited to a proportion of the loss. Benefits are
determined by dividing the total benefits of policies known before the loss by total
benefits of all policies known after the loss. This is referred to as the coordination of
benefits for individual policies. Third party liability is never primary and not included.
Only those policies written on the insured are considered as applicable.
5. Relations of Earnings to Insurance – loss of time benefits shall not exceed the
monthly earnings of an insured at the time the disability commenced or his/her average
earnings for the two years immediately preceding a disability, whichever is greater. The
monthly benefit cannot be reduced to less than $200.
6. Unpaid Premiums – this provision allows an insurer to deduct unpaid premiums from
a claim that has occurred during a grace period.
7. Conformity With State Statutes – any provision on the policy effective date that is in
conflict with statutes of the state is automatically amended to meet state requirements.
8. Illegal Occupation/Act – liability is denied if the insured is injured while
committing an illegal occupation/act. Also, an illegal occupation will result in an
application being declined for coverage.
9. Intoxicants and Narcotics – liability is denied if injury is caused by the insured being
intoxicated or under the influence of drugs unless administered on the advice of a physician.
When insurers underwrite alcohol abuse, they may be increasing their exposure to risk.
a. The insurer may cancel with written notice to the insured. Notice of five to 31
days may be required. Unearned premium is refunded on a pro rata basis.
b. The insured may cancel after the initial policy term with written notice to the
insurer at any time. The unearned premium is returned on the short rate basis.
Other Provisions and Clauses
1. Right to Examine (Free Look) – allows the insured, upon delivery of the policy, a
specified number of days to look over the policy and if dissatisfied, return it for a full refund.
In California, the free-look period on individual health insurance policies is not less
than 10 days or more than 30 days. It is 30 days for LTC and Medicare Supplement
2. Insuring Clause – states who is covered, by whom, for how much, and for what time
period against what peril. Premium or rate calculations are not part of this provision.
3. Consideration Clause – payment of the first premium and statements in the
application are the applicant’s consideration. The insurer’s consideration is the promise
to pay within the contract terms.
4. Preexisting Conditions – applies to prior conditions which the applicant received
(or should have received) medical advice or treatment within a specified period before
the effective date of the policy.
5. Elimination Period – is a type of (time) deductible. A period of days that must expire
after onset of an illness or occurrence of an accident before benefits will be payable.
The longer the elimination period chosen, the lower the cost of coverage.
6. Reduction in Coverage – stipulates circumstances for which the insurer will reduce
7. Accumulation – benefits are increased periodically if the policy is kept in force for a
certain length of time.
8. Waiver of Premium – premiums are waived by the insurer after a stated time period
(usually three to six months). Premiums are not paid by the insured until such time he/
she has recovered from the disability; then premiums are resumed at the same mode and
9. Occupational – a policy that pays for injury and illness on and off the job.
10. Nonoccupational – a policy that pays for injury and illness off the job only.
11. Accident (Injury) – one of the following may be used:
a. Accidental Bodily Injury (result) – requires only that the injury be
unintended and unforeseen.
b. Accidental Means (cause) – requires both the injury and the cause of the
injury to be unintended and unforeseen; considered more restrictive.
12. Sickness – one of the following may be used:
a. A sickness or disease contracted and commencing after the policy has been in
force at least 30 days.
b. A sickness first manifesting itself while the policy is in force.
Policy Renewal Provisions
1. Noncancellable – guaranteed renewable to age 65 with guaranteed premiums. This is
the one most favorable for the insured, because only the owner can terminate the policy
and rates never increase. The insurer cannot change the plan once issued.
2. Guaranteed Renewable – renewable without proof of insurability, at insured’s
option, to age 65. Premiums are not guaranteed, and may be changed but by
classification only. The renewal provision used in group health conversions.
3. Conditionally Renewable – policy is renewable unless a termination notice is given
by the insurer or is nonrenewable for specified conditions that must be stated in the
policy when issued.
4. Optionally Renewable – renewable only at option of insurer (on renewal or
5. Nonrenewable (Period of Time) – life of the policy is expressed and cannot be
6. Cancellable – insurer or insured may cancel at any time (has lowest premium).
Cost Containment in Health Care Delivery
1. Mandatory Second Surgical Opinion – this requirement may be included in
policies that offer surgical expense benefits, requiring the insured to consult a physician,
other than the attending physician, to determine the necessity of surgery and/or alternate
methods of treatment. If the insured should fail to obtain the second opinion, benefits
are greatly reduced.
2. Precertification – the physician may submit claim information prior to treatment to
know in advance if the procedure is covered and at what rate benefits will be paid.
3. Concurrent Review – the insurer monitors the insured’s hospital stay to make certain that
everything is proceeding according to schedule. The length of hospital stay is monitored.
4. Ambulatory Outpatient Care – these facilities provide in addition to diagnosis and
treatment: preventive care, health education, family planning, and dental/vision care.
They monitor the cost effectiveness of outpatient services.
5. Managed Health Care – used in medical expense plans attempting to contain costs by
controlling the behavior of participants. It usually contains the following characteristics:
a. Controlled access to providers.
b. Comprehensive case management.
c. Preventive care.
d. Risk sharing.
e. High-quality care.
f. Does not authorize elective cosmetic surgery.
6. Emergency Services – obtaining services in an emergency situation, which includes
directives for the contact of an HMO before care is received, and what to do in case of
7. Non-Emergency Hospital Preauthorization Admissions – an insured who does
not comply with the provision may have the normal benefit level reduced. This managed
care provision reduces hospitalizations.
8. Out-of-Area Benefits and Services – description of benefits and services available
outside the HMO service area. Medically necessary emergency benefits must be made
available when the insured is outside the service area.
9. Medicare – provides an explanation of what effect becoming eligible for Medicare
would have on an insured’s benefits.
10. Where to Obtain Services – statement in the policy explaining where services may
11. HMO Restrictions – the restrictions of an HMO, regarding choice of physicians,
hospitals or other health care providers, must be clearly stated in certificates of
coverage, handbooks, provider directories, and any other materials used in a direct offer
for HMO membership.
12. Provider Credentialing – A process that ensures that managed care organizations
authorize, contract with, or employ practitioners who have appropriate credentials,
qualifications, and licensure to provide care to patients.