Health Insurance Policy Provisions and Contract Law
Core concepts
A&S policies contain standard provisions: entire contract, incontestability, grace period, reinstatement, notice of claim, proof of loss, time of payment, physical examination, legal action, and change of occupation. Candidates must understand utmost good faith, insurable interest, representations vs. warranties, and waiver/estoppel.
Traps in questions
- Confusing representations (statements believed true) with warranties (guaranteed true).
- Forgetting the grace period length (often 30 days) and that coverage continues during it.
- Misunderstanding reinstatement - it may require new evidence of insurability.
- Overlooking that legal action cannot begin until a set period after proof of loss.
Rule of thumb
Contract law questions usually turn on good faith and disclosure. If the insured concealed a material fact, the insurer may rescind within the contestability period.
Worked example
An insured misses a premium by 10 days within a 30-day grace period. The policy remains in force, and a claim during that period is payable. If the grace period had expired, coverage would lapse.