Health and Accident Insurance
This domain tests products that pay for medical expenses, disability income, accidental death and dismemberment, and critical illness. Questions focus on definitions of disability, elimination periods, benefit periods, deductibles, coinsurance, coordination of benefits, pre-existing conditions, exclusions, and workers' compensation offsets.
Core rules
- Medical expense policies may reimburse actual expenses, pay scheduled amounts, or combine both. Deductibles and coinsurance shift part of the cost to the insured.
- Disability income policies replace part of earned income. Own-occupation definitions are broader for the insured and usually apply for a limited period; any-occupation definitions are narrower and often apply later.
- The elimination period is a waiting period before benefits begin. The benefit period is how long benefits can last. They are not the same.
- Coordination of benefits prevents duplicate payment when more than one plan covers the same expense. One plan is primary and the other pays secondary.
- Accidental death and dismemberment pays only for accidental causes and specified losses. Critical illness pays a lump sum on diagnosis of a covered condition, subject to survival and waiting periods.
- Pre-existing-condition clauses, workers' compensation offsets, and exclusions for self-inflicted injury, war, or sickness are common.
Worked example
A disability policy pays own-occupation benefits for 24 months, then any-occupation benefits. A claimant cannot perform her own occupation but can perform sedentary work. She receives benefits for the first 24 months; after that, benefits stop because she can perform any occupation. The reasoning is that the definition changes at the stated duration, so the claim must be reassessed against the later definition.
Traps that cost marks
- Confusing the elimination period with the benefit period.
- Assuming AD&D pays for illness.
- Ignoring coordination-of-benefits order.
- Overlooking pre-existing-condition waiting periods.