Health Insurance Policy Provisions and Riders
Uniform provisions
Health policies must include the mandated uniform provisions: entire contract; time limit on certain defenses (two years, after which only fraud or nonpayment can void); grace period (7 days weekly, 10 days monthly, 31 days for other modes); reinstatement within three years with evidence of insurability and back premiums; notice of claim within 20 days; claim forms within 15 days; proof of loss within 90 days; payment of claims within 45 days; physical exam at the insurer's expense; legal action no sooner than 60 days and no later than three years after proof of loss; change of occupation; misstatement of age; other insurance with this insurer; unpaid premium; cancellation with notice; and conformity with state law.
Riders and exclusions
Impairment/exclusion riders waive coverage for a specified condition in exchange for issuing the policy; pre-existing condition provisions use a look-back period; waiver of premium continues coverage during total disability; return of premium refunds premiums on death or surrender; multiple indemnity (AD&D) pays a multiple for accidental death; hospital indemnity pays a fixed daily amount.
Traps
The grace period depends on the premium mode, so memorize all three numbers rather than one. The time limit on certain defenses is not identical to the life insurance incontestability clause, and the three-year legal-action limit runs from proof of loss.
Rule of thumb
Two defenses survive the two-year limit: fraud and nonpayment of premium.
Worked example
An insured becomes disabled and cannot pay; after the elimination period the waiver of premium rider keeps the policy in force, while the insurer may not rescind for a misstatement made three years earlier.