Health Insurance Policy Provisions, Options and Riders
Required uniform provisions
The NAIC model and state law mandate a core set of provisions you must be able to identify:
- Entire contract / changes - only a company officer may alter the policy.
- Grace period - commonly 7 days for weekly premium, 10 days for monthly, and 31 days for other policies; coverage continues, but the insurer may deduct the unpaid premium from a claim.
- Reinstatement - restores coverage upon payment of overdue premium (often with evidence of insurability); a reinstated policy usually re-runs contestability for statements made in the reinstatement application.
- Incontestability - after two years the insurer cannot deny a claim based on misrepresentation in the application; fraud and nonpayment may still be pursued.
- Misstatement of age or sex - benefits are adjusted, not voided.
- Claim handling - claim forms within about 15 days of notice, proof of loss within about 90 days, payment of claims within about 30 days, and a waiting period (often 60 days) before legal action.
- Change of occupation / illegal occupation - benefits may be reduced if the insured moves to a more hazardous class.
- Physical exam and autopsy - the insurer may require these at its own expense.
- Legal actions and conformity with state statutes.
Options and riders
Conversion privilege on termination of group coverage, continuation (COBRA generally 18 months, up to 36 for certain events, plus state continuation), HIPAA special enrollment, newborn and adopted child coverage, dependent coverage to age 26, maternity, mental health parity, and disability or long-term care riders.
Traps
Grace periods are much shorter in health than in life. Incontestability does not forgive unpaid premium.
Worked example
A monthly premium policy lapses on the 11th; the 10-day grace period ends on the 10th. A claim filed on the 12th is outside the grace period and may be denied.