Required (Mandatory) Provisions
The Uniform Individual Accident and Sickness Policy Provisions Act establishes provisions that must be included in individual health insurance policies. These mandatory provisions protect the insured.
Overview of Mandatory Provisions
All 50 states have adopted the Uniform Individual Accident and Sickness Policy Provision Law, which requires 12 mandatory provisions in individual health insurance policies.
Key Principle: Required provisions protect the policyholder. If an insurer modifies any provision, the modification must be at least as favorable to the insured as the original wording.
The 12 Mandatory Provisions
1. Entire Contract
The entire contract provision states that the policy, together with any attached applications, constitutes the entire agreement between the parties.
| Element | Included in Contract |
|---|---|
| Policy document | Yes |
| Application (copy) | Yes |
| Endorsements/riders | Yes |
| Oral statements | No |
Key Point: No statement made by the applicant can be used to void the policy or deny a claim unless it is in writing and attached to the policy.
2. Time Limit on Certain Defenses (Incontestability)
This provision limits how long an insurer can contest the validity of a policy or deny claims based on misstatements in the application:
| Timeframe | Insurer's Rights |
|---|---|
| First 2 years | May contest policy for material misrepresentation |
| After 2 years | Cannot contest except for fraud |
| After 3 years | Cannot deny claims for pre-existing conditions not disclosed |
Exceptions:
- Fraudulent misstatements can always be contested
- The 3-year pre-existing condition limitation applies to conditions not specifically excluded by name
3. Grace Period
The grace period provides time to pay a late premium without losing coverage:
| Premium Payment Mode | Minimum Grace Period |
|---|---|
| Weekly | 7 days |
| Monthly | 10 days |
| Quarterly/Semi-Annual/Annual | 31 days |
Key Features:
- Coverage continues during the grace period
- Premium owed if claim occurs during grace period
- Policy lapses only after grace period expires
4. Reinstatement
The reinstatement provision outlines how a lapsed policy can be restored:
| Aspect | Requirement |
|---|---|
| Application | Written application may be required |
| Premium | Payment of past-due premiums |
| Approval | Company approval or automatic after 45 days |
| Accident coverage | Effective immediately |
| Sickness coverage | 10-day waiting period |
Exam Tip: After reinstatement, coverage for accidents is immediate, but coverage for sickness has a 10-day waiting period to prevent adverse selection.
5. Notice of Claim
The insured must notify the insurer of a claim:
| Requirement | Details |
|---|---|
| Timeframe | Within 20 days of loss (or as soon as reasonably possible) |
| Method | Written notice to company or agent |
| Content | Identify the insured and policy |
6. Claim Forms
The insurer must provide claim forms promptly:
| Requirement | Details |
|---|---|
| Timeframe | Within 15 days of receiving notice of claim |
| If not provided | Insured may submit proof in own format |
| Acceptable proof | Written statement of nature and extent of loss |
7. Proof of Loss
The insured must submit formal proof of loss:
| Requirement | Details |
|---|---|
| Timeframe | Within 90 days after the loss |
| Extension | Not later than 1 year (except legal incapacity) |
| Content | Documentation of loss and claim |
8. Time of Payment of Claims
Specifies when benefits must be paid:
| Claim Type | Payment Timing |
|---|---|
| Lump sum benefits | Immediately upon receipt of proof |
| Periodic benefits (disability) | At least monthly |
| Other benefits | Per policy terms |
9. Payment of Claims
Designates to whom benefits are paid:
| Situation | Payee |
|---|---|
| Living insured | Benefits paid to insured |
| Facility of payment | May pay to relative if no beneficiary |
| Death benefit | Paid to beneficiary or estate |
| Medical expense | May be paid to provider (assignment) |
10. Physical Examination and Autopsy
The insurer's right to examine the insured:
| Right | Details |
|---|---|
| Physical examination | At insurer's expense, as often as reasonably required |
| Autopsy | At insurer's expense, where not prohibited by law |
| Timing | During claim investigation |
11. Legal Actions
Time limits on lawsuits against the insurer:
| Limitation | Timeframe |
|---|---|
| Minimum waiting period | 60 days after proof of loss submitted |
| Maximum time to sue | 3 years from proof of loss deadline |
Key Point: The insured cannot sue until 60 days after submitting proof of loss, giving the insurer time to investigate.
12. Change of Beneficiary
The right to change the beneficiary designation:
| Feature | Details |
|---|---|
| Right to change | Unless irrevocable beneficiary |
| Effective date | Upon written request received by insurer |
| Consent required | Not required for revocable beneficiary |
Summary of Key Timeframes
| Provision | Timeframe |
|---|---|
| Grace period (monthly) | 10 days |
| Grace period (quarterly+) | 31 days |
| Notice of claim | 20 days |
| Claim forms | 15 days (insurer to provide) |
| Proof of loss | 90 days |
| Incontestability | 2 years |
| Pre-existing conditions | 3 years |
| Legal action minimum | 60 days after proof |
| Legal action maximum | 3 years |
| Reinstatement sickness waiting | 10 days |
Under the mandatory provisions, how long does an insured have to submit proof of loss after a covered loss occurs?
After a health insurance policy is reinstated, what is the waiting period before sickness coverage becomes effective?
According to the Time Limit on Certain Defenses provision, after what period can an insurer no longer contest a policy for material misrepresentation (except fraud)?
22.2 Optional Provisions
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