Health Policy Provisions, Clauses, and Riders — practice questions

10% of the exam ≈15 real questions 22 free questions here

Mandatory and optional provisions, claim timelines, cost-sharing terms, and renewability rights — about 15 scored questions, and the domain with the most exact numbers to memorize.

Where people lose points

• The probationary period runs from policy issue; the elimination period runs from the start of the disability.
• Noncancelable means the insurer can change neither the premium nor the coverage; guaranteed renewable means premiums can change by class.
• Notice of claim, proof of loss, and time of payment of claims each have their own deadline — learn all three.
• Coinsurance is a percentage split after the deductible; a copayment is a flat amount per service.

Questions and answers, explained

All 10 questions above, with the correct answer and why it is correct. Everything here is on health policy provisions, clauses, and riders.

1. A lapsed health policy was automatically reinstated on the 45th day after the insurer received the reinstatement application and premium without acting on them. Which of the following losses would the reinstated policy cover?

   • AAn injury sustained in an accident the day after reinstatementCorrect
   • BA sickness that begins 5 days after reinstatement
   • CA sickness that first appeared while the policy was lapsed
   • DAny loss occurring after the original lapse date, retroactively

   Why: Florida's reinstatement provision makes reinstatement automatic on the 45th day after the conditional receipt date if the insurer has not disapproved the application in writing, and the reinstated policy covers injuries sustained after reinstatement immediately, but sickness only if it starts more than 10 days after the reinstatement date (s. 627.609, F.S.). The 10-day sickness wait discourages people from reinstating only after becoming ill, which is why choices B and C fail. Reinstatement is never retroactive to the lapse period. (Outline VI.A)

   Reference Outline VI.A; s. 627.609, F.S.

2. Under a Florida health policy, written proof of loss must ordinarily be furnished to the insurer within how many days after the date of loss?

   • A45 days
   • B90 daysCorrect
   • C20 days
   • D180 days

   Why: The proof of loss provision requires written proof within 90 days after the loss (or after the end of each period for which continuing benefits are claimed). If it was not reasonably possible to comply, the claim cannot be denied for lateness as long as proof is filed as soon as reasonably possible — but no later than 1 year, unless the claimant was legally incapacitated (s. 627.612, F.S.). The 20-day figure is the notice-of-claim deadline. (Outline VI.A)

   Reference Outline VI.A; s. 627.612, F.S.

3. An insured furnished written proof of loss and disagrees with how the insurer is handling the claim. Under the legal actions provision, when is the earliest she may sue the insurer on the policy?

   • AImmediately after the claim is denied
   • B30 days after proof of loss is given
   • C90 days after proof of loss is given
   • D60 days after written proof of loss is givenCorrect

   Why: The legal actions provision bars any suit on the policy within 60 days after written proof of loss is given — this gives the insurer a reasonable period to investigate and pay (s. 627.616, F.S.). It also bars actions brought after the applicable statute of limitations expires. The 90-day figure is the proof-of-loss deadline, not the litigation waiting period. (Outline VI.A)

   Reference Outline VI.A; s. 627.616, F.S.

4. An insured holds disability income policies with two insurers totaling $4,000 per month, but his earnings support only $2,500 of coverage. Both policies contain the optional relation of earnings to insurance (average earnings) provision. When he becomes totally disabled, what happens?

   • ABenefits are reduced proportionately so they do not exceed his earnings, with premium refundedCorrect
   • BEach insurer must still pay its full stated monthly benefit regardless of what he actually earns
   • CAll claims are denied outright because the insured is overinsured
   • DBoth policies are rescinded for a material misrepresentation of his earned income

   Why: The relation of earnings to insurance provision lets insurers reduce disability benefits proportionately when total benefits under all coverage exceed the insured's monthly earnings, using the greater of earnings at the time disability began or average monthly earnings for the preceding 2 years, with a pro rata refund of the premium for the excess. In Florida, benefits may not be reduced below the lesser of $500 per month or the sum of the stated benefits (s. 627.624, F.S.). Overinsurance triggers reduction, never outright denial. (Outline VI.A)

   Reference Outline VI.A; s. 627.624, F.S.

5. A disability income policy rider allows the insured to purchase additional monthly benefit amounts at specified future dates or events without new medical underwriting, provided the insured documents sufficient increased income. This rider is the:

   • ACost-of-living adjustment rider, which indexes benefits to inflation
   • BWaiver of premium rider, which excuses premiums during disability
   • CImpairment rider, which excludes a named preexisting condition
   • DFuture increase option rider, also called guaranteed insurabilityCorrect

   Why: The future increase option — also called guaranteed insurability — locks in the insured's medical insurability: additional benefit amounts can be bought at option dates regardless of health, though financial underwriting (proof of higher earnings) still applies. The closest distractor is the COLA rider, which automatically adjusts benefits for inflation during a claim rather than letting the insured buy more coverage. (Outline VI.C)

   Reference Outline VI.C (Guaranteed insurability; future increase option)

6. A Florida insured was comatose for 13 months following a covered accident and did not furnish written proof of loss until 15 months after the loss, as soon as she was reasonably able. Her policy uses the standard proof of loss provision. May the insurer deny the claim solely because proof was late?

   • AYes — any proof filed more than 90 days after the loss is barred without exception
   • BYes — the 1-year outer limit on late proof of loss is absolute
   • CNo — the 1-year outer limit does not apply to a claimant who was legally incapacitatedCorrect
   • DNo — an insurer may never deny a health claim for late proof of loss

   Why: Proof of loss is normally due within 90 days, but if it was not reasonably possible to comply the claim may not be reduced or denied so long as proof is filed as soon as reasonably possible — and in no event later than 1 year from the time specified, EXCEPT where the claimant was legally incapacitated (s. 627.612, F.S.). Choice B is the closest distractor and states the general rule correctly but ignores the legal-incapacity exception that controls here. Choice D overstates the protection: an insurer can deny for lateness when the delay was avoidable. (Outline VI.A)

   Reference Outline VI.A; s. 627.612, F.S.

7. The legal actions provision fixes both the earliest and the latest date on which an insured may sue on a Florida health policy. What is the LATEST point at which suit may be brought?

   • A3 years after written proof of loss is required to be given to the insurance company
   • B5 years after the claim is denied by the insurer in writing
   • CWhen the applicable statute of limitations expires, measured from proof of lossCorrect
   • DThere is no outer limit at all, so long as proof of loss was filed on time

   Why: Florida's provision bars suit within 60 days after written proof of loss is given and bars any action brought after the applicable statute of limitations runs, measured from the time proof of loss is required to be given (s. 627.616, F.S.). Choice A is the closest distractor because the older NAIC uniform wording used a flat 3-year outer limit; Florida instead cross-references the general statute of limitations. Choice D ignores that an outer limit exists at all. (Outline VI.A)

   Reference Outline VI.A; s. 627.616, F.S.

8. Under the payment of claims provision, benefits unpaid at the insured's death that are payable to the estate — or to a beneficiary who cannot execute a valid release — may be paid by the insurer to a relative by blood or marriage, up to a maximum of:

   • A$1,000
   • B$3,000Correct
   • C$5,000
   • D$10,000

   Why: This is the optional facility of payment clause, which caps such a discretionary payment at $3,000 to a person related to the insured or beneficiary by blood or marriage whom the insurer deems equitably entitled (s. 627.614, F.S.). The required part of the same provision directs that benefits be paid to the insured, and loss-of-life benefits to the beneficiary of record or, if none, to the estate. The clause is a convenience for small amounts, which is why the higher dollar options are wrong; $1,000 is the older NAIC uniform figure, not Florida's. (Outline VI.A)

   Reference Outline VI.A; s. 627.614, F.S.

9. When a lapsed Florida health policy is reinstated, the reinstatement provision limits how far back the accepted premium may be applied. Premiums may not be applied to any period more than how many days before the reinstatement date?

   • A30 days
   • B45 days
   • C60 daysCorrect
   • D90 days

   Why: The reinstatement provision states that premiums accepted in connection with a reinstatement will be applied to a period for which premiums have not been previously paid, but not to any period more than 60 days before the reinstatement date (s. 627.609, F.S.). Choice B, 45 days, is the closest distractor because it is the number of days after the conditional receipt on which the policy is reinstated automatically if the insurer has not written the insured of its disapproval — a different rule in the same provision. (Outline VI.A)

   Reference Outline VI.A; s. 627.609, F.S.

10. An insurer wants to use its own plain-language wording for the reinstatement provision instead of the statutory wording. Under s. 627.605, F.S., this is permitted only if the substituted provision is:

    • AShorter and easier to read than the statutory wording
    • BApproved by the office and in no respect less favorable to the insured or the beneficiaryCorrect
    • CApproved by a majority of the insurer's existing policyholders
    • DIdentical in meaning to wording already used by three other insurers

    Why: Florida allows a corresponding provision of different wording only when the office approves it and it is in each instance not less favorable in any respect to the insured or the beneficiary; provisions inapplicable to or inconsistent with a particular coverage may be omitted or modified, again with office approval (s. 627.605, F.S.). Choice A confuses readability with the legal test — brevity is irrelevant if the substitute weakens the insured's rights. (Outline VI.A)

    Reference Outline VI.A; s. 627.605, F.S.

Topics inside this domain

• Medicare and Medicare supplement rules
• Life policy provisions and clauses
• Disability income insurance

Drill other domains

• Types of Life Policies and Features (10%)
• Life Policy Riders, Provisions, Options, and Exclusions (10%)
• Life Application, Underwriting, and Policy Delivery (8%)
• Retirement and Other Life Insurance Concepts (5%)
• Types of Health Policies (11%)
• Social Insurance (4%)

← Back to the full practice exam