Which of the following is a required mandatory uniform policy provision that appears in an accident and health contract?

The following standard provisions are mandatory in every insurance contract as mandated by the NAIC Uniform Health Insurance Policy Provision Law.

Entire Contract

The entire contract provision states that the insurance policy represents the contract between the insurer and the policyowner in its entirety, assuring the policyowner that no changes to the contract can be made once the contract has been issued. This clause in health insurance policies is the same as in life insurance policies.

Time Limit on Certain Defenses

The time limit on certain defenses provision is akin to the incontestability clause in life insurance policies, except that a fraudulent statement on a health application can be contested at any time unless the policy is guaranteed renewable, in which case it cannot be contested for any reason after the contestable period expires - usually two years. The insurer is also prohibited from denying a claim on the basis of a preexisting condition after the contestable period expires.

Grace Period

The grace period allows the policyowner a little leeway in paying premiums on time. Florida law requires minimum grace periods of 7 days on weekly premium health insurance policies, 10 days for health policies with premiums payable monthly and 31 days for other health policies.

The Affordable Care Act (ACA) provides that individuals who purchase coverage on the health insurance exchange/marketplace and who qualify for premium tax credits may have a 90-day grace period to pay outstanding premiums.

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Reinstatement

The reinstatement provision allows the restoration of a policy that lapsed due to late premium payments back to its original active status rather than being considered canceled and reissued. After the grace period has expired, the insurer may request an updated application in order to reissue the policy. The insurer has the discretion to approve the application and issue a policy or to reject it. However, if the insurer takes no action either way within 45 days, the policy is considered reinstated automatically. If the delinquent premium payment is accepted by the insurer, and no new application for reinstatement is requested, benefits become effective immediately.

Notice of Claim

The notice of claim provision pertains to the timely notice given to the insurer when a claim is being made (within 20 days). If the claim is for disability income payments for two or more years, the insured must submit proof of loss every six months.

Claim Forms

The claim forms provision outlines the insurer's responsibility to provide the claimant with the specific forms the insurer requires within 15 days after receiving the insured's notice of claim.

Proof of Loss

The proof of loss provision means that the insured must supply the insurer with some evidence that the loss actually occurred and to what extent. The claimant has 90 days to supply the proof, if reasonably possible.

Time Payment of Claims

The time payment of claims provision allows insurers 45 days after receiving notice and proof of loss in which to pay or deny the claim (in Florida).

Payment of Claims

The payment of claims provision specifies how and to whom claims payments are to be made.

Physical Exam and Autopsy

The physical exam and autopsy provision gives the insurer the right to have the insured physically examined periodically; and if the insured dies, the insurer has the right to order an autopsy of the deceased.

Legal Actions

The legal actions provision prohibits insureds from taking legal action against the insurer due to a claim for 60 days from the date of proof of loss if the claim is disputed. Legal action in Florida cannot be taken before 60 days (from the date of proof of loss), nor after five years.

Change of Beneficiary

The change of beneficiary provision allows the policyowner to change the policy beneficiary if so desired as long as the beneficiary designation is revocable. This provision also gives the policyowner the right to surrender or assign the policy without obtaining the beneficiary's permission.

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Louise purchased a disability policy when her salary was $4,000 a month. Later, she lost that job and her salary was reduced to $2,000 a month. Three years ago, she became self-employed and now receives $3,500 a month. The maximum disability benefit she might expect, is which of the following?

a. $4,000, the contract amount
b. The average of her income over te life of the contract
c. $2,000
d. $3,500
e. $3,500

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QUESTION

Helen Bowers, owner of Helen’s Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2016 and 2017. $$ \begin{matrix} \text{May 2016} & \text{\$ 180.000}\\ \text{June} & \text{180.000}\\ \text{July} & \text{360.000}\\ \text{August} & \text{540.000}\\ \text{September} & \text{720.000}\\ \text{October} & \text{360.000}\\ \text{November} & \text{360.000}\\ \text{December} & \text{90.000}\\ \text{January 2017} & \text{180.000}\\ \end{matrix} $$ Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: $$ \begin{matrix} \text{May 2016} & \text{\$ 90.000}\\ \text{June} & \text{90.000}\\ \text{July} & \text{126.000}\\ \text{August} & \text{882.000}\\ \text{September} & \text{306.000}\\ \text{October} & \text{234.000}\\ \text{November} & \text{162.000}\\ \text{December} & \text{90.000}\\ \end{matrix} $$ General and administrative salaries are approximately $27,000 a month. Lease payments under long-term leases are$9,000 a month. Depreciation charges are $36,000 a month. Miscellaneous expenses are$2,700 a month. Income tax payments of $63,000 are due in September and December. A progress payment of$180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of$90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2016. b. Prepare monthly estimates of the required financing or excess funds—that is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers’ sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the company’s current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firm’s ability to obtain bank credit? Explain.

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