Both mandatory and optional provisions in health insurance policies are included. This lesson will discuss optional provisions in your health insurance.
What are the optional provisions in health insurance policies?
Let’s talk about Cathy, who is interested in purchasing health insurance. The policy’s mandatory provisions were explained by her insurance agent. Now she must decide which optional provisions are most important to her. Cathy wants to make the best decision for her family, but she isn’t sure which provisions she should choose. Let’s try to help Cathy make this decision.
Insurance that covers medical expenses not covered by government plans is health insurance . While some provisions must be included, insurers may offer optional provisions. There are many optional provisions.
- Change in occupation
- Illegal occupation
- Misstatement of age and gender
- Relationship between earnings and insurance
Let’s take a closer look at each of these optional provisions.
Change in occupation
Insurance companies view someone with a dangerous occupation, such as a skydiving instructor or Cathy who works in an office as a greater risk for disability. An insurance company can increase the premium for a policy or pay more if an insured moves to a more dangerous occupation. If the insured changes to a safer occupation, the insurance company will decrease the premium.
The insurance company will not be notified if an insured changes her occupation. If the insured is disabled, this could affect the insured’s benefits. Let’s say that Cathy is now a pilot and has a new job. This occupation would be considered more dangerous than her office job. The insurance company would raise Cathy’s premiums to reflect this higher risk.
An illegal occupation provision states that an insurance company won’t pay benefits to policyholders if the loss was caused by a felony. Let’s say someone is injured by falling over a fence during a robbery. This injury would not be covered by the insurance company. In cases where the policyholder is engaged in illegal activities, the illegal occupation provision applies.
Incorrect Speculation of Age or Gender
The insurance company bases the policy premium calculation on several factors, including the applicant’s age as well as his/her gender. The policy premium will not be calculated if the applicant lies about his/her age and/or gender. An insurance company will pay benefits if it discovers that the applicant has misrepresented his/her age or gender.
Let’s say that Cathy claimed to be 35 but was actually 45 when she filled out her application. Because she is a higher risk for the company, the insurance company will charge a higher premium for a 45-year-old. Cathy’s premium would be reduced to the same level as the premium she would have paid if the insurance company discovered the error.
Relationship of earnings to insurance
A policy that has a relationship of earnings to insurance provision prohibits policyholders from claiming benefits greater than their/her current monthly income or the average monthly earnings over the past two years. This applies when a policyholder is covered by more than one policy on disability insurance and all benefits are greater than the policyholder’s current monthly income. This provision requires that the insurance company pays only a portion of the benefits to the policyholder.