Free Individual Accident and Health Provisions Study Guide
Alabama Life, Accident & Health exam — Individual Accident and Health Provisions.
Alabama calls health insurance disability insurance in its statutes. The uniform individual policy provisions are in Ala. Code 27-19, which tracks the NAIC model described in the national guide. The Alabama Health exam focuses on the specific periods below, the 10-day free look, and a few Alabama additions.
Free look
Every individual disability (health) policy except a single-premium nonrenewable policy must let the buyer return it within 10 days of delivery for a premium refund. The policy is then void from the beginning (27-19-32).
Required provisions
| Provision | Alabama rule |
|---|---|
| Entire contract | The policy plus the attached application is the whole contract (27-19-4) |
| Time limit on certain defenses | After two years from issue, only a fraudulent misstatement can be used to void the policy or deny a claim for a loss starting after the two years (27-19-5) |
| Grace period | At least 7 days for weekly premiums, 10 days for monthly, and 31 days for other modes (27-19-6) |
| Reinstatement | With a conditional receipt and no written disapproval, the policy is reinstated on the 45th day. Accidents are covered after reinstatement; sickness only if it begins more than 10 days later (27-19-7) |
| Notice of claim | Within 20 days after the loss, or as soon as reasonably possible (27-19-8) |
| Claim forms | Furnished within 15 days after notice. Otherwise the claimant may submit written proof in any form (27-19-9) |
| Proof of loss | Within 90 days. Late proof is accepted if filed as soon as reasonably possible and within one year, absent legal incapacity (27-19-10) |
| Time of payment | Non-periodic benefits are paid immediately on written proof. Periodic disability benefits are paid at least monthly (27-19-11) |
| Payment of claims | Death benefits go to the beneficiary, or the estate if none. An optional facility-of-payment clause can let the insurer pay up to $1,000 to a relative equitably entitled when benefits are due an estate or a minor (27-19-12) |
| Physical exam and autopsy | At the insurer's expense, as often as reasonably needed while a claim is pending; autopsy where not forbidden by law (27-19-13) |
| Legal actions | No suit until 60 days after proof of loss, and none more than three years after proof was required (27-19-14) |
| Change of beneficiary | A revocable beneficiary may be changed without the beneficiary's consent (27-19-15) |
Optional provisions
| Provision | Alabama rule |
|---|---|
| Change of occupation | A move to a riskier job reduces benefits to what the premium buys at the higher rate. A move to a safer job earns a premium reduction and refund (27-19-17) |
| Misstatement of age | Benefits are adjusted to what the premium would buy at the correct age (27-19-18). This is optional; the grace period is mandatory |
| Relation of earnings to insurance | Benefits may be prorated when total disability coverage exceeds earnings, but not below the lesser of $200 a month or the specified benefits (27-19-22) |
| Unpaid premium | Premium due and unpaid may be deducted from a claim payment (27-19-23) |
Renewability and other rules
- A policy renewable only at the insurer's option must say so prominently on the first page (27-19-31).
- An insurer that reserves the right to refuse renewal of a hospital or medical policy must give 30 days' written notice before the premium due date. Refusal may take effect only around the policy anniversary and can't prejudice claims already arising.
- If a policy ends at a stated age but the insurer accepts premium for a period beyond it, coverage continues to the end of the paid period (27-19-36).
- A person with an insurable interest may apply for and own a policy on someone else (27-19-29).
- Application statements are representations, not warranties. A misstatement defeats recovery only if it was fraudulent, material, or would have changed the insurer's good-faith decision (27-14-7).
Common exam traps
- Alabama's health free look is 10 days, but not for single-premium nonrenewable policies.
- The time limit on defenses is two years, and only fraud survives it.
- Monthly-premium grace is 10 days.
- Claim forms are due in 15 days.
- Misstatement of age is an optional provision under Alabama's law.
- Nonrenewal of a hospital or medical policy requires 30 days' notice.
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Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
