Free Individual Accident and Health Provisions Study Guide
North Carolina Life, Accident & Health exam — Individual Accident and Health Provisions.
The uniform individual policy provisions are covered in the national Individual Accident and Health Provisions guide, based on NAIC Model 180. North Carolina enacts them in G.S. 58-51-15, with exclusions in 58-51-16. North Carolina departs from the model in a few places the exam targets: the 180-day proof of loss, the $3,000 facility-of-payment amount, a $200 floor in the relation of earnings provision, and a fraud exception that many policies must delete.
Required provisions (58-51-15(a))
| Provision | North Carolina rule |
|---|---|
| Entire contract | The policy, endorsements and attached application are the whole contract. Nothing outside it is incorporated by reference |
| Time limit on certain defenses | After 2 years from issue or reinstatement, no misstatement except a fraudulent one can void the policy or deny a later claim. Policies other than major medical, sizable disability income and franchise policies must delete the fraud exception entirely |
| Preexisting conditions | Preexisting conditions must be covered after no more than one year from the effective date. They're defined by advice, diagnosis, care or treatment received or recommended in the year before coverage |
| Grace period | 7 days for weekly-premium policies, 10 days for monthly, 31 days for all others |
| Reinstatement | If a conditional receipt is issued and the insurer doesn't disapprove in writing, the policy is reinstated on the 45th day. Covers accidents after reinstatement and sickness beginning more than 10 days later. Reinstatement premium can't be applied to a period more than 60 days before the reinstatement date |
| Notice of claim | Written notice within 20 days after the loss begins, or as soon as reasonably possible. Notice to an authorized agent counts |
| Claim forms | Furnished within 15 days after notice. If not, the claimant may submit written proof in any form |
| Proof of loss | Within 180 days after the loss (or after the end of the liability period for periodic benefits). Late proof is accepted if it wasn't reasonably possible sooner, but no later than 1 year after it was due, unless the claimant lacked legal capacity |
| Time of payment | Non-periodic benefits are paid immediately on receipt of proof. Periodic benefits are paid at least monthly |
| Payment of claims | Death benefits go to the beneficiary, or to the estate if none. A facility-of-payment clause may pay up to $3,000 to a relative who appears equitably entitled |
| Physical exam and autopsy | At the insurer's expense, as often as reasonably needed while a claim is pending. Autopsy where not prohibited by law |
| Legal actions | No suit until 60 days after proof of loss, and none more than 3 years after proof was required |
| Change of beneficiary | No beneficiary consent needed unless the designation is irrevocable |
Optional provisions (58-51-15(b))
- Change of occupation. A move to a more hazardous job reduces benefits to what the premium would buy at the higher rate. A move to a safer job earns a premium reduction.
- Misstatement of age. Benefits are adjusted to what the premium would have bought at the correct age.
- Other insurance in this insurer. Coverage with the same insurer above the stated maximum is void, and the premium for it is refunded.
- Relation of earnings to insurance. Benefits above the insured's earnings are paid proportionately. Total benefits are never cut below the lesser of $200 a month or the total benefits specified.
- Unpaid premium. Premium due and unpaid may be deducted from a claim payment.
- Conformity with state statutes. A provision that conflicts with the law of the insured's state is amended to meet it.
- Illegal occupation. No liability for a loss where committing or attempting a felony, or engaging in an illegal occupation, contributed.
Exclusions and special rules
- Intoxicants and narcotics (58-51-16). Losses from intoxication or non-prescribed narcotics may be excluded, but not in a medical expense policy (hospital, medical and surgical coverage).
- Disability income without medical questions (58-51-130(d)). If the application doesn't ask about medical history, a disability that begins more than 24 months after the effective date can't be denied as preexisting. The look-back can't exceed 24 months.
- Blindness and deafness (58-3-25). Coverage can't be refused or surcharged solely for blindness or deafness. A disability policy may except blindness or deafness that existed when the application was made.
- Free look. Individual or family hospitalization policies give 10 days to return the policy for a refund (58-51-10).
- Renewability notice (58-51-20). Nonrenewal needs 30 days' notice before the premium due date in the first year. After that, notice is about one-fourth of the months of coverage, capped at two years.
Common exam traps
- Proof of loss in North Carolina is 180 days, not 90.
- Notice of claim is 20 days, and claim forms are due in 15 days.
- The facility-of-payment cap is $3,000.
- The relation of earnings floor is $200 a month.
- Many North Carolina policies must delete the fraud exception from the time limit on certain defenses.
- The intoxicants exclusion can't be used in medical expense coverage.
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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.
