An insured was totally disabled and receiving benefits when the insurer terminated her medical expense policy without cause at the end of the term. Which policy provision would allow benefits to continue for the same condition after the policy ends?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The extension of benefits provision protects an insured who is totally disabled when the policy is terminated by the insurer rather than by the insured. It continues paying benefits for the condition that caused the disability for a limited period after the termination date, typically without requiring further premium. The purpose is to avoid the hardship of cutting off benefits in the middle of an ongoing disability. The provision usually applies when the insurer chooses not to renew the policy, and the period of continuation is stated in the policy. It is one of the standard contract provisions in the A&H terminology tested on the exam.
Why the other options are wrong
- B) Coordination of benefits is a rule that determines which of two or more plans pays first when a person is covered by more than one plan; it does not extend benefits after termination.
- C) Waiver of premium relieves the insured of paying premiums during total disability; it keeps a policy in force rather than continuing benefits after termination.
- D) Reinstatement restores a lapsed policy when the insured meets conditions such as paying past-due premiums; it does not apply to an insurer's nonrenewal.
Memory hook
Extension of benefits bridges the gap: the insurer ended the policy, so benefits outlast the term for that disability.