State RegulationsPA specificDifficulty 2/5
A producer recommends that a client replace her comprehensive major medical plan with a cancer-only policy that pays a scheduled benefit on diagnosis. Under Pennsylvania regulation, what applies to this product?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under 31 Pa. Code 88.169 and 31 Pa. Code 88.193, a policy that pays benefits only for a specified disease is a limited health policy, and Pennsylvania requires it to meet the limited-policy standards, including required disclosures of its limitations. The producer must make sure the client understands the scheduled, disease-specific nature of the benefits before replacing broad coverage with it. The Pennsylvania Insurance Department enforces these form and disclosure standards.
Why the other options are wrong
- A) Limited does not mean unregulated; Pennsylvania imposes dedicated standards on specified-disease policies through 31 Pa. Code 88.169.
- B) Nothing confines sale of a cancer-only policy to already-diagnosed applicants; regulation concerns policy standards and disclosure, not that restriction.
- D) Form and disclosure oversight belongs to the Pennsylvania Insurance Department under state regulation, not to a federal filing process.
Memory hook
Cancer-only = limited policy = disclose the limits, follow the limited-policy rulebook.