State RegulationsPA specificDifficulty 2/5
An individual disability income policy delivered in Pennsylvania offers benefits less favorable than the state's minimum benefit standards. What is the consequence?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Pennsylvania's minimum benefit standards for individual accident and health policies, set out at 31 Pa. Code 88.167 and administered by the Pennsylvania Insurance Department, operate as a floor. An individual disability income policy delivered in the state may be more generous than the standards, but it may not provide benefits less favorable than they require. Policy provisions that fall below the floor are not permissible, which is why producers must check any proposed policy against the standards before recommending it.
Why the other options are wrong
- A) Ignoring the standards would defeat their purpose; they bind every individual policy delivered in Pennsylvania.
- B) The problem is the policy's terms, not a fine against the producer; substandard benefits are not cured by penalizing the seller.
- D) The minimum benefit standards at 31 Pa. Code 88.167 are exactly the rules for individual policies; group certificates are governed separately.
Memory hook
The standards are a floor, not a suggestion: more generous is fine, stingier is not.