California Life-Only & Accident and Health AgentAccident and Health InsuranceMedium
A client is reviewing their health insurance policy and sees a provision that allows the insurer to adjust benefits or premiums if the insured changes to a more hazardous occupation. Which standard policy provision permits this action?
- AConformity with State Statutes
- BRelation of Earnings to Insurance
- CChange of Beneficiary
- DChange of Occupation
Show answer & explanationAnswer & explanation
Correct answer: D. Change of Occupation
The Change of Occupation provision allows the insurer to adjust benefits or premiums if the insured changes to a more or less hazardous occupation, reflecting the altered risk level.
Why the other options are wrong
- A. Conformity with State Statutes ensures that any policy provision in conflict with state law is automatically amended to conform.
- B. The Relation of Earnings to Insurance provision allows for a reduction in disability benefits if the total amount of disability income from all policies exceeds the insured's prior earnings.
- C. The Change of Beneficiary provision allows the policyowner to change the designated beneficiary.
Change of Occupation Provision
A standard health insurance policy provision that permits the insurer to adjust policy benefits or premiums if the insured changes to an occupation with a different level of risk.
- Protects insurer from increased risk without corresponding premium.
- Can result in reduced benefits for more hazardous jobs.
- Can result in increased benefits or reduced premiums for less hazardous jobs.
Memory trick: Occupation changes, policy rearranges.