Life & Health Insurance Exam (National Portion)Underwriting and Policy IssueMedium
An applicant for a health insurance policy has a pre-existing condition that the insurer deems too risky to cover. However, the insurer is willing to issue the policy if this specific condition is excluded from coverage. What document would be used to formalize this arrangement?
- AA waiver of premium rider.
- BAn insuring clause.
- CAn impairment rider.
- DA conditional receipt.
Show answer & explanationAnswer & explanation
Correct answer: C. An impairment rider.
An impairment rider (also known as an exclusion rider) is attached to a policy to exclude specific pre-existing conditions from coverage. This allows the insurer to issue a policy to an otherwise uninsurable applicant, or to mitigate risk for a specific condition.
Why the other options are wrong
- A. A waiver of premium rider waives premiums if the insured becomes disabled, unrelated to exclusions.
- B. An insuring clause states the insurer's promise to pay under certain conditions, it doesn't exclude conditions.
- D. A conditional receipt provides temporary coverage pending underwriting.
Impairment Rider
An attachment to an insurance policy that excludes coverage for a specific pre-existing condition, allowing the policy to be issued.
- Excludes specific conditions.
- Common for health insurance.
- Allows coverage for other risks.
Memory trick: When risk is too much, the policy gets a special 'tag' to mark what's out.