Life & Health Insurance Exam (National Portion)Policy Provisions, Options, and RidersHard
A health insurance policy includes an 'Illegal Occupation' provision. If an insured is injured while committing an illegal act that is directly related to an illegal occupation, what will be the likely outcome regarding benefit payments?
- ABenefits will be reduced, but not entirely denied.
- BBenefits will be paid in full, as the injury occurred while the policy was in force.
- CThe insurer will pay benefits but may seek reimbursement from the insured.
- DBenefits will be denied, as the injury arose from an illegal act/occupation.
Show answer & explanationAnswer & explanation
Correct answer: D. Benefits will be denied, as the injury arose from an illegal act/occupation.
The Illegal Occupation provision in health insurance allows the insurer to deny benefits if the insured's injury or sickness arises out of, or in the course of, committing an illegal occupation or engaging in an illegal act. This prevents the policy from covering losses stemming from criminal activity.
Why the other options are wrong
- A. Benefits are usually denied entirely, not just reduced, for illegal acts/occupations.
- B. This is incorrect; policies typically exclude coverage for illegal activities.
- C. Reimbursement is not the standard action; denial of the original claim is.
Illegal Occupation Provision
A standard health insurance policy provision that allows the insurer to deny claims for losses or injuries that occur while the insured is committing an illegal act or engaged in an illegal occupation.
- Excludes coverage for losses from illegal activities.
- Protects insurers from covering criminal acts.
- Mandated by state insurance laws.
- Applies to direct connection between injury and illegal act/occupation.
Memory trick: EXCLUSIONS: Extreme Risks, Uncovered, Like Illegal Crimes.