11.1 Required and Optional Uniform Provisions
Key Takeaways
- The Uniform Individual Accident and Sickness Policy Provisions Act sets 12 required provisions (protect the insured) and 11 optional provisions (protect the insurer).
- Memorize the claim timeline: notice of claim 20 days, insurer furnishes forms within 15 days, proof of loss within 90 days, no suit before 60 days, suit barred after 3 years.
- Grace periods are 7 days (weekly), 10 days (monthly), and 31 days (quarterly/semiannual/annual) premium modes.
- Time Limit on Certain Defenses makes the policy incontestable after 2 years and bars denial of undisclosed pre-existing-condition claims after 2 to 3 years (state-dependent).
- Optional provisions such as Change of Occupation, Misstatement of Age, and Relation of Earnings adjust benefits proportionally rather than void the policy.
The Uniform Provisions Framework
Every U.S. jurisdiction has adopted the Uniform Individual Accident and Sickness Policy Provisions Act (UPPL). It standardizes the language of individual health policies so consumers can compare contracts. The Act creates two buckets.
- 12 Required (Mandatory) Provisions — these protect the insured. They must appear in every policy, though an insurer may substitute wording that is equal to or more favorable to the insured.
- 11 Optional Provisions — these protect the insurer. The insurer chooses which (if any) to include, using the exact standard wording or wording no less favorable to the insured.
Memory hook: Required = protects the insured. Optional = protects the insurer. The exam loves to flip this.
The 12 Required Provisions
| # | Provision | Core Rule |
|---|---|---|
| 1 | Entire Contract | Policy + attached application = whole agreement; no outside statements |
| 2 | Time Limit on Certain Defenses | Incontestable after 2 years (except fraud) |
| 3 | Grace Period | 7 / 10 / 31 days by premium mode |
| 4 | Reinstatement | Accidents covered at once; sickness after 10 days |
| 5 | Notice of Claim | Within 20 days of loss |
| 6 | Claim Forms | Insurer furnishes within 15 days |
| 7 | Proof of Loss | Within 90 days of loss |
| 8 | Time of Payment of Claims | Immediately (lump sum); at least monthly (periodic) |
| 9 | Payment of Claims | To insured/beneficiary; medical may be assigned to provider |
| 10 | Physical Exam and Autopsy | At insurer expense during investigation |
| 11 | Legal Actions | No suit before 60 days; barred after 3 years |
| 12 | Change of Beneficiary | Allowed unless beneficiary is irrevocable |
The Claim Timeline (highest-yield numbers)
Walk the sequence forward and the numbers stick:
- Loss occurs.
- Notice of claim — 20 days (or as soon as reasonably possible).
- Insurer furnishes claim forms — 15 days. If it fails to, the insured may submit proof in any written form describing the loss.
- Proof of loss — 90 days (extendable up to 1 year if legally incapacitated; never beyond except incapacity).
- Legal actions — wait 60 days after proof before suing; suit must be filed within 3 years of proof-of-loss deadline.
Trap: Notice of claim (20 days) and proof of loss (90 days) are different deadlines. Candidates routinely pick 20 for proof of loss — wrong.
Grace Period by Mode
| Premium Mode | Minimum Grace |
|---|---|
| Weekly | 7 days |
| Monthly | 10 days |
| Quarterly / Semiannual / Annual | 31 days |
Coverage stays in force during grace; if a claim occurs in the grace period, the unpaid premium is deducted from the benefit.
Time Limit on Certain Defenses vs. Life Incontestability
In health policies this is a two-part clause. After 2 years, the insurer cannot void the policy for misstatements (fraud always excepted). Separately, claims for a pre-existing condition not excluded by name cannot be denied after the stated period (commonly 2 years, up to 3 in some states).
The 11 Optional Provisions
These let the insurer adjust or limit benefits. Three are math-tested.
Change of Occupation
If the insured moves to a more hazardous job, benefits are reduced to what the premium paid would have purchased at the riskier rate. If the insured moves to a less hazardous job, the insurer reduces the premium and refunds the excess.
Worked example — more hazardous. An accountant pays $600/yr for a $3,000/month disability benefit. She becomes a roofer, whose rate for that benefit is $900/yr. The adjusted benefit equals:
Adjusted benefit = Original benefit × (Premium paid ÷ Premium for new occupation)
= $3,000 × ($600 ÷ $900) = $3,000 × 0.667 = $2,000/month.
Misstatement of Age
The policy is not voided; benefits are adjusted to what the premium would have bought at the correct age. If age was understated (premium too low), benefits are reduced proportionally. If overstated, excess premium is refunded.
Relation of Earnings to Insurance (Average Earnings Clause)
Applies only to disability income policies. If total monthly benefits from all coverage exceed the insured's actual earnings at disability, benefits are reduced to actual monthly earnings (subject to a floor, often $200/month). This curbs moral hazard and over-insurance.
| Optional Provision | What It Does |
|---|---|
| Change of Occupation | Adjusts benefit/premium for hazard change |
| Misstatement of Age | Adjusts benefit; never voids |
| Other Insurance — Same Insurer | Limits stacked coverage with one insurer |
| Insurance With Other Insurers (Expense) | Pro-rates expense reimbursement |
| Insurance With Other Insurers (Other) | May reduce fixed benefits |
| Relation of Earnings | Caps DI benefit at actual earnings |
| Unpaid Premium | Deducts owed premium from claim |
| Conformity With State Statutes | Bad wording auto-conforms to law |
| Illegal Occupation | Excludes losses from illegal acts |
| Intoxicants and Narcotics | Excludes substance-related losses |
| Cancellation (where allowed) | Insurer may cancel with written notice |
Trap: Misstatement of age and change of occupation adjust the contract — they do not rescind it. Rescission is reserved for material misrepresentation/fraud within the contestable period.
An insured suffers a covered loss on March 1. Under the required Proof of Loss provision, by what date must written proof of loss normally be furnished to the insurer?
An accountant pays $400 per year for a disability benefit and changes to a high-risk occupation whose rate for that same benefit is $1,000 per year. Under the Change of Occupation provision, the benefit will be adjusted to approximately what fraction of the original?