Question

Individual health insurance policies may include a provision concerning unpaid premiums. When the provision applies, if a premium payment is overdue when a claim for benefits is made?

A) The insurer may pay the claim and then cancel the policy.
B) Coverage is suspended until the premium is paid.
C) The insurer may deduct the overdue premium from the benefits.
D) A written demand for premium payment will be sent to the insured.

Answer 1

In the case of a claim made when a premium payment is overdue, the insurer may deduct the overdue premium from the benefits. This ensures the insurer recoups unpaid premiums while policyholders receive their coverage.

Step-by-step explanation:

When a claim for benefits is made and a premium payment is overdue under an individual health insurance policy, the insurer may deduct the overdue premium from the benefits paid out to the policyholder. This provision is intended to protect insurance companies from financial loss due to unpaid premiums while still providing the agreed-upon coverage to the insured. It is important for policyholders to be aware of and understand the terms of their insurance policy, including how overdue payments can affect their coverage and claims.