11 Optional Uniform Policy Provisions As the name implies, optional provisions can be included or excluded from a policy at the insurer's discretion. Change of Occupation A policy owner's occupation plays a role in determining the risk the policy owner represents to the insurer. Therefore, the insurer wants to know if the policy owner changes occupations. Depending on the occupational change, the insurer may adjust the premium requirement or the level of benefits.

Cancellation The rights of an insurer to cancel a policy are determined by the type of contract issued. A renewable policy can be canceled only at the policy anniversary date. A cancellable policy can be canceled by the insurer at any time as long as 5-day notice is given to the policy owner. Unearned premiums must be refunded to a policy owner when a policy is cancelled midterm. A pro-rata refund is due if the insurer cancels. A short-rate refund is due if the policy owner cancels.

A conditionally renewable policy allows the insurer to terminate the contract by not renewing it under certain conditions stated in the policy. A guaranteed renewable policy cannot be canceled by the insurer. Such policies generally have a maximum age or number of years to which this provision applies. Insurers do have the right to increase premiums on the policy anniversary date. A non-cancelable policy is the most attractive option, from the policy owner's perspective. A non-cancelable policy cannot be canceled by the insurer and premiums cannot be increased.

Other Insurance with the Insurer If the policy owner has two or more policies with the same insurer, the insurer will coordinate the policies so that no more than 100% of the loss is paid. Premiums for coverage in excess of benefit paid will be refunded. Insurance with Other Insurers Also called the coordination of benefits provision, it is designed to limit the total amount paid by all insurers to 100% of the amount of the loss if the insured has multiple policies issued by different insurers.

Illegal Occupation No coverage is provided if the claim occurs in connection with a felony or if the insured engages in an illegal occupation. Intoxicants and Narcotics No coverage is provided if the claim occurs while the insured is intoxicated or under the influence of drugs, unless prescribed by a physician. Misstatement of Age The benefits will be adjusted to what the premiums would have provided had the policy owner given the correct age on the application.

Unpaid Premiums This provision permits the insurer to deduct from a claim settlement any premium then due. This provision is used in cases where a claim occurs during a grace period. Conformity with State Statutes Any policy provision that is in conflict with the statutes of the state in which the insured resides is automatically amended to minimum conformity with those statutes.

Relation of Earnings to Insurance This provision reinforces the principal of indemnity and prevents the insurance company from paying a disability income claim in excess of the actual loss, which is the insured net earned income. The insurer will not issue a policy with a benefit greater than the applicant would actually earn by going to work. Reduction of Coverage A rarely used provision, this allows the insurer to reduce benefits in certain circumstances.

Free Look (Right to Examine) Under this provision, the insured may return the policy to the agent or the insurer within 10 days (30 days for LTC and Medi-gap policies) of delivery and receive a full refund of premiums paid. Insuring Clause This is customarily found on the first page of the policy. It defines the benefits and policy periods and states the insurer’s promise to pay benefits if coverage is provided by the policy and all conditions are satisfied. Consideration Clause The amount and frequency of premium payment and the representations made

by the applicant are spelled out as is the insurer's obligation to pay benefits. Assignment of Benefits Provision Many times the owner of a policy prefers the insurer pay the doctor/hospital directly. If either will accept assignment of benefits, the insurer will pay them directly in the name of the insured. Waiver of Premium Disability income policies usually include this option which exempts the insured from paying premiums if totally and permanently disabled. Other types of policies may also make this option available, for an additional premium.