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Health Policy Provisions, Clauses and Riders: Practice Questions

20 free practice questions with explanations. Pick an answer for each, then check your score.

Exam weight: 15 of 100 scored questions on the Life and Health general knowledge exam. Updated 2026-11-04.

Quick study guide

Individual health and disability policies use standard provisions from the NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), which Texas adopted in Insurance Code chapter 1201 with small changes.

Mandatory provisions

Entire contract: the policy, endorsements and attached papers are the whole contract; an unattached application doesn't bind the insured, and only an executive officer can approve a change. Time limit on certain defenses: once the period ends, only a fraudulent misstatement can void the policy, and a claim can't be denied as preexisting unless the condition was excluded by name. The NAIC model uses three years, and some states, including Texas, use two years from issue. Reinstatement: covers injuries at once, sicknesses only if they begin more than 10 days later. The insurer may also examine a claimant at its own expense and, where lawful, require an autopsy.

Provision	Time limit in the NAIC model
Grace period	At least 7 days (weekly premium), 10 (monthly), 31 (all others)
Notice of claim	Within 20 days of the loss, or as soon as reasonably possible
Claim forms	Insurer sends them within 15 days, or the claimant may send written proof in any form
Proof of loss	Within 90 days; if not reasonably possible, within 1 year (unless legally incapacitated)
Time of payment	Immediately on proof; disability benefits at least monthly
Legal actions	Not before 60 days after proof of loss, not after 3 years from when proof was due

Optional provisions

These appear only if the policy addresses the subject: change of occupation, misstatement of age, illegal occupation, relation of earnings to insurance (disability benefits from all policies capped at earnings), unpaid premium and cancellation.

Other clauses and cost sharing

The insuring clause is the insurer's promise to pay; the consideration clause is the insured's side (application and premium). The free look gives a full refund on return (10 days in Texas for individual policies; states vary). A probationary period applies once, just after issue; an elimination period starts each disability. The insured pays the deductible, then coinsurance (a percentage) or copayments (flat amounts) up to the out-of-pocket maximum, on usual, customary and reasonable charges; some care needs prior authorization. ACA major medical can't exclude preexisting conditions or cap essential benefits in dollars; disability income and other non-ACA policies can.

Riders and renewability

An impairment rider excludes a named condition instead of declining the applicant. A future increase option lets a disability insured buy more coverage later without proving good health. Renewability, strongest first: noncancelable (to 65, no premium change), guaranteed renewable (to 65, premiums change only by class), conditionally renewable (nonrenewal only for stated reasons other than health), optionally renewable (insurer may decline at renewal), cancelable (insurer may cancel with notice).

Practice questions

After paying a hospital claim, an insurer finds a misstatement in the insured's application. It also learns that no copy of the application was attached to the policy when it was issued. Which statement is true?
1. A.The insurer may rescind the policy, because the application is part of the contract wherever it is kept.
2. B.The insured isn't bound by the application statements, because the application wasn't attached to the policy.
3. C.The insurer may rely on the application statements only if the agent also signed the application.
4. D.The insurer may use the application statements, but only after the time limit on certain defenses ends.
Show answer
Answer: B. Under the entire contract provision, the policy, its endorsements and the attached papers make up the whole contract, and the uniform law adds that the insured is not bound by any statement in an application unless a copy is attached to or endorsed on the policy when issued. An application kept only in the insurer's files is not part of the contract, whoever signed it. The time limit on certain defenses narrows what the insurer can contest over time; it never expands it.
Source: Texas content outline VI.A.1; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Sections 3A(1) and 5A; Texas Insurance Code § 1201.207 (entire contract) and § 1201.273 (binding statements)
Some disability policies that the insured can keep in force to at least age 50 use an "Incontestable" clause instead of the standard time limit on certain defenses wording. Under the NAIC model version of that clause, the contestable period counts the time the policy has been in force during the insured's lifetime, excluding:
1. A.The first policy year, which serves as a probationary period.
2. B.Any time after the insured reaches age 50.
3. C.Any period during which the insured is disabled.
4. D.Any period when a premium was paid late, within the grace period.
Show answer
Answer: C. The model allows this alternative wording for policies the insured can continue to at least age 50 (or for at least five years if issued after age 44): after the policy has been in force for the stated period during the insured's lifetime, not counting any time the insured is disabled, it becomes incontestable as to the statements in the application. Unlike the standard wording, this clause has no exception for fraud. The NAIC model uses three years, and some states, including Texas, use two years from issue.
Source: Texas content outline VI.A.2; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3A(2), drafting note; Texas Insurance Code § 1201.208(c) (incontestable clause)
An individual health policy's premium is paid monthly. Under the uniform grace period provision, the grace period must be at least:
1. A.7 days.
2. B.31 days.
3. C.30 days.
4. D.10 days.
Show answer
Answer: D. The uniform provision sets a minimum grace period of 7 days for weekly-premium policies, 10 days for monthly-premium policies and 31 days for all others, such as quarterly or annual. The policy stays in force during the grace period. Texas uses the same minimums; 30 days is not one of the uniform figures.
Source: Texas content outline VI.A.3; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3A(3); Texas Insurance Code § 1201.209 (grace period)
An individual health policy lapsed and was reinstated on May 1. Under the uniform reinstatement provision, which loss would the reinstated policy cover?
1. A.An illness that began on April 20.
2. B.An illness that began on May 6.
3. C.A broken arm from a fall on May 3.
4. D.A sprained ankle from a fall on April 25.
Show answer
Answer: C. A reinstated policy covers accidental injuries sustained after the reinstatement date, but only sicknesses that begin more than 10 days after it, so the May 6 illness is not covered. The 10-day wait stops people from reinstating only after they fall ill. Losses that happened while the policy was lapsed, like the April illness and the April fall, are not covered.
Source: Texas content outline VI.A.4; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3A(5); Texas Insurance Code § 1201.210 (reinstatement)
An insured is hospitalized after an accident. Under the uniform notice of claim provision, written notice of the claim should reach the insurer:
1. A.Within 20 days after the loss, or as soon as reasonably possible.
2. B.Within 15 days, after which the claim is permanently barred.
3. C.Within 90 days after the loss, with no exceptions allowed.
4. D.Only after the insured is discharged and has the final bill.
Show answer
Answer: A. The provision asks for written notice within 20 days after the loss begins, or as soon as reasonably possible, and notice given to an authorized agent counts. Texas words it as before the 21st day, which is the same period. Ninety days is the proof of loss deadline, and 15 days is how long the insurer has to send claim forms.
Source: Texas content outline VI.A.5; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3A(6); Texas Insurance Code § 1201.211 (notice of claim)
An insured notifies her insurer of a claim, but 15 days pass without the insurer sending claim forms. Under the uniform claim forms provision, she:
1. A.Must wait for the forms, and her proof deadline is paused until they arrive.
2. B.May send her own written proof of the loss within the normal proof-of-loss period.
3. C.Is entitled to automatic payment of the full amount she claimed.
4. D.Must complain to the state insurance department before submitting proof.
Show answer
Answer: B. If the insurer doesn't furnish claim forms within 15 days after notice, the claimant complies by submitting, within the normal proof-of-loss period, written proof covering the occurrence, character and extent of the loss. The insurer's delay does not pause the deadline or guarantee payment; it just lets the claimant use her own format. Texas words it as before the 16th day, the same period.
Source: Texas content outline VI.A.6; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3A(7); Texas Insurance Code § 1201.212 (claim forms)
An insured must file written proof of loss for a surgery claim within 90 days. A serious complication makes it not reasonably possible for her to file on time. Under the uniform proof of loss provision:
1. A.Late proof is accepted at any time within the three-year lawsuit period.
2. B.The benefit is reduced by a set percentage for each month of delay.
3. C.Late proof still counts if sent as soon as reasonably possible, within one year of the due date.
4. D.The claim is void because the proof arrived after the deadline.
Show answer
Answer: C. Proof of loss is due within 90 days, but a late filing doesn't invalidate or reduce the claim if filing on time wasn't reasonably possible, as long as proof comes as soon as reasonably possible and, except for legal incapacity, within one year after it was otherwise due. Three years is the outer limit for filing a lawsuit, not for proof of loss, and the provision has no penalty schedule.
Source: Texas content outline VI.A.7; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3A(8); Texas Insurance Code § 1201.213 (proof of loss)
An insured disagrees with her insurer's decision on a claim. She sent written proof of loss on March 1. Under the uniform legal actions provision, she may sue the insurer:
1. A.Immediately, as soon as proof of loss has been furnished.
2. B.Between 60 days after proof of loss and three years after proof was due.
3. C.Only after one full year has passed since the date of the loss.
4. D.At any time, because the provision sets no time limit.
Show answer
Answer: B. The provision bars a lawsuit until 60 days after written proof of loss has been furnished, which gives the insurer time to investigate, and bars any suit more than three years after proof of loss was required to be furnished. Texas uses the same limits, worded as before the 61st day and three years.
Source: Texas content outline VI.A.11; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3A(12); Texas Insurance Code § 1201.217 (legal actions)
Under the Affordable Care Act, which feature is NOT allowed in a non-grandfathered individual major medical policy?
1. A.An annual deductible the insured pays before benefits begin.
2. B.A $30 copayment for each primary care office visit.
3. C.20% coinsurance on covered services after the deductible.
4. D.A lifetime dollar limit on essential health benefits.
Show answer
Answer: D. Federal law bars group health plans and individual health insurance from setting lifetime or annual dollar limits on essential health benefits. Deductibles, coinsurance and copayments are still allowed, within the plan's out-of-pocket maximum. Lifetime, annual or per-cause maximums still show up in coverage outside these rules, such as accident-only or hospital indemnity policies.
Source: Texas content outline VI.B.15; HealthCare.gov: Lifetime and yearly limits; 42 U.S.C. § 300gg-11 (no lifetime or annual limits)
An insured bought a disability income policy while working as an accountant. He later becomes a commercial roofer without telling the insurer and is injured on a roofing job. Under the change of occupation provision, the insurer will:
1. A.Deny the claim and cancel the policy for nondisclosure.
2. B.Pay only what his premium would have bought at the insurer's rates for roofers.
3. C.Pay the full benefit and raise his premium from then on.
4. D.Pay the full benefit, because job changes don't affect coverage.
Show answer
Answer: B. When the insured moves to an occupation the insurer classifies as more hazardous, the provision reduces the benefit to what the premium paid would have bought at the rates for that occupation. The policy is not voided and the claim is not denied. If he had moved to a less hazardous job, the insurer would lower the premium and refund the excess unearned premium. Change of occupation is an optional provision.
Source: Texas content outline VI.A.14; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3B(1); Texas Insurance Code § 1201.219 (change of occupation)
An insured owns two individual disability income policies from different insurers that together promise more each month than she was earning when she became disabled. One policy contains a relation of earnings to insurance provision (as worded in the Texas Insurance Code). That insurer will:
1. A.Pay nothing until the other insurer's benefits have run out.
2. B.Deny the whole claim because her total coverage was excessive.
3. C.Pay its full benefit, because each policy is a separate contract.
4. D.Pay a proportionate share based on her earnings and refund excess premium.
Show answer
Answer: D. This optional provision limits the insurer to the share of its benefit that her monthly earnings (the higher of earnings when the disability began or the two-year average) bear to the total monthly benefits from all policies, and it refunds premiums paid in the prior two years for the benefit it can't pay. It doesn't void the claim, and a minimum floor protects small total benefits. Its purpose is to remove any reason to stay disabled because disability pays more than working.
Source: Texas content outline VI.A.16; Texas Insurance Code § 1201.222 (relation of earnings to insurance); NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), overinsurance provision, Section 3B(5)
Which of these is an optional uniform provision, one an insurer includes only if its policy addresses the subject, rather than a mandatory one?
1. A.Proof of loss.
2. B.Illegal occupation.
3. C.Grace period.
4. D.Entire contract.
Show answer
Answer: B. The illegal occupation provision is optional. If used, it frees the insurer from paying for a loss to which the insured's committing or attempting a felony, or working in an illegal occupation, contributed. Grace period, proof of loss and entire contract are among the mandatory provisions every individual policy must contain, along with others such as notice of claim, claim forms and legal actions.
Source: Texas content outline VI.A.15; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Sections 3A and 3B(8); Texas Insurance Code § 1201.226 (illegal occupation)
Which policy clause states that the insurer issues the coverage in exchange for the statements in the application and the payment of premium?
1. A.Consideration clause.
2. B.Conformity with state statutes provision.
3. C.Entire contract provision.
4. D.Insuring clause.
Show answer
Answer: A. The consideration clause sets out what the insured gives in return for coverage: the application and the premium. The insuring clause is the insurer's side, its promise to pay for covered losses. The entire contract provision lists the documents that make up the contract, and the conformity provision amends any terms that conflict with state law.
Source: Texas content outline VI.B.1 and VI.B.3; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 2A(1) (policy must state the entire money and other considerations)
An insured receives her new individual health policy, reads it, and returns it to the insurer within the free-look period. What happens?
1. A.Her coverage continues until the end of the first month.
2. B.She gets a refund minus a charge for the days she was covered.
3. C.She gets a refund only if she gives a reason the insurer accepts.
4. D.She gets all her premium back, and the policy is void from the start.
Show answer
Answer: D. The free-look provision lets the owner return a new policy for any reason and get the premium back; the returned policy is void from the date it was issued. The number of days varies by state and type of policy. Texas, for example, gives 10 days after delivery for individual accident and health policies, except single-premium nonrenewable ones.
Source: Texas content outline VI.B.2; Texas Insurance Code § 1201.058 (notice that policy is returnable)
A disability income policy has a 30-day probationary period and a 90-day elimination period. Six months after the policy is issued, the insured becomes totally disabled by an illness. When do benefits start to accrue?
1. A.After 120 days of disability, adding the two periods together.
2. B.After she has been disabled for 30 days.
3. C.Immediately, because the probationary period is over.
4. D.After she has been disabled for 90 days.
Show answer
Answer: D. A probationary period applies only at the start of the policy (sicknesses that begin within that time after issue aren't covered), and NAIC minimum standards limit it to 30 days in the definition of sickness. It ended long before this illness. The elimination period is a waiting period at the start of each disability, so benefits begin to accrue after 90 days of disability. The two periods are not added together.
Source: Texas content outline VI.B.4 and VI.B.5; NAIC Accident and Sickness Insurance Minimum Standards Model Regulation (Model 171), Section 5M
An insured's major medical plan has a $1,000 deductible, 20% coinsurance and a $5,000 out-of-pocket maximum. Her first covered claim of the year is surgery with a $6,000 allowed amount. How much does she pay?
1. A.$2,000
2. B.$1,200
3. C.$5,000
4. D.$2,200
Show answer
Answer: A. She pays the deductible first ($1,000), then 20% coinsurance on the remaining $5,000 ($1,000), for $2,000 in total; the plan pays the other $4,000. Coinsurance applies only after the deductible, not to the full $6,000. Her $2,000 is below the $5,000 out-of-pocket maximum, so the cap doesn't come into play.
Source: Texas content outline VI.B.9 and VI.B.10; HealthCare.gov glossary: Coinsurance; HealthCare.gov glossary: Deductible; HealthCare.gov glossary: Out-of-pocket maximum/limit
An insured chooses an out-of-network surgeon at an out-of-network surgery center for a planned, non-emergency procedure. The surgeon charges $3,000, and the insurer finds that the usual, customary and reasonable (UCR) charge for that procedure in the area is $2,200. Which statement about the claim is true?
1. A.The insurer must pay based on the full $3,000, because the surgeon sets the fee.
2. B.The insurer pays based on $2,200, and the surgeon may bill her for the $800 difference.
3. C.The insurer pays nothing at all, because the charge was higher than UCR.
4. D.The surgeon must accept $2,200 and cannot bill her for the rest.
Show answer
Answer: B. The UCR amount reflects what providers in the area usually charge for the same service, and insurers use it to set the allowed amount they pay on. An out-of-network provider may bill the patient for the difference between its charge and the allowed amount, which is called balance billing; a preferred (network) provider may not. Federal No Surprises Act protections limit balance billing in other situations, such as emergency care and certain out-of-network care at in-network facilities, which is why this example is a planned procedure at an out-of-network center.
Source: Texas content outline VI.B.14; HealthCare.gov glossary: UCR (usual, customary, and reasonable); HealthCare.gov glossary: Balance billing; CMS: No Surprises Act consumer protections
An applicant for an individual disability income policy has a history of lower-back problems. The insurer issues the policy with an impairment rider excluding disability caused by the lower back. Four years later he is disabled by a back condition. Which is true?
1. A.The insurer pays half, because the condition existed before the policy.
2. B.It must be paid, because the time limit on certain defenses has passed.
3. C.It must be paid, because federal law bans all preexisting-condition exclusions.
4. D.It is not covered, because the rider excludes that condition by name.
Show answer
Answer: D. An impairment (exclusion) rider lets the insurer accept an applicant it might otherwise decline by excluding a specific condition. The time limit on certain defenses stops the insurer from denying a claim as preexisting only for conditions not excluded by name or specific description, so a rider exclusion still applies. The ACA ban on preexisting-condition exclusions covers health insurance coverage such as major medical; disability income insurance is an excepted benefit outside that rule.
Source: Texas content outline VI.C.1 and VI.B.8; NAIC Uniform Individual Accident and Sickness Policy Provision Law (Model 180), Section 3A(2)(b); 42 U.S.C. § 300gg-3 (no preexisting condition exclusions in health insurance coverage); 42 U.S.C. § 300gg-91(c)(1) (disability income insurance is an excepted benefit)
A 32-year-old surgeon buys a disability income policy with a future increase option. Three years later her income has risen sharply. What does the option let her do?
1. A.Buy more monthly benefit on set dates without proving good health, if her income supports it.
2. B.Have her monthly benefit double automatically each year at no extra premium.
3. C.Convert the disability policy into a whole life policy without a medical exam.
4. D.Raise her benefit by any amount whenever she likes, with no check of her income.
Show answer
Answer: A. A future increase option (a form of guaranteed insurability for disability income) lets the insured add coverage at specified times without new medical underwriting. The insurer still checks that her income justifies the larger benefit, and she pays additional premium for it. The increase is not automatic or free, and the option has nothing to do with converting to life insurance.
Source: Texas content outline VI.C.2 and VI.C.3
What is the main difference between a noncancelable disability income policy and a guaranteed renewable one?
1. A.A guaranteed renewable policy lets the insurer change benefits at each renewal.
2. B.The insurer can raise premiums by class on guaranteed renewable, but not on noncancelable.
3. C.A noncancelable policy can be cancelled if the insured's health gets worse.
4. D.Only a noncancelable policy must be renewed until the insured reaches 65.
Show answer
Answer: B. Under the NAIC minimum standards, both types must be renewable at the insured's option until age 65 (or Medicare eligibility), and in both the insurer cannot change any policy provision on its own. The one exception is that a guaranteed renewable insurer may change premium rates by class, never for one insured because of health. Policies that let the insurer cancel or refuse renewal are the cancelable and optionally renewable types.
Source: Texas content outline VI.D.1 and VI.D.3; NAIC Accident and Sickness Insurance Minimum Standards Model Regulation (Model 171), Section 7A(2)

Where these questions come from: Texas content outline (Pearson VUE #124401, effective 1 Sep 2026), Life and Health general knowledge, section VI: Policy Provisions, Clauses, and Riders — 15 of 100 scored questions. See how we write questions.