The following provisions are optional at the discretion of the insurer as mandated by the NAIC Uniform Health Insurance Policy Provision Law.
Change of Occupation
The occupation of a person directly reflects his/her risk profile, mostly to the risk of disability. If a person changes his job to a more risky profession, the insurance company has the right to raise the premiums and change the benefit policy or vice versa if the person changes to a less risky profession. The benefit and premium changes take place as soon as a person changes jobs. Even if the insured doesn't notify the insurer of the job change in advance, changes to the benefit will still take place (up or down accordingly) if disability occurs.
Misstatement of Age
This provision is the same as in life insurance, with a slightly different end result. This provision, in health insurance, allows the insurer to go back and make changes to the benefits so that they match the correct age. This means if a person stated originally that they were younger, the premiums they had been paying were lower than they should have been, and benefits would be adjusted (decreased) accordingly. Conversely, if a person stated originally that they were older than they really were at the time of application, then they would have been paying a higher premium and, therefore, benefits would be adjusted (increased) accordingly.
Other Insurance In This Insurer
There is a maximum amount an insurer is allowed to cover an individual in order to limit the company's risk. A person may occupy more than one policy with an insurer; however, this provision protects the company and does not allow the coverage to exceed a specified amount.
Insurance With Other Insurer
This provision protects the insurance company against over-insurance in case a person has the same coverage from two different insurance policies and only one is notified when "expenses are incurred." This provision states that benefits payable will be prorated and excess premiums will be refunded to the policyowner.
Insurance With Other Insurers
As you can see, this is similar to the above provision. This provision is to allow people to have insurance with more than one company, however, while still avoiding over-insurance. It calls for prorating benefits on any other reason than "expenses incurred," usually in regard to disability income.
Relation of Earnings to Insurance
This has to do with the amount of monies from premium payments the insurer received versus the loss the insurer suffered through claims payments. If disability income benefits from all disability income policies for the same loss exceed the insured's monthly earnings at the time of disability (or the average monthly earnings for two years preceding), the insurer is liable only for that proportionate amount of benefits as the insured's earnings bear to the total benefits under all such coverage.
In Florida, total indemnities payable to the insured may not be reduced below $500 or the sum total benefits under all applicable coverage, whichever is less. Any premiums paid for the excess coverage are refunded.
Unpaid Premiums
When a benefit is payable to the insured or beneficiary, if there are any unpaid premiums they will be deducted at this time.
Cancelation
When the insurance company exercises its right to cancel a policy, the insured must be notified 45 days in advance and must be reimbursed for any prepaid premiums.
Conformity with State Statutes
All conflicts regarding state statutes of the state the insured lives in are automatically adjusted at the time the policy is issued.
Illegal Occupation
If the insured is connected with a felony or has an illegal occupation and incurs injury, the insurance company is not held responsible.
Intoxicants and Narcotics
The insurer is not responsible for any loss that occurs while the insured is intoxicated or under the influence of narcotics unless drugs were administered by a physician.
What Does Change of Occupation Provision Mean?
A change of occupation provision is a clause in an individual health insurance policy that provides the insurers the right to amend or make adjustments on the policy’s benefits and premium rates, especially when the insured changes his or her job position or career.
It benefits the insured whose job involves working in a hazardous environment. It also provides the insured a way to handle disability income claims. From the insurance company's perspective, this benefits them because they are able to charge an accurate rate for the amount of risk they are taking.
That said, not all policies have this provision built in so if such provision is not included in the policy, then no changes can be made. This can be disadvantageous to the insured as you would be paying a higher rate even if you are no longer working in that higher risk occupation.
Insuranceopedia Explains Change of Occupation Provision
Most health insurance policies are underwritten by the insurance company based on many factors. One important factor considered in underwriting is your occupation. Most people these days spend a large portion of their time at work. Aside from sleep, that is probably the activity we engage in the most on a daily basis.
This means that what you do for work has a great impact on your health and level of risk from the insurer's perspective. Some jobs - especially those involving manual labor or working with potentially hazardous machinery put insureds at higher risk of injury and disability than more sedentary office jobs. For insureds in those occupations, their health insurance premiums are likely to be higher and terms are more restricted.
If the insured changes his or her job to one that is categorized by the insurance company as less hazardous than the occupation stated in the policy at the time of application, the insurance company will reduce the premium rate and will return excess unearned premiums from the date when the occupation was changed or based on the anniversary date of the policy. For this to take effect, the insurer needs to provide a document or proof of change of the occupation.
On the other hand, if the insurer changes to a more hazardous job and got injured, then the insurance company will only cover the insurer at the rate of the premium that has been paid. Once the insurer got paid, the premium would increase thereafter once changes in the policy take effect.
Not only can this change of occupation provision be used to change premiums, it can also be used to change the terms and coverages offered by the policy. If you move to a less hazardous occupation, coverage can be expanded by the insurer. The opposite can occur if you are moving to a more hazardous occupation.