An insured is hospitalized when the insurer terminates the policy for nonpayment of premium. If the policy contains an extension of benefits clause, the insurer will:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An extension of benefits (or extended benefits) clause protects an insured who is in the middle of treatment when the policy terminates, for example when the insured is hospitalized and the policy is cancelled for nonpayment of premium or simply not renewed. The clause requires the insurer to continue paying for covered services related to a condition being treated at the time of termination, but only for a limited period stated in the policy and only for the specified covered condition. It does not renew the policy or create new coverage, and it is subject to the policy's benefit limits.
Why the other options are wrong
- B) An extension of benefits clause extends payments for an ongoing condition; it does not renew the policy for another year or restore full coverage.
- C) The clause looks forward after termination, not backward; it is not limited to bills incurred before the premium due date.
- D) The clause exists precisely to prevent a blanket refusal; without it the insurer could deny claims after lapse, but with it covered treatment continues briefly.
Memory hook
Extension of benefits = finish what you started. Payments continue for the current treatment, then stop.