An insured is hospitalized when his individual major medical policy is terminated. Under an extension of benefits provision, the insurer will generally:
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Why A is correct
The extension of benefits provision protects an insured who is disabled or confined to a hospital when the policy terminates. The insurer continues to pay benefits for that same sickness or confinement for a limited period — commonly up to 90 days or until discharge — even though the policy is no longer in force. The clause prevents the insurer from terminating benefits mid-treatment and is a standard contract protection in individual and group medical expense policies. Some contracts also extend benefits when the insured becomes disabled as a result of the sickness, and the continuation generally applies without an additional premium because it carries forward rights that vested while the policy was still in force.
Why the other options are wrong
- B) Extension of benefits continues claim payments for an ongoing confinement; it does not trigger a refund of premiums.
- C) The clause has nothing to do with converting the policy; conversion is a separate contractual right found in group plans.
- D) Denying all claims after termination is precisely what the extension of benefits provision exists to prevent for an ongoing confinement.
Memory hook
Already sick when the policy dies? Extension of benefits keeps the check coming for a limited curtain call.