A policy provision that allows benefits for an ongoing covered condition to continue for a limited period after the policy itself is terminated is known as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The extension of benefits provision protects an insured who is disabled or confined when the policy terminates. If the insured is receiving benefits for a covered condition at the time of termination, the provision continues those benefits for a stated limited period, such as 90 days or another contract-specified duration, even though the policy itself has ended. The purpose is fairness: a person who became ill while insured should not lose mid-treatment coverage merely because the contract expired. This continuity-of-care function is precisely what the extension of benefits clause performs, so A is the correct answer.
Why the other options are wrong
- B) A renewal guarantee sets out the insurer's right or duty to renew the policy for a new contract period; it addresses whether coverage continues forward, not whether benefits extend after the policy has terminated.
- C) Coordination of benefits (COB) determines which of two plans pays first when an insured is covered under more than one policy, preventing overpayment; it has nothing to do with post-termination care.
- D) The grace period allows an insured to pay an overdue premium within a stated number of days without the policy lapsing; it concerns late premium payment, not the continuation of benefits for ongoing treatment.
Memory hook
Extension of benefits = the policy walks out but stays to pay for the treatment it started.