An 'extension of benefits' provision in a medical expense policy generally:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Extension of benefits is a claims-protection clause found in medical expense and disability policies. If the policy is terminated, for example by the insurer's refusal to renew or by the policy's lapse, while the insured is totally disabled or confined to a hospital, benefits for that confinement or disability continue for a limited period, often up to a stated maximum such as 90 days or one year. The clause prevents an interruption of coverage at the worst possible time, when the insured cannot obtain new coverage. It is distinct from a grace period, which concerns late premium payment, and from a guaranteed renewal promise, which governs future renewals.
Why the other options are wrong
- B) The grace period is the window after the premium due date during which the insured may still pay without a lapse in coverage. It is a payment rule, not a continuation of benefits after the policy has already terminated.
- C) Adding dependents is governed by the plan's eligibility and enrollment provisions, which may require evidence of insurability and depend on the plan's schedule, not by an extension of benefits clause.
- D) Lifetime renewal is the function of a guaranteed renewable or noncancelable provision. An extension of benefits clause only continues already-incurred claims for a limited time after termination.
Memory hook
Extension of benefits = if you're laid up when the policy ends, benefits keep flowing for a while.