Massachusetts Accident and Health Policy Provisions
Massachusetts does not leave the wording of an individual accident and sickness policy to the insurer. Section 108 of chapter 175 prescribes the required provisions every policy must contain, the optional provisions a policy may contain only in the statute’s words (or approved wording no less favorable to the insured), and several other rules for the contract. This chapter covers them, along with the free look. The previous chapter covered advertising, disclosure, underwriting and replacement.
Required policy provisions (Mass. Gen. Laws ch. 175, § 108(3)(a))
Every individual accident and sickness policy delivered in Massachusetts must contain the required provisions in the words in which they appear in the statute, although the insurer may substitute different wording the Commissioner approves that is not less favorable to the insured or beneficiary (Mass. Gen. Laws ch. 175, § 108(3)(a)). With the Commissioner’s approval, the insurer omits a provision that does not apply to the coverage and modifies one that is inconsistent with it (§ 108(3)(c)). They follow the uniform provisions you studied earlier, with the Massachusetts wording below.
| Provision | Massachusetts rule |
|---|---|
| Entire contract; changes | The policy, with its endorsements and attached papers, is the entire contract. A change is valid only if approved by an executive officer of the insurer and endorsed on or attached to the policy, and no agent may change the policy or waive its provisions |
| Time limit on certain defenses | After two years from the date of issue, no misstatement in the application, except a fraudulent misstatement, may be used to void the policy or deny a claim for a loss or disability that begins after the two years. The provision does not limit the optional provisions numbered (1) to (5) of § 108(3)(b), such as change of occupation, misstatement of age and other insurance in this insurer. No such claim may be reduced or denied because a disease or condition not excluded by name or specific description existed before coverage began |
| Grace period | At least 7 days for weekly premium policies, 10 days for monthly premium policies and 31 days for all other policies, for each premium after the first, during which the policy stays in force |
| Reinstatement | Accepting a late premium without requiring a reinstatement application reinstates the policy. If an application is required and a conditional receipt issued, the policy is reinstated on approval or on the 45th day after the receipt unless the insurer has disapproved it in writing. It covers accidents after reinstatement and sickness that begins more than 10 days after it, and the premium accepted may not be applied to any period more than 60 days before reinstatement (a policy renewable to at least age 50, or for five years if issued after age 44, may omit this last rule) |
| Physical examinations | The insurer, at its own expense, may examine the insured as often as it reasonably requires while a claim is pending |
| Legal actions | No lawsuit to recover on the policy may be brought until 60 days after written proof of loss has been furnished, and none after three years from the time written proof of loss is required |
| Change of beneficiary | Unless the insured has made an irrevocable designation, the right to change the beneficiary belongs to the insured, and the beneficiary’s consent is not needed to change the beneficiary, surrender or assign the policy, or make other changes |
A policy the insured can keep in force by paying premiums until at least age 50 (or, if issued after age 44, for at least five years) may use an incontestable clause instead of the time limit on certain defenses: after it has been in force two years during the insured’s lifetime (excluding any period of disability, a clause the insurer may omit), it becomes incontestable as to the statements in the application (Mass. Gen. Laws ch. 175, § 108(3)(a)(2)). If the insurer reserves the right to refuse renewal, the grace period applies unless the insurer has delivered or mailed written notice of nonrenewal at least 30 days before the premium due date (§ 108(3)(a)(3)).
Claim procedures (Mass. Gen. Laws ch. 175, § 108(3)(a)(5)–(9), (4)(c))
Five of the required provisions set out how a claim moves:
| Step | Massachusetts rule |
|---|---|
| Notice of claim | Written notice within 20 days after a covered loss occurs or begins, or as soon after that as is reasonably possible. Notice to the insurer’s designated office or to an authorized agent, with information sufficient to identify the insured, counts as notice to the insurer |
| Claim forms | The insurer furnishes claim forms on receiving notice of claim. If it does not furnish them within 15 days, the claimant meets the proof-of-loss requirement by sending written proof of the occurrence, character and extent of the loss within the proof-of-loss deadline |
| Proof of loss | Written proof within 90 days after the loss (or, for a periodic benefit, after the end of the period for which the insurer is liable). A late proof is still accepted if it was not reasonably possible to give it on time and it is given as soon as reasonably possible, and, except in the absence of legal capacity, no later than one year after it was otherwise due |
| Time of payment of claims | Benefits other than periodic payments are paid immediately on receipt of due written proof of loss; periodic benefits are paid no less frequently than monthly |
| Payment of claims | A death benefit is paid to the designated beneficiary, or to the insured’s estate if no designation is in effect. Other benefits unpaid at the insured’s death may go to the beneficiary or the estate, at the insurer’s option; all other benefits are paid to the insured |
In a policy with a loss-of-time benefit payable for at least two years, the insurer may require the insured to give notice that the disability continues at least once every six months (§ 108(3)(a)(5)). The payment of claims provision may also include optional clauses letting the insurer pay up to $1,000 to a relative by blood or marriage when the benefit is payable to the estate or to a minor or incompetent person, and pay medical benefits directly to the hospital or provider unless the insured asks otherwise in writing (§ 108(3)(a)(9)).
Massachusetts adds a deadline outside the policy wording. For hospital, medical, surgical or dental expense coverage, the insurer must furnish claim forms within 15 days of notice of claim and, if it has not paid within 45 days, notify the claimant in writing why or what more is needed; otherwise it owes interest from the 45th day at 1.5 percent per month, up to 18 percent a year (Mass. Gen. Laws ch. 175, § 108(4)(c)). The interest rule does not apply to a claim the insurer is investigating for suspected fraud. For example, an insurer that receives notice of a surgical claim and neither pays it nor explains in writing within 45 days owes interest on the benefit starting on the 45th day.
Right to examine (free look) (211 CMR 42.05(1)(e))
An individual accident and sickness policy’s free-look (right to examine) provision complies with ch. 176D if it gives at least 10 days from the date of policy delivery (211 CMR 42.05(1)(e)), and the disclosure form must describe the free-look provision and how to return the policy for a refund (211 CMR 42.09(3)(c)). The 10-day right to cancel in Mass. Gen. Laws ch. 175, § 187H, is a life insurance rule; it applies to individual life policies with a face amount under $25,000, not to accident and sickness insurance.
Other Massachusetts policy rules (Mass. Gen. Laws ch. 175, § 108)
- An individual accident and sickness policy may not be delivered to any person in Massachusetts until the policy and its rate table have been on file with the Commissioner for at least 30 days, unless the Commissioner approves it sooner in writing (§ 108(2)(a)).
- The insured is not bound by any statement in the application unless a copy of the application is attached to or endorsed on the policy when issued (§ 108(5)(a)), and a false statement in the application does not bar recovery unless it materially affected the acceptance of the risk or the hazard the insurer assumed (§ 108(5)(c)).
- A policy that violates section 108 is still valid, but it is read as if it complied (§ 108(4)(b)).
- An accident-only policy must state on its first page, either in contrasting color or in bold type at least four points larger than the largest type on that page, that it insures against accident only and does not pay benefits for losses from sickness (§ 108(9)).
Optional policy provisions (Mass. Gen. Laws ch. 175, § 108(3)(b))
A policy need not contain the optional provisions, but if it addresses any of those matters, it must use the statute’s words (or approved wording not less favorable to the insured) (Mass. Gen. Laws ch. 175, § 108(3)(b)).
| Provision | Massachusetts rule |
|---|---|
| Change of occupation | If the insured is hurt or falls ill after changing to a more hazardous occupation, the insurer pays only what the premium paid would have bought at the rates for that occupation. If the insured changes to a less hazardous one, the insurer reduces the premium and refunds the excess unearned premium |
| Misstatement of age | All amounts payable are what the premium paid would have purchased at the correct age |
| Other insurance in this insurer | Coverage above a stated maximum under policies with the same insurer is void and its premiums are returned; or, in the alternative wording, the insured (or beneficiary or estate) elects one policy and the premiums for the others are returned |
| Insurance with other insurers (expense incurred benefits) | If other valid coverage with another insurer pays the same loss on an expense-incurred or service basis and the insurer was not told of it in writing before the loss, the insurer pays only its proportionate share of the loss and returns the excess premium |
| Insurance with other insurers (other benefits) | The same proportional rule for benefits paid other than on an expense-incurred basis, such as fixed indemnities, when the insurer had no prior written notice of the other coverage |
| Unpaid premium | When a claim is paid, any premium then due and unpaid may be deducted from it |
| Conformity with state statutes | A provision that conflicts, on its effective date, with the statutes of the state where the insured resides on that date is amended to conform to their minimum requirements |
| Illegal occupation | The insurer is not liable for a loss to which a contributing cause was the insured’s committing or attempting a felony, or being engaged in an illegal occupation |
For both insurance-with-other-insurers provisions, benefits under a compulsory benefit statute, such as workers’ compensation, always count as other valid coverage of which the insurer had notice (§ 108(3)(b)(4), (5)). Overinsurance, a provision the outline does not list, may adjust a disability income benefit when all loss-of-time coverage exceeds a set percentage of earned income, and it may be used only in an individually underwritten policy whose loss-of-time benefit may be payable for at least 52 weeks and whose application asks the questions needed to compare benefits with earnings (§ 108(3)(b)(6)). Massachusetts numbers the optional provisions (1) through (10) but has no provision (8).
A policy that lets the insurer refuse renewal of an individual must say that, apart from termination for nonpayment of premium, the right may not be used before the renewal date on, or after and nearest, each policy anniversary, and that nonrenewal does not affect a claim that began while the policy was in force. The rule does not apply to accident-only policies (§ 108(3)(b1/2)).
Lesson summary
- Required provisions: time limit on defenses two years; grace 7/10/31 days; reinstatement 45 days, sickness after 10 days; notice of claim 20 days; claim forms 15 days; proof of loss 90 days, outside limit one year; legal action after 60 days and within three years. The physical examination provision has no autopsy clause. Medical expense claims not paid in 45 days need a written explanation or draw interest (ch. 175, § 108).
- A policy and its rate table are on file 30 days before delivery; the application binds the insured only if attached; a false statement bars recovery only if it materially affected the risk (ch. 175, § 108(2), (5)).
- A free-look provision complies with ch. 176D if it gives at least 10 days from delivery (211 CMR 42.05(1)(e)).
- Optional provisions: change of occupation, misstatement of age, other insurance in this insurer, insurance with other insurers (expense incurred and other benefits), overinsurance, unpaid premium, conformity with state statutes and illegal occupation (ch. 175, § 108(3)(b)).