State RegulationsIL specificDifficulty 3/5
An Illinois insurer argues that because its new individual hospital indemnity form exceeds every benefit floor in the minimum-standards regulation, no other part of the regulation can affect the form. Is the insurer correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
50 Ill. Adm. Code 2007 does more than set benefit floors. Alongside its minimum benefit standards, it prohibits provisions that are unjust, unfair, misleading, or deceptive or that encourage misrepresentation, and it imposes disclosure and replacement requirements. A policy form that is generous on benefits is still subject to those prohibitions. Filing a form does not immunize it, and there is no premium-maximum function in the regulation, so the insurer's benefit-rich argument fails under Illinois law.
Why the other options are wrong
- A) Minimum benefit standards are only one function; the regulation also contains the prohibited-provision and disclosure requirements that still apply.
- B) Filing with the Illinois Department of Insurance does not exempt a form from the regulation's prohibited-provision rules.
- C) The regulation prescribes minimum standards and prohibited provisions; it is not a premium-maximum rule.
Memory hook
High benefits do not buy a pass on fair provisions.