What Do You Mean It's Not Covered: How the Insurance Company Pays Claims

Time of Payment of Claim: Any benefits payable under this policy will be paid immediately upon our receiving written proof of the loss.

Policyholders will often refer to this paragraph when they're suing their insurance company for breach of contract. When faced with this kind of claim, the insurance company will usually refer to the paragraph dealing with proof of loss -- and argue that the policyholder didn't supply that completely or on time.

Payment of Claims: Any benefits are payable to you. Any accrued benefits unpaid in the event of your death may, at our option, be paid to your estate. If any benefit is payable to your estate, or to an insured person who is a minor or otherwise not competent to give a valid release, we may pay such benefits (up to amount not exceeding $1,000) to any relative by blood or connection by marriage of yours who we consider to be equitably entitled. Any payment made by us in good faith in accordance with this provision will fully discharge us to the extent of the payment.

Benefits are payable directly to you -- generally, medical insurance policies provide reimbursement for covered expenses. This means the insurance company wants you to pay your medical bills first -- and then it will pay you. Traditional insurance companies would rather not get involved directly with doctors or hospitals. In the event of your death, benefits may be paid to your estate. Whenever benefits are payable to an insured's estate or to an insured who cannot give a valid release (a person who is a minor or incapacitated), the insurance company has the option of paying benefits of up to $1,000 to a relative who appears to be entitled to receive the funds. This may occur if a relative has been caring for the insured and handling financial matters.