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Contract

A contract in insurance is the legally binding agreement between the policyholder and the insurance company that outlines the terms, conditions, and obligations of both parties. It specifies what coverage is provided, what benefits are payable, how premiums are calculated, and what exclusions or limitations apply. The insurance contract serves as the foundation for determining how claims are handled and what rights and responsibilities exist under the policy.

In health, dental, life, or disability insurance, the contract is typically made up of several key components: the application for insurance, the policy document, the schedule of benefits, and any riders or amendments. Together, these form the complete legal agreement. Once the insurer accepts the application and the first premium is paid, the contract takes effect and remains valid as long as premiums are paid and terms are met.

Example:

If you apply for a personal health insurance plan and the insurer issues a policy outlining your coverage for prescription drugs, dental care, and vision, that policy - along with your signed application - forms the insurance contract between you and the insurer.

What to Watch For:

Always read your contract carefully before signing or renewing coverage. It is a legal document, so terms such as exclusions, termination clauses, and renewal conditions are enforceable. Keep both the policy and any updates or endorsements together, as they collectively represent the full contract.

Related Terms

Policy (Contract)

A policy, also referred to as a contract, is the legally binding agreement between an insurance company (the insurer) and the policyholder that defines the terms, conditions, and obligations of coverage. It outlines what is insured, the benefits provided, the premium amount, exclusions, and the responsibilities of both parties. Once the insurer accepts the application and the first premium is paid, the policy becomes active and enforceable.

Certificate of Insurance

A certificate of insurance is an official document issued by an insurance company that summarizes the key details of your coverage. It serves as proof that you are insured and outlines the essential terms of your policy, including the type of coverage, effective dates, benefit limits, exclusions, and any dependents or beneficiaries listed under the plan.

Coverage Period

The coverage period is the span of time during which an insurance policy is active and the insured person is eligible to receive benefits. It begins on the policy’s effective date and ends on the contract expiry date or termination date, depending on whether the policy is renewed or canceled. During this time, the insurer is obligated to pay for eligible claims according to the terms of the plan, as long as premiums are paid and coverage remains in force.

Underwriting

Underwriting is the process by which an insurance company evaluates an applicant’s risk to determine whether coverage can be offered, what terms will apply, and how much the premium will cost. It involves reviewing personal, medical, occupational, and lifestyle information to assess the likelihood of future claims. The goal of underwriting is to ensure fairness by matching the cost of coverage to the level of risk presented by each applicant.

Plan Member

A plan member is an individual who is enrolled in and eligible to receive benefits under a group insurance plan. Typically, the plan member is an employee of a company or a member of an organization that sponsors the group policy. The plan member is covered for the benefits outlined in the plan - such as health, dental, life, and disability insurance - and may also extend coverage to eligible dependents, including a spouse or children.

Relevant Plans

Plans that relate to Contract

Alberta Blue Cross - Blue Assured - Basic

Alberta Blue Cross - Blue Assured - Basic

Can apply at anytime, at any age.

Alberta Blue Cross - Blue Assured - Enhanced

Alberta Blue Cross - Blue Assured - Enhanced

Can apply at anytime, at any age.

Alberta Blue Cross - Blue Assured - Enhanced+

Alberta Blue Cross - Blue Assured - Enhanced+

Can apply at anytime, at any age.

Alberta Blue Cross - Blue Assured - Premium

Alberta Blue Cross - Blue Assured - Premium

Can apply at anytime, at any age.

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