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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.

In health, dental, life, or disability insurance, the policy (or master contract in group insurance) is the governing document that determines how claims are processed and benefits are paid. It may also include riders or endorsements that add, modify, or limit specific coverages. The policy serves as the ultimate reference for resolving disputes, confirming eligibility, and verifying what services or expenses are covered.

Example:

If you purchase an individual health insurance policy, the insurer provides a written contract specifying your effective date, premium amount, coverage details, and claim submission requirements. The insurer must honor all terms stated in that contract as long as premiums are paid and the policy remains in force.

What to Watch For:

Read your policy carefully to understand its provisions, including definitions, exclusions, and renewal terms. Keep the original document and any amendments in a safe place. In group insurance, employees receive a certificate of insurance summarizing the policy, but the master contract held by the employer contains the full legal wording that governs all benefits.

Related Terms

Paramedical Disciplines

Paramedical disciplines refer to regulated health professionals who provide therapy or rehabilitation services outside of hospital settings. Common examples include physiotherapists, chiropractors, massage therapists, acupuncturists, naturopaths, osteopaths, psychologists, and speech-language pathologists.

Pay-Direct card / Drug card

A pay-direct card, also known as a drug card, is a plastic or digital card issued by your health insurance provider that allows pharmacies to bill your insurer directly for eligible prescription drugs. Instead of paying the full cost upfront and submitting a claim later, you pay only your portion - such as a deductible or coinsurance - at the point of sale.

Per Incident

Per incident refers to the way certain insurance benefits are calculated or limited based on each separate event, illness, or accident rather than by year or lifetime. When a benefit is paid “per incident,” it means you are eligible for reimbursement each time a new, distinct occurrence happens, up to the maximum amount specified for that type of claim.

Per Person / Per Family

Per person and per family describe how benefit limits, deductibles, or maximums are applied within a health or dental insurance plan. A per person limit means the specified amount applies individually to each insured member, while a per family limit represents the total combined coverage for all members under one policy.

Per-Practitioner Annual Maximum (Paramedical)

The per-practitioner annual maximum is the total amount your plan will reimburse for services from one specific type of provider in a single benefit year. For example, if your plan pays up to $500 for massage therapy annually, once that amount is reached, additional treatments from that provider type are no longer covered until the next year.

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