California Life-Only & Accident and Health AgentAccident and Health InsuranceMedium
A client, Mr. Henderson, is reviewing his health insurance policy and notices a clause that states the insurer cannot cancel the policy, nor can they increase the premium beyond what is stated in the policy, as long as Mr. Henderson pays his premiums on time. What type of renewability provision does Mr. Henderson's policy most likely contain?
- ANon-cancellable
- BConditionally Renewable
- COptionally Renewable
- DGuaranteed Renewable
Show answer & explanationAnswer & explanation
Correct answer: A. Non-cancellable
A non-cancellable policy guarantees that the insurer cannot cancel the policy and cannot increase premiums beyond the original schedule, as long as premiums are paid. This offers the highest level of security to the policyholder.
Why the other options are wrong
- B. Conditionally renewable policies allow cancellation or refusal of renewal under specified conditions.
- C. Optionally renewable policies allow the insurer to cancel the policy or refuse renewal at any renewal date.
- D. Guaranteed renewable policies guarantee renewal but allow the insurer to increase premiums by class.
Non-Cancellable Policy
A health insurance policy provision that guarantees the policyholder the right to renew the policy and prevents the insurer from increasing premiums beyond the original schedule, as long as premiums are paid.
- Highest level of policyholder protection.
- Insurer cannot cancel the policy.
- Premiums cannot be increased beyond original rates.
Memory trick: GRaNt CONditions for Option Renewals.