California Life-Only & Accident and Health AgentAccident and Health InsuranceMedium
A client is comparing different health insurance policies and notices that one policy states the insurer can refuse to renew the policy on any anniversary date, but only if they do so for all policies in that same class. Which renewability provision is this policy describing?
- AGuaranteed Renewable
- BOptionally Renewable
- CConditionally Renewable
- DNon-Cancellable
Show answer & explanationAnswer & explanation
Correct answer: B. Optionally Renewable
An Optionally Renewable policy allows the insurer to refuse renewal on an anniversary or premium due date, but only if they refuse to renew all policies in the same class. The insurer cannot refuse to renew an individual policy within that class.
Why the other options are wrong
- A. Guaranteed Renewable policies guarantee renewal and cannot be canceled, but premiums can be increased for an entire class of policyholders.
- C. Conditionally Renewable policies allow the insurer to refuse renewal under certain conditions specified in the policy, which apply to the individual insured.
- D. Non-Cancellable policies cannot be canceled or have premiums increased by the insurer, as long as premiums are paid.
Optionally Renewable
A health insurance policy renewability provision where the insurer has the option to renew or not renew the policy on an anniversary or premium due date, but this decision must apply to an entire class of policyholders, not just an individual.
- Insurer can refuse renewal.
- Decision applies to an entire class of policies.
- Less favorable than Guaranteed Renewable or Non-Cancellable.
Memory trick: Renewability options: some are guaranteed, some are optional for the insurer to renew for a whole class.