California Life-Only & Accident and Health AgentAccident and Health InsuranceMedium
A client is seeking to purchase a health insurance policy where the insurer retains the right to refuse renewal on any policy anniversary date. Which type of renewability provision allows the insurer this discretion?
- AOptionally Renewable
- BConditionally Renewable
- CNon-Cancellable
- DGuaranteed Renewable
Show answer & explanationAnswer & explanation
Correct answer: A. Optionally Renewable
An Optionally Renewable policy grants the insurer the right to choose whether or not to renew the policy on any anniversary date. This gives the insurer the most discretion regarding renewal, aside from a cancellable policy.
Why the other options are wrong
- B. Conditionally Renewable means the insurer can refuse renewal only if specific conditions are not met.
- C. Non-Cancellable means the insurer cannot cancel or increase premiums.
- D. Guaranteed Renewable means the insurer must renew, though they can adjust premiums by class.
Optionally Renewable Policy
A health insurance policy where the insurer has the option to renew or not renew the policy at each renewal or anniversary date. The insurer may also adjust premiums.
- Insurer has full discretion to renew or not.
- Premiums can be adjusted at renewal.
- Less secure for the insured than other renewability options.
Memory trick: Renewability: Who decides if it continues?