California Life-Only & Accident and Health AgentAccident and Health InsuranceMedium
A client has a health insurance policy that renews annually. The insurer has the right to refuse to renew the policy for reasons stated in the policy, but cannot change the premium for the current policy year. Which type of renewability provision does this policy contain?
- AConditionally Renewable
- BNon-cancellable
- CGuaranteed Renewable
- DOptionally Renewable
Show answer & explanationAnswer & explanation
Correct answer: A. Conditionally Renewable
A conditionally renewable policy allows the insurer to refuse renewal under certain conditions specified in the policy, but the premium cannot be changed during the policy year. The insurer retains the right to refuse renewal based on stated conditions.
Why the other options are wrong
- B. Non-cancellable policies guarantee renewability and fixed premiums until a certain age.
- C. Guaranteed renewable policies guarantee renewability but allow the insurer to increase premiums by class.
- D. Optionally renewable policies allow the insurer to refuse renewal for any reason at renewal or to change premiums.
Conditionally Renewable Policy
A health insurance policy where the insurer can refuse to renew under specific conditions stated in the policy, but cannot change the premium for the current policy year.
- Insurer can refuse renewal based on stated conditions.
- Premium cannot be changed during the policy year.
- Less restrictive for the insurer than guaranteed renewable.
Memory trick: Renewing health policies has levels of insurer control, like a conditional promise.