Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Accident, Health and HMOHard
A Texas resident is covered by an individual health insurance policy. The policy states that the insurer cannot cancel the policy, nor can it refuse to renew it, as long as the premiums are paid, until the insured reaches age 65. The insurer can, however, increase the premiums for the entire class of insureds. What type of renewability provision does this policy contain?
- ANoncancellable.
- BConditionally Renewable.
- COptionally Renewable.
- DGuaranteed Renewable.
Show answer & explanationAnswer & explanation
Correct answer: D. Guaranteed Renewable.
This scenario describes a Guaranteed Renewable policy. The insurer cannot cancel or refuse to renew the policy (up to a certain age or for a specific period) as long as premiums are paid, but it reserves the right to increase premiums for the entire class of policyholders.
Why the other options are wrong
- A. Noncancellable policies guarantee renewability and that premiums cannot be increased, which is not the case here.
- B. Conditionally Renewable policies allow the insurer to refuse renewal under certain conditions specified in the policy, which is not the case here.
- C. Optionally Renewable policies allow the insurer to refuse renewal for any reason on the premium due date, which is a weaker renewability provision.
Guaranteed Renewable Provision
A health insurance policy provision where the insurer guarantees to renew the policy up to a certain age, but reserves the right to increase premiums for an entire class of insureds.
- Insurer cannot cancel or refuse renewal.
- Premiums can be increased, but only by class.
- Typically renewable until age 65 or 70.
Memory trick: If 'guaranteed' renewal, they 'can' raise 'premiums' for 'everyone'.