Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Health InsuranceEasy
A client is reviewing their health insurance policy and notices a clause that states the insurer cannot unilaterally change any policy provision, including premium rates, as long as the premiums are paid on time. Which type of renewability provision does this describe?
- ANon-Cancellable
- BOptionally Renewable
- CGuaranteed Renewable
- DConditionally Renewable
Show answer & explanationAnswer & explanation
Correct answer: A. Non-Cancellable
A Non-Cancellable policy provision ensures that the insurer cannot change any policy provisions, including premium rates, and cannot cancel the policy as long as premiums are paid. This offers the strongest protection to the policyholder.
Why the other options are wrong
- B. Optionally Renewable allows the insurer to cancel the policy for any reason at renewal.
- C. Guaranteed Renewable allows the insurer to change premiums for classes of policyholders, but not cancel the policy.
- D. Conditionally Renewable allows the insurer to refuse renewal under certain conditions specified in the policy.
Non-Cancellable Provision
A health insurance policy provision that guarantees the policy cannot be canceled and premium rates cannot be increased as long as premiums are paid.
- Strongest form of renewability for the policyholder.
- Insurer cannot change any policy provisions.
- Premiums are fixed for the life of the policy.
Memory trick: Renewability is like a shield: how strong is its protection?