Texas General Lines — Life, Accident, Health and HMOHealth InsuranceHard
A client is reviewing a health insurance policy where the insurer retains the right to change premiums for a specific class of policyholders, but not for an individual policy. Which renewability provision is MOST likely in force?
- ANoncancellable
- BConditionally Renewable
- COptionally Renewable
- DGuaranteed Renewable
Show answer & explanationAnswer & explanation
Correct answer: D. Guaranteed Renewable
Guaranteed Renewable policies guarantee renewal of the policy up to a certain age, but the insurer retains the right to increase premiums if applied to an entire class of policyholders, not just an individual. This matches the scenario described.
Why the other options are wrong
- A. Noncancellable policies guarantee renewal and that premiums will not increase.
- B. Conditionally Renewable policies allow the insurer to refuse renewal under certain conditions (e.g., reaching a certain age or employment status).
- C. Optionally Renewable policies give the insurer the right to renew or cancel the policy on its anniversary date.
Guaranteed Renewable (Health Insurance)
A health insurance policy provision that guarantees the insured's right to renew the policy up to a specified age, but allows the insurer to increase premiums for an entire class of policyholders.
- Insurer cannot cancel the policy, except for non-payment of premiums.
- Premiums can be increased, but only if applied to all policyholders in the same class.
- Does not guarantee premium rates.
- Common in long-term care and disability income policies.
Memory trick: Renewability: Non-can is ironclad, Guaranteed is guaranteed but premiums can rise.