Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Specific to Health InsuranceMedium
A Florida health insurance agent is explaining the renewability provisions of a medical expense policy to a client. The policy states that the insurer cannot cancel the policy, but it reserves the right to increase premiums for the entire class of policyholders. Which renewability provision does this describe?
- AConditionally Renewable
- BGuaranteed Renewable
- COptionally Renewable
- DNoncancellable
Show answer & explanationAnswer & explanation
Correct answer: B. Guaranteed Renewable
A Guaranteed Renewable policy ensures the insurer cannot cancel the policy, but allows the insurer to increase premiums for an entire class of policyholders, not just an individual, providing a balance of security for the insured and flexibility for the insurer.
Why the other options are wrong
- A. Conditionally Renewable policies allow the insurer to refuse renewal under certain conditions, which is not described.
- C. Optionally Renewable policies allow the insurer to renew or not renew at their discretion, which is not described.
- D. A Noncancellable policy guarantees renewal and the premium cannot be increased, which is not the case here.
Guaranteed Renewable
A health insurance policy provision that guarantees the insured's right to renew the policy, but allows the insurer to increase premiums for the entire class of policyholders.
- Insurer cannot cancel the policy
- Premiums can be increased, but only by class
- Common in medical expense and long-term care policies
Memory trick: Renew for sure, but rates might soar (for everyone).