Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Specific to Health InsuranceHard
A Florida health insurance agent is explaining the renewability provisions of various health insurance policies. For a policy to be considered 'Non-cancellable,' what must be true regarding its premiums?
- APremiums can be adjusted annually based on the Consumer Price Index (CPI).
- BPremiums may increase if the insured's health status declines significantly.
- CPremiums must remain level and cannot be increased by the insurer.
- DPremiums may increase based on the insurer's claims experience for the entire class of policyholders.
Show answer & explanationAnswer & explanation
Correct answer: C. Premiums must remain level and cannot be increased by the insurer.
A Non-cancellable policy is the most restrictive for the insurer, guaranteeing renewal up to a certain age and, crucially, guaranteeing that the premium rate will not change from what was stated in the policy when it was issued.
Why the other options are wrong
- A. While some policies might have inflation adjustments, 'Non-cancellable' specifically means the insurer cannot initiate premium increases.
- B. Premiums cannot increase based on individual health status for any renewability provision once issued, only for class-wide changes or guaranteed level premiums.
- D. This describes a 'Guaranteed Renewable' policy, not 'Non-cancellable'.
Non-cancellable Policy Premiums
For a health insurance policy to be 'Non-cancellable,' the insurer cannot cancel the policy and cannot increase the premium rates from what was originally stated.
- Highest level of protection for the insured.
- Insurer cannot cancel the policy.
- Insurer cannot increase premium rates.
Memory trick: Non-Cancellable is the ULTIMATE lock on premiums.