Life & Health Insurance Exam (National Portion)Health InsuranceHard
A client has an individual health insurance policy. The policy states that the insurer cannot cancel the policy, but they can increase the premium for the entire class of policyholders. What type of renewability provision is this?
- AGuaranteed Renewable
- BConditionally Renewable
- CNoncancellable
- DOptionally Renewable
Show answer & explanationAnswer & explanation
Correct answer: A. Guaranteed Renewable
A Guaranteed Renewable policy ensures the insurer cannot cancel the policy or refuse to renew it, but they can increase premiums for an entire class of policyholders, not just an individual, by class.
Why the other options are wrong
- B. Conditionally Renewable allows cancellation under certain conditions, which is not the case here.
- C. Noncancellable means the insurer cannot cancel or increase premiums.
- D. Optionally Renewable allows the insurer to cancel or refuse renewal on any anniversary date.
Guaranteed Renewable Provision
A health insurance policy provision that guarantees the insured's right to renew the policy, but allows the insurer to increase premiums for an entire class of policyholders, not on an individual basis.
- Insurer cannot cancel the policy.
- Insurer cannot refuse to renew the policy.
- Premiums can be increased, but only for an entire class of insureds.
- Common in health insurance policies, especially long-term care and Medicare Supplement.
Memory trick: Noncan is gold, Guaranteed is silver, Conditional is tricky, Optional is risky.