Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Accident, Health and HMOMedium
A health insurance policy in Texas contains a 'Guaranteed Renewable' provision. This provision ensures that the insurer:
- ACan cancel the policy for any reason, but must refund all premiums paid.
- BMust renew the policy, but can increase premiums based on the individual's claims history.
- CCannot cancel the policy, but can increase premiums for the entire class of insureds.
- DCannot cancel the policy, and premiums will always remain the same.
Show answer & explanationAnswer & explanation
Correct answer: C. Cannot cancel the policy, but can increase premiums for the entire class of insureds.
A 'Guaranteed Renewable' provision in a health insurance policy means the insurer cannot unilaterally cancel the policy, except for nonpayment of premiums. However, the insurer retains the right to increase premiums, but only if the increase applies to all policyholders within the same class, not based on an individual's claims experience.
Why the other options are wrong
- A. This is incorrect; the insurer cannot cancel for just any reason.
- B. This is incorrect; premium increases apply to a class, not based on individual claims history.
- D. This is incorrect; premiums can be increased for the class.
Guaranteed Renewable Provision
A provision in a health insurance policy that guarantees the insured's right to renew the policy, typically up to a certain age or for life, but allows the insurer to increase premiums on a class basis.
- Insurer cannot cancel the policy (except for non-payment).
- Insured has the right to renew.
- Premiums can be increased.
- Premium increases must apply to an entire class of insureds, not individually.
Memory trick: It's 'Guaranteed to Renew', but the price can 'Group-Up'.