Life & Health Insurance Exam (National Portion)Health InsuranceEasy
A client is reviewing their health insurance policy and notices a provision that states the insurer cannot cancel the policy, but they can increase the premium for the entire class of policyholders. Which type of renewability provision does this describe?
- AOptionally Renewable
- BConditionally Renewable
- CNon-cancelable
- DGuaranteed Renewable
Show answer & explanationAnswer & explanation
Correct answer: D. Guaranteed Renewable
A Guaranteed Renewable provision allows the insurer to increase premiums on a class basis but guarantees continued coverage. The policy cannot be canceled by the insurer, except for non-payment of premiums.
Why the other options are wrong
- A. Optionally Renewable policies allow the insurer to refuse renewal for any reason on the policy anniversary date.
- B. Conditionally Renewable policies allow the insurer to refuse renewal under certain conditions specified in the policy.
- C. Non-cancelable policies guarantee both renewability and premiums cannot be increased.
Guaranteed Renewable Provision
A health insurance policy provision that guarantees the insured's right to continued coverage, but allows the insurer to increase premiums for an entire class of policyholders.
- Insurer cannot cancel the policy (except for non-payment).
- Premiums can be increased, but only for an entire class of insureds, not individually.
- Common in health insurance policies, especially long-term care and disability income.
Memory trick: Renewability is about the insurer's right to say 'no' and 'how much'.