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 can increase the premium for the entire class of policyholders. What type of renewability provision is this?
- AOptionally Renewable
- BConditionally Renewable
- CNon-cancelable
- DGuaranteed Renewable
Show answer & explanationAnswer & explanation
Correct answer: D. Guaranteed Renewable
Guaranteed Renewable policies ensure the insurer cannot cancel the policy, but they retain the right to increase premiums if applied to all policyholders in the same class.
Why the other options are wrong
- A. Optionally Renewable policies allow the insurer to refuse renewal for any reason, on the premium due date.
- B. Conditionally Renewable policies allow the insurer to refuse renewal under certain conditions.
- C. Non-cancelable policies mean the insurer cannot cancel or increase premiums.
Guaranteed Renewable
A health insurance policy provision where the insurer cannot cancel the policy, but can increase premiums for an entire class of policyholders.
- Insurer cannot cancel the policy.
- Premiums can be increased, but only for the entire class of insureds.
- Common in health insurance policies.
Memory trick: Renewing health means knowing if they can hike your rates or kick you out.