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Questions and Answers
What must an insurer provide to the insured upon cancellation of a cancellable policy?
What must an insurer provide to the insured upon cancellation of a cancellable policy?
- Coverage for all future claims
- A guaranteed renewal option
- Proper written notice and a refund of any unearned premium (correct)
- An automatic extension of the policy
Which statement is true regarding guaranteed renewable policies?
Which statement is true regarding guaranteed renewable policies?
- Coverage continues indefinitely past age 65.
- Policy cancellation is mandatory at age 65.
- The insured has the right to renew the policy for the life of the contract. (correct)
- The insurer can increase premiums on an individual basis.
What happens if a claim is ongoing at the time a cancellable policy is canceled?
What happens if a claim is ongoing at the time a cancellable policy is canceled?
- The claim is suspended until further notice.
- The insurer must honor the claim. (correct)
- The insured loses all rights to the claim.
- The insurer automatically denies the claim.
Under what condition can insurers generally not cancel guaranteed renewable policies?
Under what condition can insurers generally not cancel guaranteed renewable policies?
Which provision allows an insurer to cancel a policy at any time?
Which provision allows an insurer to cancel a policy at any time?
How can insurers adjust premiums for guaranteed renewable policies?
How can insurers adjust premiums for guaranteed renewable policies?
What must the face page of an individual health insurance contract clearly state?
What must the face page of an individual health insurance contract clearly state?
What happens if the insurer reserves the right to refuse renewal?
What happens if the insurer reserves the right to refuse renewal?
What does the absence of a cancellation provision imply for individual health insurance policies?
What does the absence of a cancellation provision imply for individual health insurance policies?
Which of the following accurately describes a noncancellable policy?
Which of the following accurately describes a noncancellable policy?
Until what age can the insured usually renew a noncancellable policy?
Until what age can the insured usually renew a noncancellable policy?
What condition must be met for disability income insurance to be renewed beyond age 65?
What condition must be met for disability income insurance to be renewed beyond age 65?
Which of these is NOT an essential consideration when examining a policy?
Which of these is NOT an essential consideration when examining a policy?
What must insurers do before refusing to renew a policy?
What must insurers do before refusing to renew a policy?
What is a key characteristic of a guaranteed renewable policy?
What is a key characteristic of a guaranteed renewable policy?
How can premiums be adjusted in a guaranteed renewable policy?
How can premiums be adjusted in a guaranteed renewable policy?
Which types of policies must be written as guaranteed renewable?
Which types of policies must be written as guaranteed renewable?
What happens to coverage in a guaranteed renewable policy at the insured's age 65?
What happens to coverage in a guaranteed renewable policy at the insured's age 65?
Which statement correctly differentiates guaranteed renewable policies from noncancellable policies?
Which statement correctly differentiates guaranteed renewable policies from noncancellable policies?
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Study Notes
Rights of Renewability in Health Insurance
- The individual health insurance contract must specify conditions for policy renewal.
- Insurers who reserve the right to refuse renewal must provide written notice to the policyholder at their last known address.
- Lack of a cancellation provision does not ensure continuous coverage; insurers may still refuse renewal.
Noncancellable Policies
- Insurer cannot cancel a noncancellable policy or raise premiums beyond the stated amount.
- Insured has the right to renew the policy for its contract life.
- Renewal guarantee typically ends at age 65, coinciding with Medicare eligibility.
- For disability income insurance, renewal beyond age 65 requires proof of continued full-time employment.
Cancellable Policies
- Insurers can cancel the policy anytime or at the end of the policy period without guarantees for continued coverage.
- Written notice and a refund of unearned premiums must be provided upon cancellation.
- Claims occurring at the time of cancellation must be honored by the insurer.
- Cancellable provisions are rare and often illegal in many states.
Guaranteed Renewable Policies
- Similar to noncancellable policies, but insurers can increase premiums on the policy anniversary date.
- The insured retains the unilateral right to renew the policy for as long as the contract lasts.
- Premium increases can only be applied on a class basis, not individually.
- Coverage typically ceases at age 65; however, Medicare Supplements and long-term care policies must be guaranteed renewable and cannot be canceled at that age.
- Guaranteed renewable policies ensure continued coverage as long as premiums are paid.
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