Under a guaranteed renewable individual health policy, the insurer's right to terminate the policy is restricted to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Guaranteed renewability means the insurer must renew the policy as long as premiums are paid, so the policy cannot be cancelled because the insured's health worsens or claims increase. Termination is confined to narrow grounds: nonpayment of premium, fraud or material misrepresentation in obtaining the policy, and the insurer's discontinuance of the entire product line (applied uniformly to all policyholders of that block). The insurer may, however, increase premiums by class with proper notice — the guarantee is of renewability, not rate lock.
Why the other options are wrong
- B) Health-based cancellation is exactly the conduct guaranteed renewable coverage forbids; deteriorating health must not cost the insured their policy. Renewal must continue as long as the premium is actually paid.
- C) A change to a more hazardous occupation alone does not justify termination; the policy's definitions and occupational provisions govern, and the insurer may adjust terms rather than cancel. The insurer's remedies are limited by contract.
- D) Termination 'for any reason' with notice describes a cancellable policy — the lowest level of renewability protection, not guaranteed renewable coverage. Cancellable policies give the insurer the broadest exit rights.
Memory hook
Guaranteed renewable = renewable as long as you pay. Health can't cancel it; only nonpayment, fraud, or killing the whole line can.