Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An insurer may terminate an individual medical expense policy for which of the following reasons?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
An insurer may cancel or terminate a medical expense policy for nonpayment of premium or for fraud or a material misrepresentation in the application. Under guaranteed renewable policies, the insurer cannot cancel the policy because the insured's health has deteriorated or because claims were paid. The right to terminate is therefore tied to conduct at the point of application or to premium payment, not to the insured's health status or claims history after issue.
Why the other options are wrong
- A) Deteriorating health is the very reason guaranteed renewable policies exist; the insurer must continue coverage as long as premiums are paid.
- B) Paying a legitimate covered claim cannot be grounds for termination; that would defeat the purpose of insurance and violate fair claims practices.
- D) A routine annual physical requirement is not a standard condition for terminating an individual medical policy.
Memory hook
Cancellation triggers: unpaid premium or a lie on the application. Sickness and claims are not exit tickets for the insurer.