State RegulationsTX specificDifficulty 3/5
Which statement correctly describes the cancellation rights of the parties to a Medicare supplement policy under the Texas Medicare supplement cancellation rule?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under 28 TAC 3.3306(E), the asymmetry between the parties is the whole point: the policyowner's right to end the policy is unrestricted, while the insurer's right is confined to the grounds the rule permits, principally nonpayment of premium and fraud or material misrepresentation. An insurer that treats its own cancellation right as unlimited has violated the rule, and the insured should be advised that the remedy for an unwanted policy is simply to surrender it.
Why the other options are wrong
- B) The insurer does not have the same unrestricted right the policyowner has; its grounds are limited.
- C) The rights are reversed: the policyowner is the party with the unrestricted right to cancel.
- D) Both parties can end the policy; the difference is how narrow the insurer's grounds are.
Memory hook
The insured can walk anytime; the insurer needs a real reason.