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Renewability

Noncancellable, guaranteed renewable, conditionally renewable, optionally renewable, and cancellable policies, ranked from most to least protection.

Study questions and answers

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1. Which renewability type prevents the insurer from canceling the policy or raising the premium, guaranteeing renewal to a specified age?

  1. Noncancellable
  2. Guaranteed renewable
  3. Conditionally renewable
  4. Optionally renewable
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A. Noncancellable
Noncancellable gives the insured the most protection: no cancellation and no premium increases.

2. Under a guaranteed renewable policy, the insurer cannot cancel the policy but may raise premiums:

  1. For one insured individually
  2. By class
  3. At any time without notice
  4. Never
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B. By class
Premium increases must apply to an entire class of insureds, not to one person based on their claims.

3. Under an optionally renewable policy, the insurer may refuse to renew:

  1. At any time with notice
  2. Never
  3. Only after a claim
  4. On the policy anniversary or premium due date
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D. On the policy anniversary or premium due date
The insurer can decline renewal on the anniversary or due date, but cannot cancel during the term.

4. Which renewability type allows the insurer to terminate coverage at any time with written notice and a refund of unearned premium?

  1. Noncancellable
  2. Guaranteed renewable
  3. Cancellable
  4. Conditionally renewable
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C. Cancellable
Cancellable policies give the insured the least protection.
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