South Carolina Insurance Practice Exam

What type of health insurance policy allows the insurer to terminate the policy for reasons other than the insured's health?

1. Conditionally renewable

2. Guaranteed renewable

3. Non-renewable

4. Lifetime renewable

The correct answer is: Conditionally renewable

The correct answer is one that refers to a health insurance policy type that allows the insurer to terminate the coverage based on other factors, not strictly related to the insured's health. A conditionally renewable policy gives the insurer the right to terminate the policy upon the occurrence of specific conditions outlined in the contract, which may involve changes in the insured's situation, but not necessarily their health status. This type of policy typically has a limited renewal guarantee and can be influenced by the insurer's discretion based on reasons such as policy misrepresentation or changes in the insured's circumstances. The other options present broader guarantees for renewal or termination, making them less flexible. A guaranteed renewable policy requires the insurer to renew the policy as long as premiums are paid, regardless of the insured's health conditions. A non-renewable policy means it does not provide for renewal at all, ending coverage after a specified period. A lifetime renewable policy guarantees renewal for the life of the insured, but still primarily protects against termination due to health changes. This distinction emphasizes how conditionally renewable policies operate differently from other types, allowing for termination based on factors other than the insured’s health status while maintaining certain protections for the policyholder.