Question

K has a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered a) Non-cancelable

b) Guaranteed renewable
c) Optionally renewable
d) Conditionally renewable

Answer 1

b) Guaranteed renewable. A guaranteed renewable policy is a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds.

Step-by-step explanation:

The type of policy described in the question is a guaranteed renewable policy. In a guaranteed renewable policy, the insurer is required to renew the policy as long as the insured continues to pay the premiums. The premiums in this type of policy can only be increased if applied to the entire class of insureds, not for each individual separately.

If the insurance company tries to charge the actuarially fair premium to the group as a whole rather than to each group separately, it can have negative implications for the company. Charging a higher premium to the entire group may result in some individuals choosing not to renew their policies, leading to a loss of customers for the insurance company.