11.3.1 Renewability Provisions
Let's look at the policy renewability provisions first. There are a variety of policies that contain renewability provisions which define the insured's rights. The principal renewability classifications of health insurance include cancelable, optionally renewable, conditionally renewable, guaranteed renewable, and noncancelable.
Cancelable Policies
Cancelable policies have provisions that state they can be terminated (canceled) at any time by the insurer.
However, the insurer must produce written notification of contract cancelation 45 days in advance. In addition to providing 45 days' advance notice, the insurer must also refund any premium fees that were paid in advance.
Insurers are also allowed to increase premiums in a cancelable policy.
Optionally Renewable Policies
In an optionally renewable policy, the insurer has the option to terminate the policy by class; however, only on a specific date that is stated in the contract. Usually this action will take place on policy anniversary dates or premium due dates.
The insurer has the option to increase premiums by class as well.
Conditionally Renewable Policies
Conditionally renewable policies can be renewed unless one or more conditions stated in the contract occur, excluding any condition pertaining to the insured's health.
There is a possibility of premium increase. If there is an increase to the premiums, it must apply to an entire class of policies.
Guaranteed Renewable Policies
Guaranteed renewable policies state the policy must be renewed as long as premiums are paid or until a specified age (usually 60 or 65).
However, premium increases may apply.
Noncancelable Policies
Noncancelable policies are also referred to as "noncan" policies. These policies cannot be canceled, nor can the premiums be changed. Benefits are predetermined as a fixed amount.
The term for these policies usually ends at the insured's attained age of 65. Most noncancelable policies are found in disability policies. However, they cannot be used for medical expense reimbursement (due to inflation).
