17.3 Renewability Provisions
Generally, the more liberal the process is for renewing a policy, the higher the premiums are going to be.
Cancelable Policies
These types of policies are cancelable by the insurer at any time and at the insurer's discretion. Since the only way a policy can be canceled is if an entire class (or specific group) of insureds is affected, canceling policies is a way for the insurer to raise rates.
Optionally Renewable Policies
These policies are written with a specific date designated in which the insurer has the option of canceling or renewing a policy. This usually happens on the policy anniversary date and again allows the insurer to raise rates (by class).
Conditionally Renewable Policies
These policies allow the insurer the power to terminate the policy if certain conditions prevail. For instance, the policy may state that continued coverage is dependent upon the insured's maintaining meaningful employment. The conditions cannot be related to health however; usually they would be tied to the insured's employment or age.
Guaranteed Renewable Policies
In these types of policies, the insurer has promised that the insured's policy is renewable, usually until a specified age (such as 60 or 65) as long as the insured continues to make the required premium payments. The insurer cannot raise premium rates individually though - any rise in rates must pertain to an entire class of insureds.
Noncancelable Policies
Noncan provisions can appear in medical expense insurance policies. These policies cannot be canceled, nor can the policies' premium rates be raised for a specified period of time (typically until the insured reaches age 65).
