California Life and Health Insurance Practice Exam

What type of changes can be made to a guaranteed renewable health insurance policy?

1. Coverage levels

2. Premium rates of the policyowner

3. Term of coverage

4. Deductibles and co-pays

The correct answer is: Premium rates of the policyowner

In a guaranteed renewable health insurance policy, the key feature is that the insurer must renew the policy for the insured as long as the premiums are paid, but they retain the right to adjust the premium rates. This means that while the insured has the assurance that their coverage will continue, they should be aware that the costs might increase based on the insurer's guidelines, reflecting changes in insurance regulation, the insured's age, or the insurer’s claims experience. Premium rates can be adjusted but only under the terms set forth in the policy, which typically involves a broader class rate hike rather than a personalized increase. Hence, it is crucial for policyholders to understand that while coverage is guaranteed, the financial aspects tied to that coverage—specifically the premium rates—can be modified over time. In contrast, the other choices involve elements that typically cannot be changed in a guaranteed renewable policy. Coverage levels, term of coverage, and deductibles and co-pays are generally fixed unless specified otherwise, and policyholders should expect these elements to remain stable throughout the life of the policy unless explicitly stated.