What Is A Guaranteed Renewable Policy?
A guaranteed renewable health insurance policy states the insurance company is obligated to continue to provide coverage to the policyholder as long as the premiums are paid. The guaranteed renewable provision guarantees coverage for the policyholder. A Guaranteed renewable policy does not allow the policyholder to make any changes to scheduled premiums or benefits. A guaranteed renewable policy, like other provisions in healthcare insurance, is designed to offer equal protection for the insurer and the policyholder.
While this type of provision does guarantee coverage as long as premiums are paid, the guaranteed coverage is based on facts made by the beneficiary. The information regarding age, health history, or lifestyle is used during the underwriting process to determine if coverage will be offered. If it is discovered by the insurance company that some of the information giving is in fact not true, the insurance company can terminate the policy. This is considered fraud, and this along with not paying or defaulting on premiums will initiate the termination of the policy.
With the renewable guarantees, at the end of the current policy term, the insurance company actually sells another policy to the policyholder. The new policy has to have virtually the same premiums and there cannot be any penalties due to health problems.
Can Prices Be Raised On Guaranteed Renewable Policies?
Yes, insurance providers are giving the liberty of raising the premium costs in order to provide protection against expenses from claims filed by the policyholder. The insurance company can justify the increase based on the increased risks of future claims made by the policyholder.
Guaranteed Renewable Vs. Non-Cancelable
Guaranteed renewable policies, guarantee coverage to the policyholder as long as premiums are paid. On the other non-cancelable policies not only dictate insurance companies cannot cancel coverage, but they cannot increase premium payments, or reduce coverage.
What Are Optionally Renewable Provisions?
Optionally renewable provisions in health insurance policies give the policyholder more freedom within the constrictions defined in the contract. Health insurance contracts with optionally renewable provisions included gives the policyholder the freedom to terminate the insurance contract at the anniversary date of the policy or at the due date of the premium.
Optionally renewable provisions do not permit the policyholder to end the contract within any dates that fall between the anniversary dates. Optionally renewable policies do not define or outline acceptable reasons the policyholder may elect to cancel. Optionally renewable provisions allow the policyholder to cancel for any reason or no reason at all.
Conditionally Renewable Policy
A conditionally renewable policy gives more protection to the insurer, unlike the guaranteed renewable. With a conditionally renewable policy, the insurer is not obligated to extend coverage to the policyholder. There are conditions defined in the contract, that determine if coverage will continue to be extended to the policyholder. Insurers define conditions that must be meet in order to continue coverage to the policyholder. At any time, if the predefined conditions are not met, the insurer can cancel coverage or opt out of renewing the policy.
A conditionally renewable policy assess the risk factors of potential claims being filled by the policyholder. A conditionally renewable policy, for healthcare coverage, may define an option of the insurer to terminate coverage to a currently insured policyholder if they take up skydiving as a hobby. Insurers rate the risk factors involved and define conditions that if happen to occur protects them from a negative financial obligation to extend coverage.
Health insurance defines multiple provisions, from guaranteed renewable provisions, optional renewable provisions, some favor the insurer more while others favor the policyholder more. Deciding to purchase a guaranteed renewable policy or a conditionally renewable, all factors should be carefully considered and understood.