Illinois Health Insurance Practice Exam

Which provision prevents an insurance company from canceling a policy and changing premium rates for the insured?

1. Renewability provisions; guaranteed renewable

2. Illegal occupation

3. Intoxicants and Narcotics

4. Guaranteed Insurability Rider

The correct answer is: Renewability provisions; guaranteed renewable

The correct answer is related to the concept of renewability provisions, specifically the guaranteed renewable clause. This provision is crucial in health insurance policies as it ensures that an insured individual has the right to renew their policy at the end of a coverage period without undergoing medical underwriting or facing cancellation. Under guaranteed renewable terms, as long as the insured continues to pay premiums, the insurance company cannot cancel the policy or change the premium rates based on the insured's health status or other factors. This provision provides financial security and peace of mind to policyholders, knowing they can maintain their coverage despite any changes in their health over time. The other options do not address the issue of policy cancellation or premium rate changes in the same manner. While provisions like illegal occupation or the use of intoxicants and narcotics might outline specific exclusions or conditions within a policy, they do not inherently provide protection against the cancellation of the policy or the adjustment of rates for the insured. The guaranteed insurability rider allows individuals to obtain additional insurance without proof of insurability under certain conditions but does not prevent the original policy from being canceled or premiums being increased.