Health Insurance Mastery Practice Exam

Which type of health insurance policy prevents the insurer from altering terms?

1. Renewable policy

2. Guaranteed issue policy

3. Noncancelable policy

4. Adjustable policy

The correct answer is: Noncancelable policy

A noncancelable policy is designed to prevent the insurer from altering the terms of the contract during the lifetime of the policyholder, as long as the premiums are paid on time. This means that the insurer cannot change the premium amount, reduce coverage, or cancel the policy for health reasons, providing a strong level of security and predictability for the policyholder. This feature is particularly important for individuals who may develop health issues later on, ensuring continuous coverage without the risk of adverse changes. In contrast, a renewable policy allows for renewal at the end of a period, but the insurer may have the right to change premiums or terms at renewal time. A guaranteed issue policy ensures coverage without underwriting, but it does not prevent the insurer from adjusting terms later. An adjustable policy, as the name suggests, allows the insurer to modify premiums and benefits according to stated conditions, which undermines the stability that a noncancelable policy offers.