Health Insurance Mastery Practice Exam

With an optionally renewable policy, the company reserves the right to:

1. Rollover coverage automatically

2. Terminate coverage at any policy anniversary date

3. Renew the policy indefinitely

4. Increase premium rates annually

The correct answer is: Terminate coverage at any policy anniversary date

An optionally renewable policy allows the insurer to terminate coverage at any policy anniversary date. This means that while the policyholder can typically renew the policy, the insurer has the authority to decide whether or not to allow that renewal. It provides the insurance company with flexibility to reassess the risk associated with the policy and potentially discontinue the coverage based on their underwriting guidelines or the performance of the policy. The other options do not accurately describe the nature of an optionally renewable policy. Rollover coverage automatically implies a commitment to continue the policy without the option for the insurer to decline, which is not the case here. The option to renew indefinitely implies that the coverage is guaranteed for an unlimited period, which contradicts the nature of being optionally renewable. Lastly, increasing premium rates annually is not guaranteed under an optionally renewable policy, as premium adjustments depend on the specific terms of the policy and state regulations, rather than directly linked to the optional renewal aspect.