Certified Financial Consultant (CFC) Practice Exam

What can insurers change in a guaranteed renewable health insurance policy?

1. Benefits based on health status

2. Rates by class

3. The policy terms

4. Coverage options

The correct answer is: Rates by class

In a guaranteed renewable health insurance policy, insurers have the ability to change rates by class. This means that while individual policyholders cannot be discriminated against based on health status or previous claims, insurers are allowed to adjust premiums for a class of policyholders. This adjustment is typically based on factors such as the overall health care costs associated with that class, changes in the market, or other risk factors. This feature ensures that while the insurer must continue to renew policies regardless of an individual's health status, they maintain the right to modify pricing structures to account for broad trends and risks associated with the collective group of insured individuals. Thus, while the coverage and benefits might remain the same for an individual policyholder under a guaranteed renewable contract, the rates can be adjusted reflecting the collective risk profile of the insured class.