Among renewable policies, which statement best describes guaranteed renewable?

• A. It may adjust premiums but cannot cancel the policy
• B. It cannot cancel the policy under any circumstances
• C. It cannot renew after the initial term
• D. It requires medical underwriting

Answer: (A)

Guaranteed renewable means the insurer must renew the policy at each anniversary or term end, as long as premiums are paid, and the policy cannot be canceled due to the insured’s health changes. The insurer can adjust premiums at renewal to reflect the insured’s age or risk, but they cannot drop the policy merely because health has changed. This is why the statement that premiums may be adjusted while cancellation is not allowed best describes guaranteed renewable.

The other ideas don’t fit: saying the policy cannot be canceled under any circumstances is too absolute—nonpayment or policy fraud can still lead to lapse or cancellation. The idea that it cannot renew after the initial term contradicts guaranteed renewal, which guarantees renewal. And requiring medical underwriting at renewal conflicts with the purpose of guaranteed renewable, which is to renew coverage without requiring new underwriting at each renewal (though premiums can change).