Which of the following actions may an insurance company NOT do in a health policy that contains a guaranteed renewable premium benefit?

• A. Increase the premiums across the entire class
• B. Cancel the policy
• C. Reduce benefits
• D. Increase the premiums on an individual basis

Answer: (D)

The main idea is how guaranteed renewable premium works. With a health policy that has a guaranteed renewable premium feature, the insurer promises to renew the policy and may adjust premiums, but only for a class of insureds, not for a specific individual based on that person’s health or claims. This means premium changes are allowed across the entire class (such as all policyholders in the same age group), but not targeted at one person.

Increasing premiums for an individual breaks that rule, so it’s not permitted under guaranteed renewal. The insurer can raise rates for the whole class to reflect higher costs, and while cancellation or changes to benefits can involve other terms and conditions, the distinct restriction here is that individual premium increases aren’t allowed.