What is conditionally renewable?
Conditionally renewable is a provision in health insurance policies that gives the company the right not to renew the policy for reasons specified in the contract. Conditions vary by contract and the conditional renewal is often at the next premium payment period, that is, quarterly, annually, after second year or third year.
Conditionally renewable policies benefit the insurer over the policyholder. The insurer creates and places conditions that allow the policy to be canceled or not renewed if the conditions are not met.
Sometimes, the premium that the insured person pays may be increased if a condition is not met, but the insurer can decide to let the policyholder renew for another period.
The conditions cannot be contingent on the insured’s health. Instead, most conditions specified in an insurance contract are related to the insured’s age or employment status.
Most workplaces have insurance policies that cover disability and other labor concerns. Sometimes, if a new job is considered substantially riskier than the previous job, the policyholder may not be able to renew the disability policy because the risks are too high.
That means the health insurance company has weighed the risks and decided that there is a greater likelihood of the policyholder making an injury claim because of the new work.
Conditionally renewable policies are generally offered to those insured people who work in high-risk occupations. These types of policies are frequently found in group coverage situations.
Conditionally renewable policies generally have noticeably lower premiums than insurance policies that are noncancelable or guaranteed renewable. This is because the insurer has a substantial amount of power to cut coverage if its claims’ losses reach a certain threshold. The lower premium is proportional to the coverage guarantees.
Do you need a personal loan to pay for a medical procedure? Check out the rates at Bankrate.com.
Conditionally renewable example
Danny has a conditionally renewable health insurance policy. He used to be a truck driver, but changed jobs and became a window cleaner on high-rise buildings. When his insurance came up for renewal, the company canceled his policy because his job as a window cleaner is substantially riskier than that of a truck driver.
Do you want a home-equity line of credit to make home improvements? You’ll find great rates at Bankrate.com.