A guaranteed renewable insurance policy is one where the insurer is obligated to renew the insurance coverage for as long as the insured party makes the payments against that policy. This is often used in policies which cover health, disability or life insurance so that a policy holder has a reasonable guarantee of ongoing coverage even if they should develop a condition or conditions that increase the likelihood that an insurer will have to make a payment against a claim.
This protects the insured against being without insurance if they should develop a condition which might require expensive ongoing care, treatment or therapy.
What guarantees does a guaranteed renewable insurance policy make with respect to premiums?
Under a guaranteed renewable insurance policy the insurer is required to offer the policy holder renewed coverage as long as they make payments of their premiums, but no specific warranty is given in regard to the level of premium that customer may be charged.
In particular the premiums may rise based on the filings of previous claims against the policy, injury or any other factor that might increases the insurer’s risk of being obligated to pay out under the insurance policy provided.
It is also common for insurers to be able to increase premiums across an a complete class of people that are insured under the same or similar policies during the life span of the guaranteed renewable policy.
What does a guaranteed renewable insurance policy offer me?
A guaranteed renewable insurance policy offers the policy holder a certain level of peace of mind, in that they can be assured that they will always be able to access the coverage under their policy no matter the change in their circumstances.
However, the guaranteed renewable insurance policy does not guarantee that the customer will be able to afford to access that renewed level of coverage as the insurer is able to raise premiums in line with the perception of risk covered under the policy.
In fact many insurers in addition to offering guaranteed renewable insurance policies also offer non-cancelable policies. A non-cancelable policy offers the additional protection of a guarantee with respect to the premiums paid under the policy and when the costs are similar for both policies it may be better to choose the non-cancelable policy for the additional certainty than the guaranteed renewable insurance policy.