A non-cancellable insurance policy is one where the insurer will be obliged to renew the coverage provided by the insurance policy as long as the insured party continues to make payments into that policy. This is normally used in the instances of policies which cover disability, life or health insurance so that a policy holder can be guaranteed ongoing coverage even if they should later develop a condition or conditions that increase the risk exposure of the insurance company to make payments against claims, or even if it guarantees that the insurer will have to make a payment of a benefit.
This protects the insured party from being without insurance when they develop conditions that may need expensive long-term care, treatment or therapy for example.
What does non-cancellable mean in terms of my insurance premiums?
In terms of your insurance premiums a non-cancellable policy requires an insurer to maintain the existing premium no matter the eventualities faced by the insured party. This is different from a guaranteed renewable policy where an insurance company is required to provide ongoing cover but has free reign to increase premiums in accordance to risk.
This means that previous or ongoing claims made by the insured party cannot be reflected in the premiums paid by that party, which means that the insurer carries a higher level of risk under a non-cancellable policy that in most other scenarios. This may be reflected in that the initial contract premiums are higher than an alternative guaranteed renewable policy, however in the instance that you develop a chronic persistent problem this increased premium pays for increased security for your continued health care at an affordable rate.
What does a non-cancellable insurance policy offer me?
A non-cancellable insurance policy gives you peace of mind that your health, disability or life insurance will always pay benefits at the levels stipulated in the contract for the same premiums so that you will be able to continue to afford cover if you should find yourself in a long-term situation of needing care and or other financial benefits provided by your policy.
A non-cancellable insurance policy is often more expensive than a standard insurance policy and the premiums are a reflection of the increased risk to the insurer that they may have to pay out large sums of money for your care without recourse to claiming this back through additional premium costs later.
Additional Non-Cancellable Insurance Definitions
- Business Dictionary – A policy contract that specifies that the insured may continue coverage by paying the premiums for a specific time frame. During the same time frame, the insurer is prohibited from making changes. The premiums on this type of policy cannot be changed during the term…
- Lifetips.com – A non-cancellable health insurance policy, also called a guaranteed renewable policy, is a policy that cannot be cancelled as long as you pay your premiums on time. A non-cancellable health insurance policy does not however, guarantee your premiums will not rise over time…
- Answers.com – insurance contract that cannot be cancelled by the insurance company . Since the insurance policy is a unilateral contract instead of a bilateral contract , the insured may cancel at will. Only the insurer makes a promise of future performance and only the insurer can be charged with breach of contract…