CANCELABLE AND NON-CANCELABLE POLICIES

Now, having gotten that material out of the way, this is what you need to know about the circumstances under which your policy may be cancelled, aside from non-payment of premium.

There are five main categories that govern renewal provisions: Non-Cancellable, Guaranteed Renewable, Conditionally Renewable, Optionally Renewable, and Cancelable.

These are graded from highest to lowest, and the cost of a premium reflects each grade of policy. The top three are greatly preferred by you, the consumer, over the bottom two grades.

The Non-Cancelable is the most expensive; the insurer may not cancel on you, may not change rates, and must renew up to a certain age (usually age 65).

The Guaranteed Renewable policy has these features: the insurer may not cancel but may raise rates for the whole class of policies (ex.: everyone in your state, all smokers), and must renew to a given age.

The Conditionally Renewable policy maybe cancelled but only if they cancel an entire class (like smokers, or anyone with pre-existing conditions). They may raise rates but only if they raise rates for an entire class of insureds.

The Optionally Renewable policy is one that the insurer may cancel for you as an individual, the insurer may raise rates for you as an individual, and may even drop you at the renewal date.
The Cancelable policy may be cancelled at any date, change rates at any time --but this is the cheapest policy.

--- Ready for a breather? Just one more section of heavy-duty reading and then it gets easier, OK?