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Aflac Insurance Practice Exam

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What term describes a renewable provision where premiums can increase only within rate classes?
Correct Answer:
Guaranteed Renewable provision
Explanation:
Renewal provisions govern how a policy can be renewed and how premiums may change. A guaranteed renewable provision requires the insurer to renew the policy to a specified date, and at each renewal the premiums can increase, but only within the established rate class. This means price changes apply to groups of insureds with similar risk, not to individuals, allowing gradual, class-wide adjustments as the insured ages. That’s why this term fits the description of a renewable provision where premiums can rise only within rate classes. The other terms don’t fit: a noncancellable clause would prevent premium increases; a level premium keeps premiums constant; flexible pricing isn’t the standard term used here.

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