An insurer may terminate an individual medical expense policy for which of the following reasons?

Why C is correct

An insurer may cancel or terminate a medical expense policy for nonpayment of premium or for fraud or a material misrepresentation in the application. Under guaranteed renewable policies, the insurer cannot cancel the policy because the insured's health has deteriorated or because claims were paid. The right to terminate is therefore tied to conduct at the point of application or to premium payment, not to the insured's health status or claims history after issue.

Why the other options are wrong

• A) Deteriorating health is the very reason guaranteed renewable policies exist; the insurer must continue coverage as long as premiums are paid.
• B) Paying a legitimate covered claim cannot be grounds for termination; that would defeat the purpose of insurance and violate fair claims practices.
• D) A routine annual physical requirement is not a standard condition for terminating an individual medical policy.

Memory hook

Cancellation triggers: unpaid premium or a lie on the application. Sickness and claims are not exit tickets for the insurer.

Why A is correct

Nonpayment of premium is the classic, universally permitted ground for terminating an individual medical expense policy. Under federal rules, an insurer may not rescind coverage after a claim except for fraud or intentional misrepresentation, and it may not cancel a policy simply because the insured's health worsens or because a covered claim was filed. Changing physicians is an ordinary member activity that cannot trigger termination. The right-to-terminate provisions in the A&H outline therefore focus on nonpayment and on statutorily permitted rescission grounds, not on the insured's medical history or utilization of benefits.

Why the other options are wrong

• B) Filing a valid covered claim is protected conduct and cannot be a ground for termination.
• C) Deteriorating health after issue cannot justify cancellation; that risk is what the policy covers.
• D) Choosing a different doctor is a normal member decision and does not affect the policy's validity.

Memory hook

Nonpayment ends the policy; filing a claim or a health scare does not.