Arizona Life and Health Practice Exam

Who has the authority to terminate coverage under a cancelable health insurance policy?

1. The insurer only

2. The insured only

3. Both the insurer and the insured

4. No one can terminate coverage

The correct answer is: Both the insurer and the insured

In a cancelable health insurance policy, both the insurer and the insured have the authority to terminate coverage. This type of policy allows the insurer to cancel the policy at any time, provided they offer a valid reason, which typically revolves around non-payment of premiums or changes in risk factors. On the other side, the insured can also choose to terminate the policy if they no longer require coverage or wish to switch to a different insurer. This mutual authority to terminate coverage reflects the agreement made between the two parties at the inception of the policy. Thus, the ability for both the insurer and the insured to terminate coverage is essential in understanding the rights and responsibilities inherent in cancelable health insurance policies.