Laws and Rules Pertinent to Insurance Practice Test

Question: 1 / 400

What does "cancellation" of an insurance policy entail?

Ending a policy without refund

Termination of the policy before its expiration date

Cancellation of an insurance policy refers to the termination of the policy before its expiration date. This can occur for various reasons, such as non-payment of premiums, failure to comply with policy terms, or at the request of the policyholder. When a policy is canceled, the insurer typically provides notice and may specify the effective date of cancellation. This distinguishes cancellation from other processes like renewal, which involves extending the coverage period, or updating coverage amounts, which pertains to modifying existing policy terms rather than ending the insurance coverage altogether.

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Renewing an expired policy

Updating coverage amounts

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