Six years ago, when Kacey was working as an active firefighter, she purchased a $200,000 30-year term life insurance policy. At the time, the insurance company rated her policy. Recently, she changed roles and now works for the fire department’s public relations office, answering media calls and filling out paperwork. She meets with her insurance agent, Bernice, to ask if the insurer would consider reducing her premiums.

Six years ago, when Kacey was working as an active firefighter, she purchased a $200,000 30-year term life insurance policy. At the time, the insurance company rated her policy. Recently, she changed roles and now works for the fire department’s public relations office, answering media calls and filling out paperwork. She meets with her insurance agent, Bernice, to ask if the insurer would consider reducing her premiums.
A . The premiums cannot be increased once the policy is issued.
B . The insurer cannot reduce the premium, but Kacey can apply for a new policy at a lower premium.
C . The premiums can be reduced only if the policy has been in force for more than two years.
D . Her premiums can be reduced since she is no longer a firefighter.

View Answer

Answer: B

Explanation:

When a term life insurance policy is issued with a specific rating based on risk factors, such as Kacey’s former occupation as a firefighter, the premiums are generally fixed and non-negotiable post-issuance. However, Kacey can apply for a new policy, which would consider her current lower-risk occupation and potentially offer lower premiums. She would need to undergo underwriting again. Thus, Option B is correct, as the existing policy’s premiums cannot be adjusted retroactively to account for her new role.