Final answer:
Guaranteed renewability ensures an insurance policy can be renewed until a certain age, but doesn't prohibit premium increases for the insured class. It's not non-cancelable, nor is renewal solely at the insurer's discretion. The correct options for guaranteed renewability are 1 and 4.Thus the correct option is B.
Step-by-step explanation:
The characteristic of guaranteed renewability in insurance policies implies that the insurer guarantees to renew the policy up to a stated age for the insured. This is a commitment that the insurance company makes, ensuring that the policyholder has the continued coverage they require, usually up to a certain age or for a specified term, as long as premiums continue to be paid. Although the insurer may have the right to increase the premium rates for the class in which the insured is placed, they cannot single out an individual for rate increases based on claims made or a change in health status.
Option 1 and 4 reflect this definition of guaranteed renewability. It is important to note, however, that guaranteed renewability does not mean the policy is non-cancelable, nor does it mean that premiums cannot be increased (point 2). It also does not imply that renewal is solely at the insurer's discretion (point 3). The fundamental law of insurance outlines that the average payments into insurance must cover claims, administrative costs, and allow for company profits, which is why insurers retain the right to adjust premium rates if necessary.