Final answer:
The policyowner may need to pay a higher premium to continue a life insurance policy coverage after renewal, without providing proof of insurability. Insurance companies may offer a policy with a high co-pay to higher-risk individuals, or a high premium policy with a lower co-pay to those who prefer to minimize out-of-pocket healthcare costs. Similarly, car insurance rates vary based on various risk factors.
Step-by-step explanation:
When a life insurance policy renews at the end of a specified period, the policyowner may need to pay a higher premium for a new specified period to continue coverage. Insurance companies often adjust premiums based on the age and risk profile of the insured at the time of renewal. The policyowner typically doesn't have to provide proof of insurability for a guaranteed renewable policy, but premiums can increase as one ages or if the policy’s terms specify premium changes at renewal.
Regarding the types of customers insurance companies target, those with higher risks, such as having a pre-existing condition, might be offered a policy with a high co-pay. This is because the insurer expects that the insured will be using medical services more frequently, and the co-pay is a way for the insurance company to manage costs. Conversely, a high premium with a lower co-pay might be offered to customers who want to reduce their out-of-pocket expenses when they access healthcare services.
Likewise, car insurance rates may vary based on factors like the vehicle's safety rating, the driver's history, and age. Younger, less experienced drivers typically face higher insurance costs.