Final answer:
A disability income policy that covers until age 65 and allows the insurer to change the premium based on the risk class is considered guaranteed renewable. Such policies ensure coverage continuity, yet premiums can vary based on actuarial assessments of the risk group. While this provides security, it necessitates financial readiness for potential premium increases.
Step-by-step explanation:
The type of renewability best describing a disability income policy that covers an individual until the age of 65, with the insurer retaining the right to change the premium rate for the overall risk class, is called guaranteed renewable. Under this type of policy, the insurance company cannot cancel the coverage as long as the policyholder pays the premiums, but it can adjust the premium rates for the entire class of policyholders based on factors such as increased health risks or cost of providing benefits. This is in contrast to non-cancelable policies, where the premiums remain the same throughout the life of the policy.
Guaranteed renewable policies offer policyholders a level of security in knowing they can maintain their insurance. However, the potential for increased premiums in accordance with the risk associated with the age group means that individuals should be financially prepared for such adjustments. This arrangement is typical for policies that are actuarially based, where insurance premiums reflect the cost of the risk covered, ensuring that the insurance pool can sustain the claims made by its members.