Reviewable Premiums for Income Protection Insurance

A

Reviewable premiums in an income protection insurance (PHI) policy refer to a pricing mechanism where the insurance company reserves the right to adjust the cost of the policy over time. This means that the premiums charged by the insurer may be subject to change at specific intervals, such as annually or every few years.

Option A, "Alter the cost of the cover," is the correct answer to this question. With reviewable premiums, the insurance company has the flexibility to adjust the cost of the policy based on various factors such as changes in the insurer's claims experience, expenses, and investment returns. The insurer may also take into account changes in medical advancements or other factors that could affect the cost of claims.

Option B, "Withdraw cover on any anniversary date," is incorrect. The ability to withdraw cover is not related to reviewable premiums but rather to other policy terms and conditions, such as the insurer's right to terminate the policy or the policyholder's failure to pay premiums.

Option C, "Only increase premiums in line with inflation," is also incorrect. While some insurers may choose to tie reviewable premiums to inflation, this is not a requirement, and insurers are free to adjust premiums to reflect changes in their claims experience, expenses, and investment returns.

Option D, "Pay benefits for less than the full period of incapacity," is unrelated to reviewable premiums. The length of time that benefits are paid out in the event of incapacity would be specified in the policy terms and conditions and is not affected by whether premiums are reviewable or not.

In summary, if an income protection insurance (PHI) policy has reviewable premiums, it means that the insurer can alter the cost of the cover over time based on various factors. Therefore, the correct answer is A, "Alter the cost of the cover."