What could happen to premiums if the health of the policyholder improves significantly?

Premiums could potentially decrease if the health of the policyholder improves significantly due to a number of factors related to insurance underwriting and risk assessment. When an individual improves their health, the insurer may reassess the risk profile associated with that policyholder. Improved health can indicate a lower risk of claims, which means that the insurance company might adjust the premiums accordingly.

Insurance companies base premiums on risk levels; healthier individuals are considered lower risk. Therefore, if a policyholder demonstrates marked improvement—such as losing weight, quitting smoking, or managing a chronic condition effectively—the insurer might view them as less likely to require expensive medical care.

This potential reassessment can lead to a decrease in premiums, as the company adjusts pricing to reflect the new, lower risk. This change is not guaranteed, as it would depend on the insurer's policies, state regulations, and the specific circumstances related to the policyholder's improvement. In some cases, policyholders may need to provide documentation of their improved health to trigger a review of their premium rates.

If premiums always increased or showed no effect, that would suggest a lack of responsiveness to changes in health status, which is not aligned with the fundamental principles of risk management in the insurance industry.