Which term describes the automatic continuation of coverage?

Which term describes the automatic continuation of coverage?

• A. renewal
• B. extension
• C. lapse
• D. cancellation

Answer: (A)

Automatic continuation of coverage is renewal. When a policy term ends, renewal allows the coverage to continue into a new term under the same contract terms, typically without new underwriting, as long as the premium is paid. This prevents a gap in protection. By contrast, an extension is usually a temporary prolongation that may require agreement or different terms; a lapse means the policy ends due to nonpayment or nonrenewal; cancellation ends the policy entirely. So the best fit for automatic continuation is renewal.

Automatic continuation of coverage is renewal. When a policy term ends, renewal allows the coverage to continue into a new term under the same contract terms, typically without new underwriting, as long as the premium is paid. This prevents a gap in protection. By contrast, an extension is usually a temporary prolongation that may require agreement or different terms; a lapse means the policy ends due to nonpayment or nonrenewal; cancellation ends the policy entirely. So the best fit for automatic continuation is renewal.