What does "substitution of insurability" allow insurers to do?

The concept of "substitution of insurability" pertains to an insurer's ability to modify coverage terms without requiring new evidence of insurability. When this provision is invoked, it allows insurers to issue coverage even if the policyholder's health status has changed since the original policy was taken out. This means that if a policy is modified—say, due to adjustments in benefits or coverage levels—the insurer can ensure that the policyholder does not need to provide additional medical information before the new terms go into effect.

This is particularly useful for protecting consumers who might otherwise face difficulties in obtaining insurance or might be charged higher premiums due to worsening health conditions. As a result, it enhances the accessibility of insurance coverage, allowing policyholders to adjust their policies in a way that best suits their needs without the barriers that typically accompany changes in health status.

The other choices relate to different aspects of insurance coverage and policy management but do not accurately describe the function of substitution of insurability. For instance, altering premiums based on health status relates more to risk assessment, while automatic renewals or cancellations revolve around policy maintenance practices, none of which capture the essence of substituting insurability.