In insurance terms, what does the Liberalization Clause allow?

The Liberalization Clause in insurance policies is designed to protect policyholders by allowing for modifications in coverage that improve benefits without requiring an additional premium payment. This clause ensures that if the insurer expands or broadens coverage under the policy, those enhancements automatically apply to all existing policies of the same type, thereby benefiting the insured.

In practical terms, the Liberalization Clause ensures that policyholders receive the advantages of new regulatory changes or enhancements in coverage that their insurer chooses to implement. This can provide additional security and confidence to the insured, knowing they are receiving the best possible coverage available under their current policy without an increase in cost.

While other options may seem reasonable, they do not accurately reflect the purpose of the Liberalization Clause or the benefits it confers to policyholders. The focus of this clause is specifically on enhancing coverage without additional costs, making option C the most fitting answer.