Renewable Term Life Insurance
Margaret Huntley 25-01-2022

A Comprehensive Guide on How To Get Renewable Term Life Insurance

Renewable Term Life Insurance

The first step to renewing a term life insurance policy is understanding what term life insurance is and how it works. A term life insurance policy lasts for a set period of time. Usually, the term will last between 10, 20, or 30 years. 

If the policyholder passes away within the term, then a death benefit is paid to the beneficiary to be used how they see fit. The death benefit will be a predetermined amount decided at the purchase of the policy. Once the policy ends, the coverage does too. 

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Renewable Term Life Insurance

Upon reaching the end of their term life insurance, the policyholder may wish to continue their coverage. This is where renewable policies come into play. 

There are two ways that a term life insurance policy could be renewed:

  1. Renewability Clause: Some term life insurance policies have a clause in them that allows the policyholder to renew their coverage on a yearly basis after their policy expires. The policy is renewed without needing to requalify and the death benefit stays the same. However, the premiums may increase based on age or other factors.
  2. Annual Renewable Term Policy: This is a specific type of policy that allows for the policyholder to choose to extend their coverage on a yearly basis up to a specified age. These policies provide guaranteed insurability for a set period of time and a level of the death benefit. But the monthly premiums are more expensive than other types of term policies and they are subject to increase as the policy renews. The insurer provides a set limit on how much the premiums are able to increase.

Convertible Term Life Insurance

Renewable term life insurance policies are not to be confused with convertible term life insurance ones. 

Convertible term life insurance policies have a clause that allows the policyholder a choice of whether to end their coverage or to convert to a permanent policy once the term is up. Permanent life insurance does not expire. 

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How to Renew Term Life Insurance

At the end of a term life insurance policy, the policyholder is faced with the choice of what to do next. Either they can decide to terminate their life insurance coverage, or they can decide to continue it. 

The following is a list of options for those who wish to continue life insurance coverage at the end of term:

  • Purchase a new term life insurance policy 
  • Purchase a new permanent life insurance policy 
  • Renew current policy (if the policy has a renewability clause)
  • Convert term policy into a permanent policy (if policy is a convertible one)

All that is required to continue coverage, is to contact the insurance provider about the chosen option. 

Benefits of Renewable Term Life Insurance

Renewable term life insurance is a great fit for many different types of people. The following are reasons to consider a renewable term life insurance policy:

  • Great for short term coverage needs such as mortgages, or other temporary debts
  • No medical exam required for renewal 
  • Flexible to suit individual needs
  • Cost-effective for the short term
  • Convenient to stay with same provider

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When Not to Renew Term Life Insurance

Because term life insurance is renewed on a short term basis, it is designed to cover short term needs. If a customer has long term coverage needs such as children or other dependants, it is more cost effective to purchase a new term policy or a permanent policy than to continue renewing their term policy year after year.

Margaret HuntleyMargaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.