Renewability

Renewability in insurance, specifically life insurance or term life insurance, refers to the ability to extend the coverage of an existing policy once it reaches the end of its term or expiration date without the need for requalification or underwriting.

Example #1

An individual purchases a 20-year term life insurance policy. Near the end of the term, they have the option to renew the policy for another term without having to undergo a medical exam or provide new health information.

Example #2

A policyholder renews their life insurance policy annually to maintain coverage for their dependents.

Misuse

Misuse of renewability can occur if insurance companies unfairly increase premiums substantially at the time of renewal, making it financially challenging for policyholders to continue coverage. It's important to protect against this by reviewing policy terms carefully and considering alternative options if faced with unreasonable price hikes.

Benefits

Renewability benefits consumers by providing continuity of coverage, especially when their health status may have changed since the inception of the policy. It offers peace of mind knowing that they can maintain their insurance protection without having to go through the underwriting process again.

Conclusion

Understanding the renewability feature of your insurance policy is crucial for ensuring continuous coverage and avoiding potential financial pitfalls. By being aware of how renewability works and monitoring any changes in premiums, consumers can make informed decisions that align with their long-term insurance needs.

Related Terms

Term Life InsuranceUnderwritingPolicyholder