Glossary > Insurance > Life Insurance > Term Life Insurance

Renewable Term Life Insurance

Renewable term life insurance is a type of life insurance policy that allows the policyholder to renew their coverage at the end of the term without undergoing a medical exam or providing evidence of insurability.

Example #1

For example, a consumer purchases a 10-year renewable term life insurance policy with a death benefit of $500,000. After the initial 10-year term expires, the policyholder can choose to renew the policy for another term without having to prove their insurability again.

Example #2

Another example is a policyholder who initially buys a 20-year renewable term life insurance policy when they are young and healthy. As they age, they may decide to renew the policy without facing challenges related to their health status at the time of renewal.

Misuse

Misuse of renewable term life insurance could occur if an insurer fails to clearly disclose the potential increase in premiums upon renewal. This lack of transparency could lead to policyholders being caught off guard by sudden cost hikes, jeopardizing their ability to maintain coverage.

Benefits

One of the primary benefits of renewable term life insurance is that it provides flexibility for policyholders to extend their coverage term without requalifying based on their health status. This can be particularly advantageous for individuals who may have developed health conditions that could make it difficult or costly to secure a new life insurance policy.

Conclusion

Renewable term life insurance offers policyholders the convenience of extending their coverage without the need for additional medical examinations, ensuring continued financial protection for themselves and their beneficiaries. However, consumers must stay informed about potential premium increases upon renewal to make well-informed decisions.

Last Modified: 4/29/2024