Renewable Term Life Insurance - How Does it Work?

September 03, 2021

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When shopping for term life insurance coverage, you may have come across the term “renewable term life insurance.” What exactly does it mean when term life insurance is renewable? How does this form of term life insurance work? Let’s take a closer look at this form coverage and how it can work for you.

What is a renewable term?

Renewable terms are typically clauses found within term life insurance policies. Renewable term life insurance is temporary coverage that allows you to renew your coverage term for continued financial security. You can continue your term plan so long as you are up-to-date on premium payments and you do so within the specified time period.

How renewable term life insurance works

Renewable terms within life insurance policies are ideal to ensure you have continued affordable life insurance coverage. With all the uncertainties that life can bring, knowing you have the option to continue your coverage can be reassuring for the insured and their beneficiaries. 

When your initial term life insurance period ends, typically after 10, 20, or 30 years, you have the option to continue your coverage for another term period. This renewal usually happens without the need for a medical exam. This unique benefit makes it easy for people with medical issues to secure coverage without reapplying for a plan. However, this ease of continued coverage will likely come with higher premiums to compensate for your older age. Also, you will have a cut-off age where you can no longer renew your coverage. This cut-off age can vary depending on the insurer. 

You can learn more information about our term 10 life insurance, term 20 life insurance, and term 30 life insurance plans here on our site. Each plan has renewable terms allowing you to continue your coverage when you need it most.

Why you would renew your coverage

There could be several reasons why you’d continue your term coverage for another temporary period. Some common examples include:

  • Ongoing mortgage payments. If your mortgage is still in the process of being paid off, continuing with temporary coverage may be a good idea.
  • Education access. If you have children still in school, a term plan is still one of the most affordable ways to ensure they have access to higher education.
  • Financial security up to retirement. If you’re still working but want to have the coverage in place to protect your family’s way of life, term life insurance can help. A term plan can provide financial security right up until you reach retirement age.

If you still have temporary needs and obligations, renewable term life insurance can be helpful. This plan can provide you with the quickest and most efficient way of continuing your term coverage for another 10+ years. 

Key information

  • Having a renewable term means your life insurance policy has the option to renew coverage if you need to extend your plan.
  • This renewal typically doesn’t require medical exams, but it will likely come with new premiums to reflect your age at the time of renewal.
  • There are ages at which point you can no longer renew your coverage.

Annual renewable terms

Annual renewable term life insurance is a form of temporary coverage that stays in place for a year. At the end of each year, the policy renews, and premiums are reassessed and updated. 

This form of coverage is one of the most affordable on the market for the few initial years you have the plan. But because it is renewed every year, your premiums are likely to increase each time you renew. This facet of the coverage means it can get expensive over time. It is best to use this form of term life insurance for short-term needs.

Renewable term life insurance vs convertible term life insurance

Alongside renewable term life insurance is convertible term life insurance. These are often confused with each other, but they are very different. 

As mentioned above, renewable coverage focuses on extending your current temporary life insurance for another coverage period. So your coverage continues, but only for another predetermined period of time. 

Convertible term life insurance, on the other hand, allows you to convert your term life insurance into a permanent policy. Like renewing your term, converting to a permanent life insurance plan doesn’t require you to undergo a medical exam, making this an easy way to qualify for lifelong coverage.

Why you would convert your term coverage to a permanent plan

After having a term life insurance plan for 10, 20, or 30-years, you may find yourself thinking about converting to a permanent plan. Once the term ends, you can easily convert to lifelong coverage, and here are some reasons why a permanent option may suit you.

  • Your health changes. If you have suffered from a recent illness or injury, you could struggle to get coverage. But if you convert your term plan to a permanent one, you will not have to go through any underwriting or medical exams. Your health will not get in the way of your eligibility for coverage.
  • Leaving a legacy. You may no longer have any temporary financial needs, but you may want to leave something behind for your family. A permanent life insurance plan is an easy way to ensure an inheritance is left behind for your family after you pass away.
  • Final expense coverage. Permanent life insurance provides you with reliable funds that can help with your final costs. The plan’s benefit can help cover service and legal fees, remaining debts, and other end-of-life expenses.
  • Changes to your budget. Term life insurance is an affordable coverage option that most people go for because of their budget. But you may have more of a budget to work with once your term coverage ends, and with that larger budget, you can get that lifelong insurance coverage you may have always wanted.

Before converting to a permanent plan, ask yourself why are you converting? You should always have a goal in mind before you convert from a temporary policy. Also, ask yourself, what can you afford? Don’t convert simply because you have the option. Permanent options are more expensive but are balanced out with reliable coverage for life. These two questions will help you understand if converting your term policy is right for you. 

Fast and easy term life insurance quotes

We help Americans find reliable and affordable term life insurance solutions. Our coverage options can easily fit into any budget and work for your unique financial needs. Each plan provides up to $750,000 in benefit amounts with fixed premiums and no doctor visits required to apply. 

For your personalized, free no-obligation quote and a list of recommended plan options, complete our short free quote form now!


Written by: Adam Bianco

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