Renewable Term Life Insurance
Renewable term life insurance is like other term life insurance in that it exists for only a set amount of time. However, under a renewable term policy, the policyholder can renew it for an extended duration. To qualify for this extension, policyholders must maintain regular premium payments throughout the entire term.
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Joel Ohman
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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...
Certified Financial Planner
UPDATED: Feb 17, 2024
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Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Feb 17, 2024
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
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- In an insurance policy, a renewable term is the clause that allows the beneficiary of the policy to extend the coverage term
- The policy is extended for a set period of time and the beneficiary does not have to requalify for coverage
- In order for this extension to happen, premium payments must be consistently kept up to date for the entire term
Are you wondering about renewable term life insurance quotes? We understand the insurance industry can be confusing, so we’ll go over everything you need to know step by step. That way, you won’t become buried under a renewable term policy landslide full of too much information. We’ll cover the basics and what you can expect so that you’ll be able to research life insurance with confidence.
In the meantime, get started on finding affordable renewable term life insurance rates in your area by typing your ZIP code into our helpful tool above.
What is renewable term life insurance?
In general, term life insurance is a form of life insurance that lasts a specific amount of time — the period known as the term. If the individual passes away within the term, their beneficiaries are paid a certain dollar amount based on the amount of coverage purchased. Renewable term insurance isn’t temporary coverage, though.
The renewable term life insurance definition is a term insurance policy’s clause allowing the coverage term to be extended for a set period of time without having to re-qualify for new coverage. Renewable term life insurance may be described as a clause in a typical term policy.
What sets a renewable policy apart is that it can be extended — hence, renewed. Renewable term life insurance policy can be renewed once the term expires; however, renewal is optional. You may also have a convertible term life policy, which would allow you to convert your policy to whole life insurance without answering health questions or getting a medical exam.
Keep in mind that term life policies have a set timeframe, unlike other types of life policies that offer permanent coverage. According to the Insurance Information Institute, the current most popular amount of time is a 20-year term. After that, you can expect your premium to rise. As you age, this type of life insurance policy will cost more to purchase and, often, more to maintain. Let’s take a look at a table showing how much you might pay for different terms.
Term length | Male | Female |
---|---|---|
10 years | $17 | $15 |
20 years | $29 | $24 |
30 years | $49 | $39 |
In short, if you plan on having coverage for a long time, i.e. more than 10 years, you may want a permanent policy instead of going for term life coverage. Let’s see what happens to a term life policy once it ends.
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What happens to term life insurance at the end of the term?
At the end of the term, the coverage will end and so will the insured person’s payments to the insurance company. Should you outlive the term life insurance policy, those funds will have been forfeited, and there will be no death benefit.
Read more: What is level-term life insurance?
What is a 20-year renewable term life insurance policy?
Essentially, it’s a policy that is active for 20 years. The cost of your premiums and coverage amount will not change within that 20-year timeframe. This is currently a very popular timeframe for coverage. You’re entitled to a level premium as long as you maintain your insurance in most cases; these are known as level term life policies. It is possible for your coverage to be both a renewable term policy and a level term life policy.
If we haven’t answered all of your questions today, fear not, because we’re going to be wrapping up with an FAQ section.
Prepared to purchase environmentally friendly term life insurance? Explore 5 ways to get term life insurance.
Type your ZIP code into our helpful tool below to find quotes for renewable term life insurance in your area.
Case Studies: Renewable Term Life Insurance
Case Study 1: The Young Family’s Financial Security
The Johnson family, consisting of John and Sarah Johnson and their two young children, sought a life insurance policy that would provide financial security for their family in the event of an untimely death. Being in their 30s, they opted for a renewable term life insurance policy with a 20-year term.
This allowed them to secure coverage during the years when their children would be dependent on their income. With the option to renew the policy at the end of the term, the Johnsons felt confident in their ability to adjust their coverage as their needs changed over time.
Case Study 2: The Business Owner’s Flexibility
Mark Thompson, a small business owner, wanted a life insurance policy that would provide financial protection for his family and business in the event of his passing. He chose a renewable term life insurance policy with a 10-year term.
As his business grew and evolved, Mark had the option to renew the policy, ensuring continued coverage for his family and the ability to adjust the coverage amount based on his changing financial circumstances.
Case Study 3: The Retirement Planning Strategy
Susan Anderson, a 55-year-old individual approaching retirement, wanted to secure life insurance coverage that would protect her loved ones and complement her retirement planning. She opted for a renewable term life insurance policy with a 15-year term.
This allowed her to have coverage during the years leading up to her planned retirement, ensuring her financial obligations would be met even if she passed away before reaching her retirement goals. With the option to renew the policy, Susan could adjust her coverage or explore other options as her retirement plans evolved.
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Do you have more questions about renewable term life insurance?
Now you should know what renewable term life insurance means, but if you still have some questions, keep reading. We’ll answer a few that are commonly asked below.
#1 – Can term life insurance be extended?
Most term life policies don’t expire until the insured individual reaches the age of 95. As long as you continue paying the premiums, the policy can be extended.
Read more: Extended-Term Life Insurance
#2 – Should I convert my term life insurance to permanent?
For most people, with age comes greater financial stability. If you’ve reached a stage where you feel financially secure, it’s a good time to convert the policy to a more permanent form that can provide protection over your entire lifetime. This is an option with convertible term life policies.
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#3 – Can I cash out my term life insurance?
No, funds will only be transferred to the beneficiary in the form of a death benefit, and only if you die within the term of the policy. There is no cash value portion with this type of policy; that is exclusive to permanent life insurance policies, such as whole life.
#4 – Is term life insurance a good idea?
Only you can decide what kind of life insurance is best for your needs, but generally speaking, life insurance is important. You want to know your loved ones will be taken care of when you’re gone.
#5 – How long should I get term life insurance for?
It depends on your financial situation and how long you think a life insurance policy will be necessary.
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#6 – How long is a term life insurance policy?
Different insurance companies offer different term limits at different premium rates. Usually terms are in increments of 10 years (sometimes five years) and 20 years is the most common term length.
#7 – Which is better, term life or whole life insurance?
It depends on your financial situation and your age. Some financial advisors suggest that term life insurance if managed properly is the better bargain when compared to a permanent life insurance option. Some won’t know unless they look at renewable term life insurance examples. Again, it depends on your personal circumstances, income, health, and what you feel is the best choice for you. The most important thing is to make sure that you can afford your premium payment. If you can’t pay your life insurance premiums, you could lose your coverage.
Frequently Asked Questions
What is renewable term life insurance?
Renewable term life insurance is a type of life insurance policy that offers coverage for a specific term, usually ranging from 1 to 30 years. Unlike traditional term life insurance, renewable term policies provide the option to renew the coverage at the end of the term without requiring a new medical examination.
How does renewable term life insurance work?
When you purchase a renewable term life insurance policy, you select the coverage amount and term length. During the term, you pay regular premiums to keep the policy in force. At the end of the term, you have the option to renew the policy, typically without needing to undergo a new medical evaluation. The premium for the renewed policy may increase based on your age and the current rates.
Can anyone get renewable term life insurance?
Generally, renewable term life insurance is available to individuals who meet the insurer’s eligibility criteria. However, the cost and availability of coverage may depend on factors such as your age, health condition, and lifestyle habits. Some insurers may have age restrictions or may offer renewable term policies only up to a certain age.
How do I renew my renewable term life insurance policy?
To renew your renewable term life insurance policy, you typically need to contact your insurance provider before the policy’s expiration date. The insurer will provide you with information on the renewal process, including any necessary paperwork and updated premium rates. It’s essential to review the new terms carefully and decide whether renewing is the right option for you.
Can I convert my renewable term life insurance into a permanent policy?
It depends on the terms and conditions of your renewable term life insurance policy. Some policies may include a conversion feature that allows you to convert all or a portion of the coverage into a permanent life insurance policy, such as whole life or universal life insurance. The conversion option may have specific time limitations or conversion windows, so it’s crucial to review your policy details or consult your insurance provider for more information.
Your life insurance quotes are always free.
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Joel Ohman
Certified Financial Planner
Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...
Certified Financial Planner
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.