Renewable Term Insurance refers to a term life insurance policy that gives the policyholder the option to renew the policy for subsequent terms without undergoing a medical exam. This feature ensures continued coverage even if the policyholder’s health has declined.
How It Works
Renewable term insurance covers a specific period, commonly known as the ’term.’ Upon the expiry of the term, the policyholder has the right to renew the policy for another term, under predetermined conditions, without proving insurability through a new medical examination.
Key Features
Guaranteed Renewability: The main advantage of renewable term insurance is that renewal is guaranteed without the need to undergo another health assessment.
Adjustable Premiums: Typically, premiums may increase upon each renewal as the policyholder ages, to reflect the increased risk to the insurer.
Flexibility: This type of policy is particularly beneficial for those who may find it hard to obtain insurance later in life due to deteriorating health or changed circumstances.
Considerations
When choosing a renewable term insurance policy, it’s crucial to consider the rising cost of premiums over time and evaluate it against other life insurance options. While renewable term insurance ensures continuity of cover, the increasing premiums can become a financial burden.
Reference Regulations
In many jurisdictions, the regulations related to renewable term insurance are outlined in national or regional insurance laws. For more comprehensive understanding and to ensure that the applicable laws and regulations are followed, policyholders should refer to the local regulatory authority’s guidelines concerning life insurance policies and renewability provisions.
