Renewable Term

Reviewed by Vineeth | Updated on Aug 01, 2021



The renewable term is a section covered under term insurance, and it allows the nominee or beneficiary to stretch the term of the policy without having to go through the qualification criteria for the extended coverage. It is a contingent of the payment of premium up-to-date. A renewable premium is payable by the nominee or beneficiary if they wish to avail this benefit.

Understanding Renewable Term

Concerning the life insurance contract, a renewable term condition will be useful for the nominee as future health conditions are never predictable. Despite the fact that the initial premiums are going to be higher than that of regular life insurance with no renewable term clause included, this kind of insurance is generally going to benefit the nominee or beneficiary in future.

The renewability clause is important as the policyholder will be needing to renew his or her policy once the coverage period ends considering the policyholder’s life has no major changes, such as in health conditions, which would make them uninsurable. The renewable provisions will enable policyholders to maintain the current coverage without having to requalify for the same.

Benefits of Renewable Term

Having included renewable clause on term policies will give policyholders peace of mind as they don’t have to shell out more on their premium even in the worst-case scenario. In the case of annual renewable term life policies (ART), the initial insurance contract is offered only for one year and can be renewed on an annual basis.

These policies provide assured insurability over a predetermined number of years, and the insured is to pay higher premiums as he or she ages. The primary reason for opting such policies is to make the process of availing life insurance policies quicker.

With renewable term clause, the life insurance policy can be extended even if the policyholder’s health has declined. However, most insurers don’t allow policyholders above the age of 70 years to extend their coverage.

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