The first step to renewing a term life insurance policy is understanding what term life insurance is and how it works. A term life insurance policy lasts for a set period of time. Usually, the term will last between 10, 20, or 30 years.
If the policyholder passes away within the term, then a death benefit is paid to the beneficiary to be used how they see fit. The death benefit will be a predetermined amount decided at the purchase of the policy. Once the policy ends, the coverage does too.
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Upon reaching the end of their term life insurance, the policyholder may wish to continue their coverage. This is where renewable policies come into play.
There are two ways that a term life insurance policy could be renewed:
Renewable term life insurance policies are not to be confused with convertible term life insurance ones.
Convertible term life insurance policies have a clause that allows the policyholder a choice of whether to end their coverage or to convert to a permanent policy once the term is up. Permanent life insurance does not expire.
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At the end of a term life insurance policy, the policyholder is faced with the choice of what to do next. Either they can decide to terminate their life insurance coverage, or they can decide to continue it.
The following is a list of options for those who wish to continue life insurance coverage at the end of term:
All that is required to continue coverage, is to contact the insurance provider about the chosen option.
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Because term life insurance is renewed on a short term basis, it is designed to cover short term needs. If a customer has long term coverage needs such as children or other dependants, it is more cost effective to purchase a new term policy or a permanent policy than to continue renewing their term policy year after year.
Margaret Huntley Margaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.
