Life Insurance 101: Renewable Term Insurance

Transcript

In this video, we’re going to look at renewable term life insurance in Canada. Now, this is becoming more important because some insurance providers are starting to release term life insurance policies that are not renewable.

The question is, do you care if you have the renewable provision or not? And the answer should be, you should care a lot. More specifically, it’s something you may not care about, but if you do care, you’re going to care a lot.

So, what’s renewable mean?

What renewable means is, that when you purchase a term policy, the premiums are level for a period of time such as 10, 20 or 30 years. What happens at the end of that term? If your policy is not renewable, your coverage is over abruptly with no options.

If the policy is renewable, your policy actually stays in force but the premiums go up. So you do have the option with a renewable term policy to keep your insurance past the initial term. Why is this important? If you hit the end of your 20-year term policy, so now you’re 20 years older, and you’ve become unhealthy or you need time to make a decision on a new life insurance policy and your policy is not renewable, you’re done. If it is renewable you have time to make some decisions. That’s why it’s important, it gives you options with your life insurance at the end of your term.