What is Renewable Term Life Insurance?

Renewable term life insurance includes a provision that guarantees your right to renew coverage at the end of the term without undergoing a new medical exam. This feature protects you if your health has declined, though renewal premiums will be based on your attained age.

In Canada, most term life policies include the renewability feature, but the terms vary significantly. Understanding how renewal works - and its true cost - is essential before relying on this option as part of your long-term insurance strategy.

How Renewal Works in Canada

1
Your initial term expires (e.g., 10 or 20 years)
2
You can renew for another term without medical questions or exams
3
New premium is based on your attained age at renewal
4
Renewal rates are guaranteed in your original contract (not subject to change)
5
You can typically renew until age 80-85 (varies by insurer)

Renewal Premium Shock - Real Numbers

Renewal premiums can be 5-10x higher than your original premium. Here's what to expect:

Scenario	Monthly Premium	% Increase
Original 20-year term at age 35 ($500K)	$35	-
First renewal at age 55	$180-$350	414-900%
Second renewal at age 65	$500-$900	1,329-2,471%
Third renewal at age 75	$1,500-$2,800	4,186-7,900%

When to Use the Renewal Option

Health has declined significantly during the original term

Need short-term bridge coverage to another policy

Still have temporary coverage needs beyond original term

Cannot qualify for any new coverage due to health

Awaiting permanent policy approval or conversion

Need coverage during underwriting period for replacement policy

Better Alternatives to Renewal

If you're healthy, these options are usually far more cost-effective than renewal:

Apply for New Term

New 10 or 20-year term at current age rates is almost always cheaper than renewal rates. A healthy 55-year-old pays far less for new coverage than renewal on an old policy.

Convert to Permanent

Use conversion option before term expires. No health questions, and you get lifetime coverage. Higher premium than term, but builds cash value and never expires.

Ladder Approach

Buy new longer-term policy 1-2 years before current term expires. Overlap ensures continuous coverage while you complete underwriting on the new policy.

Renewal vs Conversion: Key Differences

Feature	Renewal	Conversion
Policy Type After	Another term policy	Permanent (whole life or universal life)
Medical Underwriting	Not required	Not required
Coverage Duration	Another term (10-20 years)	Lifetime
Premium	Very high (renewal rates)	Higher than term (permanent rates)
Cash Value	None	Yes (builds over time)
Best For	Short-term bridge needs	Permanent coverage need

Renewal Strategy Example

Case Study: 55-Year-Old with Diabetes Diagnosis

Situation: John bought $500K 20-year term at age 35 ($35/month). At 53, he was diagnosed with Type 2 diabetes. Now at 55, his term is expiring.

Option A: Renewal

• No health questions required
• Premium: $285/month ($500K)
• Guaranteed for another 10 years

Option B: New Application

• Requires full medical underwriting
• Likely rated due to diabetes: $180-220/month
• May face coverage exclusions or decline

Strategy: Apply for new coverage first. If approved at acceptable rate, take it. If declined or heavily rated, use the guaranteed renewal option as backup.