Renewable Term Insurance: Renewal Rules & Traps on the LLQP Exam
A renewable term policy guarantees the owner the right to continue coverage for another term when the current one expires — with no evidence of insurability — at a new premium based on the insured's attained age.
Why it matters on the LLQP exam
Renewability is the other star term feature, and the exam's whole game is making you confuse it with convertible term. Keep the difference straight:
- Renewal = continue the term coverage for another period. Coverage stays temporary.
- Conversion = swap the term policy for permanent insurance. Coverage becomes lifelong.
What to memorize about renewal:
- The right is guaranteed — health changes cannot block it. A policyholder who becomes uninsurable mid-term can still renew.
- Renewal premiums follow a schedule printed in the contract and step up at each renewal because they are based on attained age. "The premium stays level forever" is always a wrong answer.
- Renewability is usually limited by a maximum age (for example, renewable to age 75 or 80), after which the coverage simply expires.
- Because renewal premiums climb steeply at older ages, policyowners with continuing needs are often better served by converting to permanent coverage while they still can — which is why the two features are sold and tested together.
Example question
Sofia's renewable Term 10 policy reaches the end of its first term. She has developed high blood pressure since issue. What are her renewal rights?
- She must pass a new medical to renew
- She may renew without evidence of insurability, at the same premium
- She may renew without evidence of insurability, at a higher attained-age premium
- The policy expires with no option to continue
Answer: C — renewal is guaranteed regardless of health, but the new premium reflects her current age.
For the full term picture, start with term insurance and the life insurance and taxation hub.