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A 5-Minute Guide to Renewable Term Life Insurance

Term life insurance is often the best choice for families: It’s comprehensive, affordable, and provides several options to maintain coverage when your initial term ends. Here, we examine one of those options.

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So, what happens after your term life policy ends? Renewable term life insurance (sometimes called Annual Renewable Term Life Insurance or ART) is one option provided by life insurance companies that lets you to maintain coverage after the term of your original policy has finished.

Let’s see how it works…

Renewable Term Life Insurance: The Advantages and Disadvantages

Just because your term life insurance comes to an end, doesn’t mean you won’t have coverage. You can renew your term life insurance, but before you dive, it’s important to know some of the pros and cons.

The Advantages:

  • Allows you to reclaim your coverage at the end of your initial term.
  • Allows you to keep the original face value amount (or death benefit) of your first policy.
  • Permits you to renew your term life policy without having to start the application process again.
  • Exempts you from answering medical questions or undergoing a medical exam to prove insurability.

The Disadvantages:

  • Premiums will be very expensive when you renew.
  • Annually renewable term life insurance premiums increase every year.
  • Renewal of your policy is only guaranteed until a predetermined age, it is not permanent.
  • You cannot switch your renewable term life insurance policy to a whole life insurance policy. Although expensive, a whole life policy may be more affordable in the long run than renewable term life insurance.

Who Renewable Term Life Insurance May Benefit:

Life insurance is a very personal decision, but there are some people that renewable term life insurance works best for.

  • Policyholders with medical conditions that make purchasing a new term life insurance policy very difficult.
  • Those who have reached an age where finding a policy with their original death benefit amount proves more expensive than renewal, or where they cannot qualify for a new policy based on their age.
  • Insured persons who have experienced employment or lifestyle changes that make it a difficult to buy another term life insurance policy.

Here’s an example of how this might work for someone.

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James and Kelly both have renewable term life insurance policies that they purchased when they married. They have a young daughter, Ellen, who has

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