Renewable term assurance

Renewable term assurance (also known as renewable life insurance) is an optional benefit that can be added to some life insurance policies.

This option allows you to extend your policy once it has come to an end, instead of arranging new cover.

It provides a simple and easy way of securing cover should you outlive your original policy.

Premiums may be slightly more for this added benefit and will increase each time you renew.

But exactly how does a renewable term assurance policy work and what are the pros and cons?

Unfortunately, renewable term assurance isn’t something we can secure for you at Reassured.

However, our award-winning team can compare quotes from some of the UK's leading providers to help you find a cost-effective policy that meets all of your needs.

Keep reading to find out everything you need to know about the renewable term option…

If you’ve chosen to add the renewable option to your policy, the option can be used when your term comes to an end.

For example, if you take out a 10-year policy, at the end of those 10 years you’ll usually be given the opportunity to extend your policy for another 10 years – with the same level of cover.

The renewed term and sum assured may be subject to change depending on the terms and conditions of the insurer.

If you continue to opt-in for the renewable benefit, you’ll be given the opportunity to renew your policy each time the policy comes to an end, (until you reach the upper age limit stated in your policy).

If you no longer want to renew you can opt-out of the renewable option the next time your policy comes up for renewal.

The renewable option can only be added to a level term policy, (if this option is offered by the insurer).

However, a level term life insurance policy may not best suit your needs.

Depending on personal factors, such as your age, your health and what it is you’d like to protect there could be a better policy option out there for you.

Below you’ll see the main life insurance policy options and what they’re best for helping to protect.

The key feature of renewable term assurance is its flexibility.

When taking out life insurance (especially at a young age) it’s hard to know what might come along in your life that you’ll need to protect.

This can make the flexibility of a renewable policy more appealing as you can take out a large sum assured for a shorter term (for example 10 years) and renew your policy to keep the cover in place for longer.

However, securing cover at a younger age is when you’ll experience the most favourable premiums so securing standard cover may work out more cost-effective compared to renewable in the long run.

At Reassured, our team can help you to compare top insurers to find the highest level of cover for the lowest price they can offer.

The other main benefit of renewable term assurance is that you don’t have to provide new medical information at the point of renewal, your premium will just be based on your new age.

Whereas, when taking out a new policy, not only will your age play a factor in deciding how much your premium will be but you’ll also have to tell insurers about any new medical conditions that you have.

As your premium will increase each time your policy is renewed, it may be more cost-effective to take out a standard level term policy with a longer-term.

This is because your premium will remain level throughout the lifetime of your policy, so you’ll always pay the same amount over a longer period of time.

If you’re looking to guarantee your loved ones a pay out, whole of life insurance may be a better option.

Critical illness cover allows you to make an early claim on your policy in the event you’re diagnosed with a life-changing illness listed by the insurer.

If you’re left unable to work, the pay out can be used to help replace a lost income.

Most providers who offer the renewable term option will allow you to add this to a life insurance policy with critical illness cover.

This means if you choose to renew your policy, the critical illness cover will also be renewed.

As critical illness is also an additional benefit, you’ll pay more for your premium to have this cover in place.

Having both a renewable option as well as critical illness in your policy may lead to expensive premiums which will only get more costly each time you renew.

The renewable option can be added to a level term joint policy. Any age limits in the policy will apply to the first named policyholder.

A joint life insurance policy covers two lives simultaneously. As a result, there is only one pay out, this is typically after the first death.

After this, the surviving partner will need to find new cover, as opposed to being able to renew.