Renewable and convertible term life insurance policies have features that allow you to do the following.
1) Renewable. This means that you can renew your policy to last beyond the term period that you purchased. E.g A 10 year term policy may be renewable to age 80, with the premium going up each year after the original 10 year period ends. Prices usually jump up drastically after the term ends, so the premium may not be affordable, and will keep going up. But if you only need your policy another year or two, having a renewable option can be helpful.
2) Convertible. This feature enables you to convert your life insurance policy to permanent insurance within a certain amount of time. The window for converting is generally a set number of years, or to a certain age.
The conversion rate will be based on prices for that policy at the time of conversion, and on your age at the time of conversion. Since permanent insurance costs more than term insurance, and being older increases prices, this also may not be an affordable option. However, conversion premiums are based on the health rating you got at the time your original term policy was issued. Therefore, if you have had a change of health since you took out your term policy, being able to convert it to permanent can be a good option to have.
That is a great question! The term policy that you are looking at will allow you to renew it, or extend it yearly after its term period has ended. That is both a good and a bad thing, as it's good to be able to renew it, but bad in that the price will jump hugely each year that you choose to renew it. Generally you can find a cheaper policy, so renewing isn't that great a perk. Now converting it is a better option. Your policy will allow you to change your term policy into a much smaller whole life policy, usually without having to have any medical exams. That is a good thing! I hope that helps, thanks for asking!
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
What is renewable and convertible term insurance? Well, first thing, if you're going to buy term insurance it should be both renewable and convertible. Renewable means the coverage will be offered to you up till the policy term runs out. The price can and will vary over time, they cannot cancel you, except for non payment, but they can raise prices over time. Convertible is important in case your need for life insurance goes longer than you expect. Most people at some point realize they have a lifetime life insurance need. Convertible means you can move into a permanent insurance product without having to prove good health.
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1) Renewable. This means that you can renew your policy to last beyond the term period that you purchased. E.g A 10 year term policy may be renewable to age 80, with the premium going up each year after the original 10 year period ends. Prices usually jump up drastically after the term ends, so the premium may not be affordable, and will keep going up. But if you only need your policy another year or two, having a renewable option can be helpful.
2) Convertible. This feature enables you to convert your life insurance policy to permanent insurance within a certain amount of time. The window for converting is generally a set number of years, or to a certain age.
The conversion rate will be based on prices for that policy at the time of conversion, and on your age at the time of conversion. Since permanent insurance costs more than term insurance, and being older increases prices, this also may not be an affordable option. However, conversion premiums are based on the health rating you got at the time your original term policy was issued. Therefore, if you have had a change of health since you took out your term policy, being able to convert it to permanent can be a good option to have.