YOU ASK:

What is guaranteed renewable term life insurance?

WE ANSWER:

"We offer guaranteed renewable term life insurance!" You must have come across this phrase many times on TV commercials and adverts. However, don't let yourself fall into the marketing trap of insurance companies, as their message can be very misleading.

When stating that their term life insurance rates are guaranteed for a number of years and are then "guaranteed renewable" up to a certain age, such as 95, insurers are not lying, their policies can indeed be "guaranteed renewable". But what these ads fall short of telling you is that the policies are "guaranteed renewable" at prohibitively high rates that sometimes reach ten times the price that you have originally purchased your term life insurance at.

What does "guaranteed renewable" mean anyway?

Contrary to common belief, this is not a special type of term life insurance, but a provision that is included in the majority of the term life insurance policies. According to this provision, for a small additional premium, the policy owner can renew the term life policy contract when the term is up, without evidence of insurability but at a premium rate determined by the insured's attained age.

It is well worth including the "guaranteed renewable" provision in your term life insurance policy: you never know what the future may hold and you might end up needing to extend your policy term. If your term life insurance policy is non-renewable, you will have to apply for life insurance again and might not qualify for any life insurance if your health has deteriorated. With guaranteed renewable term life insurance, you do not need to provide evidence of good health: your policy contract is renewed unconditionally.

Different insurance companies have different age limits of renewability. Some of the term policies are renewable up to age 100, while the majority restrict renewability after the age of 75 or 85.

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