Renewable Term

AAA

DEFINITION of 'Renewable Term'

A clause in a term insurance contract that allows the beneficiary to extend the coverage term for a set period of time without having to requalify for coverage. A renewable term is contingent on premium payments being up to date, as well as a renewal premium being paid by the beneficiary.

INVESTOPEDIA EXPLAINS 'Renewable Term'

In the context of a life insurance contract, having a renewable term clause would be beneficial, as future health circumstances are unpredictable. Although the initial premiums are likely to be higher than those of a life insurance contract without a renewable term clause (the insurance company must be compensated for this increase in risk), buying this type of insurance is often in the beneficiary's best interest.

RELATED TERMS
  1. Life Annuity

    An insurance product that features a predetermined periodic payout ...
  2. Decreasing Term Insurance

    A type of annual renewable term life insurance that provides ...
  3. Guaranteed Renewable Policy

    An insurance policy feature that obligates the insurer to continue ...
  4. Life Insurance

    A protection against the loss of income that would result if ...
  5. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
  6. Insurance

    A contract (policy) in which an individual or entity receives ...
Related Articles
  1. 5 Insurance Policies Everyone Should ...
    Home & Auto

    5 Insurance Policies Everyone Should ...

  2. Protect Your Kids And Pets With Custom ...
    Insurance

    Protect Your Kids And Pets With Custom ...

  3. How Much Life Insurance Should You Carry?
    Insurance

    How Much Life Insurance Should You Carry?

  4. Let Life Insurance Riders Drive Your ...
    Options & Futures

    Let Life Insurance Riders Drive Your ...

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center