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.

BREAKING DOWN '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. Yearly Renewable Group Term Insurance ...

    A type of insurance policy purchased by employers to cover several ...
  2. Term Life Insurance

    A policy with a set duration limit on the coverage period instead ...
  3. Yearly Renewable Term - YRT

    A one-year term life insurance policy. This type of policy gives ...
  4. Conditionally Renewable Policy

    An insurance policy provision that allows the insurer to not ...
  5. Beneficiary Clause

    A beneficiary clause is a provision in a life insurance policy ...
  6. Renewal Option

    A clause in a lease that outlines the terms for renewing or extending ...
Related Articles
  1. Insurance

    Life Insurance Clauses Determine Your Coverage

    Understanding these key parts of your policy will help you to ensure that your family will be covered.
  2. Financial Advisor

    Advising FAs: Explaining Life Insurance to a Client

    Life insurance was initially designed to protect the income of families, particularly young families in the wealth accumulation phase, in the event of the head of household's death.
  3. Insurance

    4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea

    Understand the benefits of applying for and securing life insurance coverage while you are young and healthy, and learn the cost of waiting to get coverage.
  4. Investing

    What's a Contingent Beneficiary?

    A contingent beneficiary is a person who will receive a payout from a will, trust, life insurance policy or other annuity, based on a specific condition. For an insurance policy, the contingency ...
  5. Retirement

    Who is a Beneficiary?

    A beneficiary is a person or entity that receives funds, assets, property or other benefits from a trust, will, or life insurance policy.
  6. Insurance

    Don't Forget to Review Your Life Insurance

    It is important to review a life insurance policy regularly to make sure that it's still relevant.
  7. Insurance

    Should You Buy Term or Permanent Life Insurance?

    When choosing between term or permanent life insurance you'll need to consider these factors.
  8. Investing

    Contingency Clauses In Home Purchases Contracts

    Real estate contracts often contain contingency clauses, which are conditions or actions that must be met for a contract to be binding.
  9. Insurance

    Life Insurance Premium Financing: Worth the Risk?

    Life insurance premium financing lets high net worth individuals buy costly insurance without liquidating assets.
  10. Financial Advisor

    Buying a Life Insurance Policy? Read This First

    Knowing who needs life insurance, how it works and the different types of insurance can help consumers make informed decisions about this product.
RELATED FAQS
  1. How are contingent beneficiaries informed of a payout?

    Understand how contingent beneficiaries are made aware of a policy payout, and learn what policy owners can do to ensure ... Read Answer >>
  2. What does U.S. law say about contingent beneficiaries?

    Learn about regulations the United States has on the naming of contingent beneficiaries, the types of contingencies that ... Read Answer >>
  3. What are the restrictions for naming a given individual as my contingent beneficiary?

    Understand what restrictions may exist, depending on your state and the policy you choose, on naming your life insurance ... Read Answer >>
  4. Under what circumstances will a contingent beneficiary receive an insurance payout?

    Learn the different types of contingent beneficiaries and what conditions must be met for these beneficiaries to receive ... Read Answer >>
Hot Definitions
  1. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  2. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  3. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  4. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  5. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
  6. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
Trading Center