Understanding the Guaranteed Renewal Feature on Term Insurance Policies

Most term insurance policies in Canada offer a guaranteed renewal feature. This means the insured’s life insurance policy can be renewed beyond the stated term without a medical. However, the renewal premiums on term policies build-in a buffer that accounts for the insured’s possible change in health health may have changed during the term. Therefore, the renewals on term policies are substantially higher than the initial premium and much higher than on new equivalent term policies.


Below is an example of $500,000 of Term 10 coverage with BMO Insurance for a 40-year-old male, non-smoker.


The premium for the initial 10 years is $385.00/year

The renewal premium in year 11 is $2,985.00year

The renewal premium in year 21 is $7,105.00/year

The renewal premium in year 31 is $19,455.00/year

The renewal premium in year 41 is $52,800.00/year


The total gross premium put into the policy by the insured’s 84th birthday would be $563,300.


Term insurance policies can be a very good value, if they cover a short term insurance need, but it’s important to determine the length of the term needed.


If you need a policy beyond the initial term, the long-term cost of the policy can be prohibitive.


For more details, you can contact us at 1-866-899-4849 or visit our Term life Insurance Quote Page.


Most recent articles

Your email address will not be published. Required fields are marked *

  • Tony
    July 6, 2013 at 4:43 am

    I don’t see the renewal premium on my policy. Where can I find these details my policy renews next year and don’t want a big suprise in my ank account

    • LSM Insurance
      July 6, 2013 at 1:51 pm

      Hi Tony, Thanks for the note. The policy may not have guaranteed renewal premium. If you contact the insurance company they can give you these details – I would ask for something in writing.