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Renewable Term Insurance

Renewable term insurance policies are less expensive than permanent life insurance policies. Read ahead to learn more about their benefits.

  • Nov 26, 2021

Renewable term insurance policy is an excellent option for individuals who want to obtain life insurance coverage without committing to a long-term policy or investment.

    Key takeaways

  • Renewable term insurance policies allow policyholders to renew their coverage each year without undergoing a new medical examination.
  • A renewable term insurance policy works like a standard term plan.
  • Renewing a term insurance policy requires careful consideration and evaluation of your current insurance needs, policy terms, and conditions.
  • A vital aspect of buying a renewable term plan is settling for a policy that gives you the flexibility to convert the term plan into a cash-value one.

A standard term insurance policy expires at the end of a specific term. But, if you have purchased a renewable term insurance policy, you can renew the same at the end of the policy tenure. You can extend the policy tenure for as little as one year or more based on your insurance needs.

A renewable term insurance plan allows you to renew the policy without going through the hassles of submitting the documents, filling out the application form, undergoing a medical test, etc. However, as you renew the policy, the premium may go up yearly or once a few years when you attain a specific age.

What is Renewable Term Insurance?

Renewable term insurance is a type of life insurance policy that provides coverage for a specific term. Renewable term insurance policies allow policyholders to renew their coverage each year without undergoing a new medical examination or providing updated health information.
Renewable term insurance is a popular option for individuals who require temporary life insurance coverage. It is beneficial for those with short-term financial obligations such as mortgage payments or children’s education. Additionally, renewable term insurance is a cost-effective way to secure coverage for a specific period of time, as premiums for renewable term insurance policies tend to be lower than for other types of life insurance policies.

How Does a Renewable Term Insurance Policy Work?

A renewable term insurance policy works like a standard term plan, except for a few differences. When you buy renewable term life insurance, the insurance company will decide your premium based on your age at the time of purchasing the policy, your health condition, and the sum assured amount.

Let us understand the working of renewable term plans better with the help of an example.

Let us assume that Radhika Dubey, a 25-year-old woman, purchases a renewable term plan with a sum assured of ₹1 crore. The plan she buys offers her coverage until she attains the age of 65. Miss. Dubey pays an annual premium of ₹10,000 for the coverage.

Now, her life cover will continue to remain valid until she reaches a specific age (i.e., 65 years) if she pays the premium on time. At the end of the term, she need not undergo the re-qualification process again, and her policy will be renewed for any period she chooses.

Renewability is critical for a term insurance policy. It ensures that your family stays protected for a more extended period against future financial uncertainties if something unexpected happens to you.

Renewable Term Life Vs Convertible Term Life

When purchasing life insurance, one of the most important decisions you must make is choosing between renewable term life and convertible term life policies. Both options offer different benefits and drawbacks, and it is crucial to understand the differences before deciding.

Renewable Term Life vs Convertible Term Life: A Comparison


Renewable Term Life

Convertible Term Life


A policy that can be renewed at the end of its term for an additional period of time, usually at a higher premium

A policy that can be converted into a permanent life insurance policy without the need for a medical exam

Term Length

Usually available in 1-10 year terms

Usually available in 10-30 year terms


Typically lower than convertible term life policies, but increase at the end of each term

Typically higher than renewable term life policies, but do not increase as the policyholder ages


Offers coverage for a specified period of time but may not be suitable for long-term needs

Offers coverage for a longer period of time and the option to convert to permanent life insurance


Not applicable, as the policy can only be renewed

Allows the policyholder to convert to permanent life insurance at any point during the term of the policy


Limited flexibility, as the policy can only be renewed

It offers more flexibility by providing the option to convert to permanent life insurance

Important Points to Note Before Renewing Any Term Insurance Policy

Renewing a term insurance policy requires careful consideration and evaluation of your current insurance needs, policy terms and conditions, premium and benefits, market offerings, insurance renewal deadlines, and the reputation of the insurance company. If you are purchasing a renewable term plan, here are a few critical factors to be considered.

Policy Tenure

When you purchase a renewable life insurance policy, you can consider buying a yearly renewable policy or one that is renewed for a specific period, like five years or more. One of the significant benefits of this option is that your premium will be evenly charged over a long period, making it more affordable.

Fixed Level Premium

When you purchase a term insurance policy with a renewable option, check if the insurance company is charging a fixed-level premium. In most cases, the insurers increase the premium charges after attaining a specific age or after a certain number of years. With a fixed-level premium, you can continue with your policy and pay the same premium even after extending the period, provided you pay the premium on time and keep the plan active.

Flexibility to Convert into a Cash Value Plan

Another vital aspect of buying a renewable term plan is to settle for a policy that gives you the flexibility to convert the term plan into a cash value plan. This way, you can convert the term plan with a savings component and give you valuable returns in your old age after you retire.

What are the Benefits of Renewable Term Insurance?

Renewable term insurance offers flexibility, affordability, and peace of mind. Let us now understand the benefits of renewable term insurance in detail.

Affordable Premiums

Renewable term insurance policies are one of the most affordable life insurance options available. Unlike permanent policies, which have higher premiums due to the added investment component, term insurance policies have lower premiums since they only provide death benefit coverage. This makes it an attractive option for individuals who want to purchase coverage without breaking the bank.


Renewable term insurance policies offer flexibility to policyholders. They can choose the length of the policy term and the amount of coverage they need, making it easier to customize the policy to meet their specific needs. Additionally, policyholders have the option to renew their policy at the end of the term without needing a medical exam. This feature is especially helpful for those who have developed medical conditions during the term of the policy.

Death Benefit Coverage

Renewable term insurance policies offer death benefit coverage to beneficiaries upon the policyholder’s death. The death benefit amount is determined at the time of policy purchase and remains fixed throughout the term of the policy. This feature provides peace of mind to policyholders, knowing that their loved ones will be taken care of financially in the event of their death.

Tax Benefits

Renewable term insurance policies offer tax benefits to policyholders. Premiums paid towards the policy are tax-deductible up to a certain limit. Additionally, the death benefit paid out to beneficiaries is usually tax-free. These tax benefits make renewable term insurance policies an attractive option for those looking to save money on taxes.

Additional Riders

Renewable term insurance policies provide additional riders that can be added to the policy to provide additional coverage. These riders may include accidental death and dismemberment coverage, critical illness coverage, and disability coverage. Adding these riders can enhance the policy’s coverage and provide additional protection to policyholders.

Why You Can Choose Renewable Term Insurance Policies?

Renewable term insurance policies allow you to secure your family’s financial future by providing a death benefit in the event of your untimely passing. This can be especially important if you have dependents who rely on your income to meet their financial obligations. With a renewable term policy, you can rest assured that your loved ones will be taken care of even if you are no longer able to provide for them. Here are some reasons why you can choose renewable-term insurance policies:


Renewable-term insurance policies offer flexibility. You can choose the term length that suits your needs, and you have the option to renew the policy at the end of the term. This gives you the ability to adjust your coverage to meet your changing needs.


Renewable term insurance policies are typically more affordable than other types of life insurance policies. This is because they provide coverage for a limited period, and the premiums are usually lower than those of permanent life insurance policies.

Peace of Mind

A renewable term insurance policy can provide peace of mind for you and your loved ones. In the event of your untimely death, the policy can help your family financially. This can help alleviate some of the stress and uncertainty that often come with such a loss.

Renewable Term Plan – An Excellent Policy for All

A renewable term insurance policy is a type of life insurance policy that provides coverage for a specific period. Unlike traditional term life insurance policies, renewable term policies can be renewed at the end of the term without the need for a new medical exam, which can be beneficial for individuals who may have developed health issues since they first purchased the policy.
Renewable term insurance policies also offer more flexibility than permanent life insurance policies since they can be adjusted to meet changing financial needs over time. Overall, renewable term insurance policies can provide valuable protection for individuals and families seeking affordable and flexible life insurance coverage.

Kotak e-Term

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  • Life Cover till 85 years for Life & Life Secure Option
  • 3 Payout Options
  • Special Rates for Women
  • Option to exit the policy with premium refund at the age of 60*
  • Special Rates for Non-Tobacco Users
  • Free Medical Check Up every 5th year**

Ref. No. KLI/22-23/E-BB/2435


- A Consumer Education Initiative series by Kotak Life

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