Life & Health · Lesson directory

LIFE INSURANCE PRODUCTS · T076–T078

Term Renewal, Conversion & Refunds

Distinguish continued term protection, permanent conversion, and premium-return features.

3 cards · Three practice questions for each card

CARD T076

Renewable Term Insurance

Term insurance with a right to renew without new evidence of insurability, within policy limits. Renewal premiums may increase.

How it works

A renewal provision permits continued term coverage without new evidence of insurability within stated deadlines and age limits. Renewal rates often reflect attained age and the contract’s schedule. It continues term protection; conversion changes to an eligible permanent policy. [20] [21]

EXAMPLE

An insured develops a condition during the term but renews under the contractual right. The insured must still meet renewal requirements and pay the required renewal premium.

Key distinction

Renew = continue term. Convert = change to eligible permanent coverage.

Practice Renewable Term Insurance · 3 questions

CARD T077

Convertible Term Insurance

Term insurance that can be changed to eligible permanent coverage without new evidence of insurability, within the conversion rules.

How it works

Conversion allows a term policy to become an eligible permanent policy without new evidence, within specified time and age limits. The insurer may restrict the available products. Premiums commonly use attained age, although some contracts offer original-age methods with adjustments. The conversion privilege does not promise the same premium. [21] [22]

EXAMPLE

A person with a later medical condition converts before the deadline to an offered permanent policy without a new medical exam, paying the permanent policy’s required premium.

Key distinction

Conversion preserves access to eligible coverage, not the old term price or unlimited product choice.

Practice Convertible Term Insurance · 3 questions

CARD T078

Return-of-Premium Term Insurance

Term insurance offering a return of specified premiums if its conditions are met. The refund is governed by the policy.

How it works

A return-of-premium term feature refunds specified premiums when its survival and completion conditions are met. It usually costs more than comparable plain term. The refund may exclude rider charges or other amounts, and early cancellation may produce less or no refund under the schedule. It is not automatic on every term policy. [20]

EXAMPLE

A rider promises to return eligible premiums after a completed 20-year term if the insured survives and the contract remains in force. Cancelling in year 6 does not necessarily earn the same refund.

Key distinction

Return of premium is a defined policy benefit, not a universal right to recover every dollar at any time.

Practice Return-of-Premium Term Insurance · 3 questions

APPLY THE TERMS

Practice questions

Select an answer, then check it to see why each option is right or wrong.

T076 · Renewable Term Insurance

0 of 3 answered

QUESTION 1 OF 3What is the main value of renewable term after a health deterioration?
QUESTION 2 OF 3What may still apply to a renewal right?
QUESTION 3 OF 3Which transaction is renewal rather than conversion?

T077 · Convertible Term Insurance

0 of 3 answered

QUESTION 1 OF 3Which right changes eligible term coverage to permanent coverage without new evidence?
QUESTION 2 OF 3What should an owner check before exercising conversion?
QUESTION 3 OF 3Does no new evidence of insurability mean the converted policy keeps the term premium?

T078 · Return-of-Premium Term Insurance

0 of 3 answered

QUESTION 1 OF 3What triggers a typical return-of-premium term refund?
QUESTION 2 OF 3Compared with otherwise similar plain term, this feature usually:
QUESTION 3 OF 3An owner cancels before the scheduled refund date. What determines the refund, if any?

Sources & further reading

Original explanations and practice scenarios informed by the following regulatory, legal, and product resources. State examples are not presented as nationwide deadlines or requirements.