What does the option to renew mean in the context of Term Life Insurance?

In the context of Term Life Insurance, the option to renew means that the policy can be extended for an additional term without the need for a new application. This feature is particularly beneficial for policyholders who want to continue their coverage but may not be able to qualify for insurance due to changes in their health or age. By exercising the renewal option, the insured can maintain their life insurance protection even as they grow older or if their health status changes, which is a significant advantage in terms of ensuring ongoing financial security for their beneficiaries.

The other options do not accurately reflect the characteristics of renewable term life insurance. For instance, premiums may not decrease upon renewal, as they are often based on the insured's age at the time of renewal, potentially resulting in higher premiums rather than lower ones. Additionally, the renewal option does not inherently allow for a switch to permanent insurance—this requires a separate provision or policy decision. Lastly, the feature does not guarantee coverage until a specific age, like 65; rather, it allows for renewal, typically under specific terms and conditions, depending on the insurer's policies.