Renewable Term

With annually renewable term insurance, the premium:

1. A.Stays level for lifeDescribes level term or whole life. Annually renewable term is repriced at the insured's new attained age every year, which is exactly why the first-year cost is so low.
2. B.Decreases each yearConfuses a falling death benefit with a falling price. Decreasing term is the product with the shrinking element, and even there the premium is normally level; mortality cost climbs with age, so an annually repriced premium can only rise.
3. C.Increases at each renewal as the insured agesCorrect - rising premiums with age.
4. D.Is waived after year oneWaiver of premium is a disability rider with its own trigger, not a feature of renewable term. Renewing the coverage means paying again, and paying more.

Why: Annually renewable term premiums increase at each renewal as the insured ages.

A renewable term provision allows the policyowner to:

1. A.Convert to an annuityConflates renewal with a different transaction entirely. Renewal continues the same term coverage, and even the separate conversion privilege leads to permanent life insurance rather than to an annuity.
2. B.Renew without proof of insurability, at a higher premiumCorrect - guaranteed renewal, higher cost.
3. C.Never renewAn owner can always stop paying and let coverage lapse, so this needs no provision to make it possible. The renewable feature exists to grant the owner a right, exercisable at his option rather than the insurer's.
4. D.Renew at the same premium foreverCaptures the guaranteed-renewal half correctly but misreads the price. The insurer gives up the right to re-underwrite the insured's health, not the right to charge the higher rate that the insured's greater age now requires.

Why: A renewable term policy can be renewed without new evidence of insurability, though at a higher premium reflecting the older age.

A renewable term policy allows the owner to:

1. A.Continue coverage without re-qualifying medicallyCorrect - guaranteed renewal without a new exam.
2. B.Renew at the same premium foreverGets the guarantee right and the pricing wrong. What the insurer gives up is the right to demand new evidence of insurability, not the right to charge the higher rate the insured's attained age now calls for.
3. C.Convert to an annuityRenewal continues term coverage on the same life. Even the separate conversion privilege leads to permanent life insurance, never to an income contract.
4. D.Add cash value like whole lifeRenewability governs how long the coverage can continue, not what the product accumulates. Term remains term no matter how many times it is renewed, and it builds no cash value.

Why: A renewable term policy can be continued at term end without proving insurability again, at a higher premium.

A client wanting coverage for a fixed 10-year need, with the ability to renew without a new exam, should buy:

1. A.Renewable termCorrect - renews without a new exam.
2. B.A deferred annuityNot insurance, so there is nothing to renew. It never covered a life in the first place.
3. C.Single-premium whole lifeIt does remove the underwriting worry permanently, which is a real point in its favor. The cost is a large single payment for coverage well beyond the ten-year need the client described.
4. D.Decreasing termDescribes how the benefit behaves during the term, not whether the policy can be continued without a new exam. The client asked for a renewal right, which is a separate provision.

Why: Renewable term can be renewed for another term without proving insurability, though at a higher rate.