renewable and convertible (R&C) term life insurance (2024)

FAQs

Renewable and convertible (R&C) term life insurance? ›

Renewable and convertible (R&C) term life insurance refers to a form of term life insurance that is usually issued for a period of 1 or 5 years that can be renewed for additional terms or can be converted to a permanent or cash value policy.

While a renewable term life insurance policy allows you to simply extend your current coverage, having a convertible term life insurance policy means that, at any point during your term or before your 70^th birthday (whichever comes first), a policyholder may convert term life coverage to whole life coverage.

Cons. Declining affordability. Despite being affordable in the early years, annual renewable term life insurance premiums can escalate significantly as the policyholder ages. Limited coverage time period.

Advantages. You might choose a convertible term policy if you can only afford a less expensive term policy now, but think you might prefer and be able to afford a more expensive permanent policy later and don't want to take the risk that a change in your health could disqualify you from life insurance coverage.

Generally, you can cash out life insurance if you have a policy that has accumulated cash value. This can be a permanent life insurance policy or a convertible term life policy. But the idea is the same: There has to be some cash value in the policy for you to be able to withdraw it.

Reasonable & Customary (R&C) charge — plan pays out-of-network claims based on Reasonable & Customary (R&C) charges determined for your area.

Another reason companies are able keep term life premiums lower is that premiums are almost never refunded. This is normally the case even if you cancel your policy. So in most cases you shouldn't expect any money back after your term expires.

Term life insurance provides coverage for a certain length of time, with policies commonly lasting between 10 and 30 years. Unlike a permanent life insurance policy, which offers lifetime protection under most circ*mstances, term life insurance coverage typically ends once you've outlived the term.

Term Life insurance Cons: If you outlive the term length, your coverage will end and you won't receive any benefits. You will not be covered your entire lifetime and your policy will not accumulate cash value like an investment account does.

Any permanent life insurance policy with a cash value can be used to invest — but for most people, it isn't the best strategy due to high costs and low returns. Buying a term life policy and contributing to a 401(k) or IRA account is often a better option.

Why would someone select a convertible term policy? ›

A convertible life insurance policy allows you to obtain less expensive term coverage today with the option to convert it to a permanent policy at a later date with the same death benefit. 1 This can be a valuable alternative if your insurance needs, financial resources, or medical situation change in the future.

That's why Orman says it's best to set up a term life insurance policy that will remain in effect until your children reach early adulthood. In fact, in a recent podcast episode, Orman suggested getting life insurance that will last until your kids reach age 23 or 24.

However, if you have a serious health condition that would make a new life insurance policy difficult or nearly impossible to get, converting your term life policy to whole life just might be your best bet.

The MBA 10-Year Renewable and Convertible Term Life is a term life insurance plan that covers the life of one insured. In the event of the death of the insured, the MBA will pay the face value (the amount of life insurance, also known as the death benefit) to the policy's designated beneficiary.

Term life is designed to cover you for a specified period (say 10, 15 or 20 years) and then end. Because the number of years it covers are limited, it generally costs less than whole life policies. But term life policies typically don't build cash value. So, you can't cash out term life insurance.

A convertible policy gives the owner the option to change a term life insurance policy into a whole life policy without a medical exam or underwriting. A renewable policy gives the owner the right to extend or renew a term life insurance policy without a medical exam or underwriting.

Converting from term to permanent life insurance gives you access to a cash value component, which grows with interest over time. You can use your policy's cash value to borrow money, in the form of a life insurance loan, or even pay your premiums. Learn more about life insurance with cash value.

10 Year R&C Term is a non-participating guaranteed renewable and convertible plan. The premiums are guaranteed and remain level for a ten year period. The policy can be renewed (without evidence of insurability) for subsequent 10-year periods. It is renewable to age 80 and convertible before age 65.

Whole life is permanent; it provides you with protection for life as long as you pay your premium when due —and your premium stays the same for as long as you keep your policy. Convertible life insurance gives you the opportunity to update term coverage to permanent.