Why does my term life insurance cost so much more at renewal?
Renewal lets you keep a term policy going without answering medical questions, and that guarantee is the reason the price rises so much. The renewal premium is based on your age at renewal, and it is priced on the assumption that people who renew are disproportionately those who could no longer pass underwriting. For someone in good health, applying for a new policy is usually far cheaper. The renewal schedule was printed in your policy from the day it was issued. A 10-year term often renews every ten years up to a final age such as 75 or 80, while a 20-year term often renews once and then moves to yearly renewable pricing that increases every year. Renewing is the right answer when your health means a new application would not go well, and most insurers will renew a smaller amount than the whole policy on request.
What to know at a glance
- The renewal schedule is printed in your original policy. The new price is not a surprise the insurer sprang on you.
- Renewal pricing assumes the healthiest people leave and reapply elsewhere, so it is priced for those who stay.
- After the first renewal, many policies reprice every year rather than every ten.
- Renewing is the right answer when your health means a new application would not go well.
On this page
How long do you need protection?
Start with the need you want your life insurance to cover.
Protection for a defined period. Check the policy’s renewal and conversion options.
Protection designed to last your lifetime, provided the policy stays in force.
Conceptual illustration, not a price comparison or a guarantee of benefits. Policy terms apply. Source: Financial Consumer Agency of Canada.
What guaranteed renewable means
Most Canadian term policies are guaranteed renewable. At the end of the term the insurer must let you continue the coverage, and they cannot ask about your health, order tests, or refuse you because of a diagnosis you picked up along the way.
That is a genuine guarantee and it is worth something. It means a term policy is never simply cancelled out from under you because you got sick.
The price of that guarantee is the price at renewal.
Why the jump is so large
Two things are happening at once.
You are older. A premium set for a 40-year-old does not apply to a 60-year-old. Mortality risk between 60 and 70 is far higher than between 40 and 50, and the renewal premium reflects the age you have reached rather than the age you bought at.
The insurer expects the healthy people to leave. This is the bigger factor and the less obvious one. At renewal, anyone in good health can shop around and buy a fresh policy for less, and most of them do. The people who stay and renew are disproportionately those whose health has changed and who could not get a new policy underwritten.
The insurer knows this and prices the renewal for that group. The renewal rate is not what it costs to insure a healthy 60-year-old. It is close to what it costs to insure a 60-year-old who could not get insurance anywhere else.
That is why the increase feels out of proportion to ten years of ageing. It is not just ageing.
What the schedule looks like
The renewal rates were in your policy document from the day it was issued. They are not decided at renewal time.
Typical patterns:
A 10-year term often renews every 10 years, with a large step at each renewal, up to a final age such as 75 or 80 after which coverage ends.
A 20-year term often renews once, then moves to yearly renewable pricing, which increases every year from that point.
Because the increase compounds annually after the first renewal, holding a renewed term policy for several more years usually costs considerably more than the first renewal premium suggests. Ask for the full schedule rather than just the next year’s figure.
The decision
The question is simple to state: can you get new coverage underwritten?
The three routes compare like this:
| Renew the existing policy | Apply for a new policy | Convert to permanent | |
|---|---|---|---|
| Health questions | None; the insurer cannot ask about your health, order tests or refuse you | Yes, full underwriting at your current age and health | Offered as an alternative when a new application would not go well, provided the right is still available |
| Price pattern | Based on the age you have reached and priced for those who could not pass underwriting; a 10-year term steps up every 10 years, and a 20-year term often moves to yearly increases after the first renewal | Priced as a healthy applicant, usually far below the renewal rate; even a rated offer is often below it | Usually a level premium for life rather than one that climbs every year |
| Speed | Automatic unless you cancel; the higher premium simply starts | Takes an application and issue; keep the old policy in force until the new one is issued | Only while the conversion right is still available |
| Fits when | Your health means a new application would not go well | You can get new coverage underwritten, or you are not sure and want to find out at no cost or commitment | You cannot pass underwriting and want a price that stays level instead of climbing every year |
If yes, applying for a new policy is almost always cheaper, often dramatically so. You are being priced as a healthy applicant rather than as a member of the group that had to renew. Apply for the new policy first and only cancel the old one once the new one is issued and in force.
If no, renew. The high price is what coverage costs for someone who cannot pass underwriting, and having it at that price is better than not having it. Before settling for renewal, check whether the conversion right is still available, because converting usually produces a level premium for life rather than one that climbs every year.
If you are not sure, apply and find out. An application costs nothing, commits you to nothing, and the answer is frequently better than people expect. Even an offer at a rated premium is often below the renewal rate. What that looks like is covered in ratings and substandard offers.
Partial renewal
Something people miss: you do not have to renew the whole amount.
A household that bought $700,000 twenty years ago may now have a much smaller mortgage and grown children. Renewing $200,000 rather than the full amount keeps meaningful coverage at a fraction of the cost. Most insurers will reduce the coverage at renewal on request.
This is worth asking about specifically, because the renewal notice will quote the full amount and nobody will suggest the alternative.
Do not let it renew by accident
Most term contracts renew automatically unless you cancel. If the premium is on pre-authorized debit, the higher amount simply starts coming out.
Two consequences. Someone who no longer needs coverage can pay renewal premiums for months before noticing. And someone who does need it can panic-cancel on seeing the new figure, leaving themselves with nothing while they work out what to do.
Neither is necessary if you know the expiry date in advance. That is the argument for starting this conversation a year out rather than when the notice arrives.
What the answer depends on
Life insurance decisions are made case by case. These are the factors that usually move the outcome:
- Your age at the renewal date
- The renewal schedule written into your specific contract
- Whether your health would still support a new application
- How many more years you actually need coverage
- Whether a conversion right is still available as an alternative
Related questions
- What happens when your term ends
- Converting term to permanent
- Declined or postponed, and what to do next
- Choosing a 10, 20 or 30 year term
New to this? What term life insurance is covers the ground this page assumes.
Sources
- Life insurance, Financial Consumer Agency of Canada.Supports: Some term policies can be renewed and premiums may increase on renewal; on a five-year renewable policy the premium would increase every five years.. Checked August 13, 2026.
- A guide to life insurance, Canadian Life and Health Insurance Association.Supports: The industry association's consumer guide describes term and permanent life insurance, group coverage through an employer and the questions to ask before buying.. Checked September 14, 2026.
Talk it through with a licensed advisor
Reading about how coverage works only gets you so far. What is actually available to you depends on your health, your age and which insurer is looking at your file.
A few questions about you and your health, then a licensed advisor comes back with the options you can actually apply for. No obligation, and a quote is an estimate rather than an offer of coverage.
Send the question you actually have. A licensed advisor replies within one business day. Nothing gets started until you say so.
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