Key takeaway
Most Canadian term life policies include a guaranteed renewal option: when the level term ends, you can renew for another term at a premium based on your attained age, without proving insurability. Premiums are much higher than the initial term. Converting to permanent coverage or buying new term are alternatives.
How guaranteed renewal works
Guaranteed renewal means that when your level term period expires, the insurer must offer you the option to renew for another term (often one-year renewable term) at a premium based on your current age. You do not need to take a medical exam or answer health questions.
The catch is price: renewal premiums are typically five to ten times higher than your original level term premium because you are older and the insurer is pricing one year at a time. Renewal is useful as a bridge but is rarely a long-term solution.
Renewal vs conversion
Renewal keeps you in term coverage at a higher annual cost. Conversion allows you to exchange your term policy for a permanent (whole life or universal life) policy without new underwriting. Conversion has age and time limits — for example, you must convert before age 65 or within the first 10 years of the term.
If you still need coverage when your term ends and your health has declined, conversion can be invaluable. If you are healthy, applying for a new term policy may yield better rates than renewing at advanced ages.
When to renew, convert, or replace
Renew when you need only a short additional period (e.g., one or two years) and do not want to go through underwriting. Convert when you need permanent coverage and want to lock in insurability. Replace (apply for new term) when you are healthy, need coverage for many more years, and can get a better rate elsewhere.
Do not let your term expire without a plan. Review conversion deadlines and start shopping for new term or permanent coverage at least a year before your current term ends.
What to check in your contract
Confirm the renewal premium scale (often in the policy) and the maximum age to which you can renew. Also confirm conversion rights: which permanent products you can convert to, and the deadline. Missing a conversion deadline can leave you without affordable permanent options.
If you have multiple term policies, track each one's renewal and conversion dates separately.
Frequently asked questions
Is renewal guaranteed on all term policies in Canada?
Most individual term policies in Canada include a guaranteed renewal option, but the terms (e.g., premium scale, maximum age) are in the contract. Group term may not offer the same renewal rights.
Why are renewal premiums so much higher?
Renewal premiums are based on your attained age and often on one-year term pricing. The insurer is taking on higher mortality risk without a new medical exam, so the cost reflects that risk.
Can I convert my term policy after the conversion period?
No. Conversion rights expire at a stated age or date in the contract. After that, you would need to apply for a new permanent policy and go through underwriting.