Texas Life Agent Practice Exam

Which of the following statements about a renewable term policy is true?

1. It is renewable at the option of the insurer.

2. It is renewable at the option of the insured.

3. It cannot be renewed after a certain age.

4. It can only be renewed once.

The correct answer is: It is renewable at the option of the insured.

A renewable term policy is designed to provide the policyholder the opportunity to renew the coverage at the end of the term without undergoing further medical underwriting. This means that the insured can choose to extend the term of the policy, typically at an elevated premium, which reflects the increased risk due to age and any changes in health status. The option for renewal lies with the insured, allowing them to maintain their life insurance protection without having to provide evidence of insurability again. Understanding this feature is important in life insurance practices, especially since it offers flexibility and continued coverage for those who may develop health issues that make it difficult to secure a new policy later on. The correct answer highlights the essential structure of renewable term policies, empowering the insured's decision to retain their coverage as needed.