Renew, convert, or buy new? The decision at the end of a term policy

If your health is unchanged, buying a new policy is usually cheapest. If your health has changed and the need is permanent, convert. If your health has changed and the need is temporary, renew as a bridge. The wrong move is deciding before you know which deadline expires first.

Three options, three very different price tags, and a decision most people make under time pressure after opening a renewal letter. Here is the framework.

Start with two questions

Question one: has your health changed since you were underwritten?

Not “are you healthy.” The comparison is against the version of you the insurer assessed when the policy was issued. New diagnoses, new medications, significant weight change, a hospitalisation, a specialist referral, a family history that has developed since.

If nothing material has changed, the market is open to you and fresh underwriting will almost always win.

If something has changed, your existing contract rights become the valuable asset and the calculation inverts.

Question two: how long do you still need the coverage?

Separate the need into two buckets.

Temporary need has an end date. Remaining mortgage amortisation. Years until the youngest child finishes education. Years until a business loan is retired.

Permanent need does not. Tax triggered by deemed disposition at death on a cottage, a rental, or private company shares. The full fair market value of an RRSP or RRIF included as income on a final return where there is no qualifying survivor to roll it to. Final expenses. A dependent with a disability. Estate equalisation where one child will inherit an illiquid asset. How these are sized is covered in our guide to estate taxes at death.

Most households have both, in which case the answer is both: convert the permanent slice and cover the temporary slice separately.

The three options compared

Option one: renewal

Guaranteed renewability means the insurer must continue coverage regardless of your health, up to the maximum age in your contract. You cannot be re underwritten and you cannot be turned down. The price is set on your age at renewal and rises sharply.

The critical variable, and the one almost nobody checks, is renewal frequency.

Annual renewal means the premium steps up every year: a comparatively cheap first year and an expensive fifth year, which is exactly what you want from a temporary bridge.

Renewal for another full term matching the original means a single large jump, then level for the full period. Better for a long need, much worse if you only need eighteen months of cover.

Five and ten year structures sit in between. Maximum renewal ages range from 80 to 100 depending on the insurer, with 85 the most common.

Which structure and which outer age limit your insurer uses, verified against each insurer’s own documents, is in the table in our guide to what happens when term life insurance expires. Your contract governs either way.

Renewal is the right answer when: you need coverage for a short, defined period, your health rules out new underwriting, and your policy renews annually or in short steps. It is a bridge, not a destination.

Option two: conversion

No medical, no health questions, priced at your attained age but on the health class recorded at issue.

Conversion is the right answer when: part of your need is genuinely permanent and your health has changed materially since the policy was issued. In that scenario it is often the only way to secure lifetime coverage at a price reflecting the healthy person you used to be.

The constraint is the deadline. No Canadian insurer allows conversion past 75, most stop at 70 or 71, and a handful of niche products stop at 65. The figures we have verified insurer by insurer are in our conversion deadline table; if yours is not among them, or your contract predates the current product, the contract itself is the answer.

Partial conversion is usually permitted, which is what makes this affordable. Convert the permanent slice only. The pricing mechanics and how to size the slice are covered in our guide to converting term life to permanent coverage.

Option three: buy a new policy

Full underwriting on your current age and current health.

Buying new is the right answer when: your health is materially unchanged, and it usually wins by a wide margin. Term rates for a healthy applicant are competitive, and you get a fresh level premium period rather than an attained age schedule.

Watch the issue age ceilings. They are often formula based rather than a flat cutoff. RBC, for example, accepts Term 10 and Term 15 applications from 18 to 70, and for terms longer than 15 years applies a maximum issue age of 85 minus the term, so a Term 25 tops out at issue age 60. Other insurers set limits per term length: Manulife’s Family Term 20 issues to age 60, and Humania’s Term 20 to age 59.

If your health is somewhere in between, this is exactly the case for an anonymous pre check before any application goes in. A file that draws a rating at one insurer can be standard at another, and finding that out without creating a record is the point. If your health has clearly changed, our guide to an expiring term when your health has changed walks the full sequence.

A quick decision path

1. Is there a permanent need? If yes, and your health has changed, convert that portion. Check your deadline first.
2. Is there a remaining temporary need? If yes, continue.
3. Is your health materially unchanged? If yes, apply for new term coverage. It will be cheapest.
4. If your health has changed, run an anonymous pre check. A rated new policy frequently still beats an attained age renewal.
5. If nothing comes back acceptable, renew as a bridge. Prefer annual or short-step renewal structures if you have a choice.
6. In all cases, keep existing coverage in force until any replacement is issued and delivered.

Frequently asked questions

How much does term life insurance go up at renewal?

It depends on the age gap and the insurer’s renewal schedule, but multiples rather than percentages are normal. Renewal pricing reflects mortality at your current age, so a twenty year jump produces a very large increase.

Can I renew for a shorter period to save money?

Only if your contract renews annually or in short steps; some insurers renew in five or ten year periods regardless of the original term. If your policy renews for another full term matching the original, you take the whole period or none.

Does it cost more to renew closer to the expiry date?

No. Renewal pricing is based on your age at renewal, not on how early or late you act. Acting early matters for other reasons, particularly if you want to apply elsewhere first.

Can I convert and renew?

Often yes, and partial conversion makes this practical. Convert a portion to permanent and let the balance renew as term.

Is a rated new policy better than renewing?

Frequently, yes. Even a rated offer is priced off current term rates rather than an attained age renewal schedule. Comparing the two is exactly what a pre check is for.

What to do next

Bring us the renewal letter and the contract. A licensed advisor confirms both deadlines, prices all three options against your actual file, and tells you which one wins. The review costs nothing and creates no insurance record.