Insurance Tools · Life Insurance

Term Premium & Renewal Staircase

See how a level term premium is set, and why it steps UP at every renewal until the policy runs into its age limit.

Initial annual premium
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First renewal
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Renewable to age
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Total premiums (illustrative)
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How this works. A term premium is just mortality cost (your face amount × your chance of dying that year) plus the insurer's expenses and profit (§2.4.1). Inside a term the premium is held level, so early years overpay a little and later years underpay. At each renewal the insurer re-prices for your older age, so the premium steps up: the staircase. A renewable policy locks in a guaranteed schedule of those steps (you can never be turned down), while a re-entry policy starts cheaper but splits at renewal: re-qualify on health for the low rate, or pay the higher guaranteed rate if your health has slipped. Either way the right to renew usually ends around age 70: the non-renewable cliff.
Educational illustration of standard Canadian insurance concepts. Figures are illustrative, not an insurer’s rates.
Illustration only, not a quote or advice. Figures are simplified for education and do not reflect any specific insurer's rates. Consult a licensed advisor.