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
—
First renewal
—
Renewable to age
—
Total premiums (illustrative)
—
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.