How to Handle a Renewal with RBC Term Life Insurance: Keep or Upgrade?

When your RBC term life insurance policy reaches the end of its term, you’re faced with an important decision: should you keep the policy as it is or consider upgrading? Renewal can bring unexpected changes, such as increased premiums or the need to adjust coverage based on new financial goals.

In this blog, we’ll walk you through what to expect during the renewal process, the pros and cons of keeping or upgrading your coverage, and help you make the right decision for your future.

In this article:

• What to Expect When Your RBC Term Life Insurance Renews
• Option 1: Keep Your Existing Coverage
• Option 2: Upgrade Your Coverage
• How to Decide: Factors to Consider
• Frequently Asked Questions (FAQs) About Renewing RBC Term Life Insurance Policy

What to Expect When Your RBC Term Life Insurance Renews

When your RBC term life insurance policy reaches the end of its term, you’re faced with an important choice. At this point, the policy typically renews automatically, but you have to understand what this means for you. One of the main things to keep in mind is that while your coverage remains the same, your premiums are likely to increase. This is because when you first signed up, your premiums were based on your age and health at the time. As you grow older, the cost of maintaining the same coverage goes up. That’s why reviewing your policy before it renews is key. You want to determine whether it makes sense to stick with the current policy or adjust it to better fit your needs and budget.

A significant aspect of the renewal process is managing premium hikes. When your policy renews, it’s common to see a substantial jump in premiums. This happens because, as you age, the risk to the insurer increases. Premiums are recalculated based on your current age, and any changes in your health can also play a role. For many, this increase can be a surprise. Depending on your situation, premiums can even double or triple. For example, if you originally locked in a 20-year term in your 30s, renewing the same policy in your 50s could lead to significantly higher monthly payments.

However, these premium hikes don’t mean you’re stuck. If the increased cost is too much, there are other options, such as adjusting your coverage or looking into different policy types that may be more affordable and suited to your current financial situation. Taking the time to understand your renewal options can help you continue protecting your loved ones without unnecessary financial stress. If you’re still unsure about your options, a broker at Protect Your Wealth can guide you through the renewal process and help you find the best solution for your needs.

Option 1: Keep Your Existing Coverage

Keeping your RBC term life insurance policy when it comes up for renewal can be a practical choice, especially if you’re on a budget. One of the main benefits is that term life insurance is typically more affordable than permanent policies, offering the same coverage for a lower premium. This can be ideal if you only need coverage for a specific period, such as until your mortgage is paid off or your children are financially independent.

When does it make sense to keep your current policy? If you only need life insurance for short-term obligations or you’re nearing the end of those financial commitments, keeping your existing coverage may be the right decision. Additionally, if you are on a tight budget and can’t afford the higher premiums associated with permanent life insurance, staying with your term policy ensures you continue to protect your loved ones without a significant increase in costs.

However, there are downsides. One of the biggest challenges is the premium increase at renewal. Since your rates were calculated based on your age when the policy started, renewing as you get older typically means higher premiums for the same amount of coverage. This can be surprising and strain your budget, especially if the increase is substantial​. Additionally, term life insurance will eventually expire, which means if you’re still alive when the policy ends, your beneficiaries won’t receive any payout.

Option 2: Upgrade Your Coverage

Upgrading your RBC life insurance by converting your term policy to a permanent one offers several long-term advantages. The process of upgrading usually involves converting your existing term policy to a permanent life insurance product, such as whole life or universal life, without requiring a new medical exam. This makes it an appealing option if your health has changed since your original policy started.

Why consider an upgrade? An upgrade makes sense if your financial responsibilities have increased, such as a growing family or a new mortgage. Permanent life insurance provides lifelong coverage, meaning your family will receive a death benefit regardless of when you pass away. It also comes with additional benefits like building cash value over time, which you can access during your lifetime for major expenses like retirement or healthcare​.

There are also possible perks when upgrading. For instance, many term-to-permanent conversions offer guaranteed coverage without a medical exam, making it easier to secure lifelong protection. Additionally, some permanent policies allow you to adjust your premium payments or even build investment value, which can provide financial flexibility later in life​.

That said, the downside of upgrading is the cost. Permanent life insurance policies tend to be significantly more expensive than term policies, which can be a challenge if you’re on a fixed income or have other financial obligations. It’s essential to assess whether the long-term benefits outweigh the higher premiums​.

How to Decide: Factors to Consider

When deciding whether to keep your existing RBC term life insurance policy or upgrade to permanent coverage, it’s important to consider several factors that align with your current and future needs. Here’s a checklist to help you evaluate your options:

Financial Situation

• Affordability: Can you afford the potentially higher premiums that come with permanent life insurance? Term insurance is more affordable but only provides coverage for a set period. Permanent insurance, while more expensive, provides lifelong protection and can build cash value. Make sure to assess how the premiums fit within your overall budget.
• Income Stability: If your income is stable, an upgrade to permanent insurance may offer long-term benefits, such as a cash value that you can access in the future. However, if your financial situation is uncertain or you’re nearing retirement, the lower cost of a term policy may be more appropriate.

Health Status

• Current Health: If your health has changed since you first got your policy, upgrading to a permanent policy without a medical exam could be a significant advantage. Many policies offer this option during a renewal period. This is especially useful if you’re now dealing with a health condition that could make getting a new policy difficult or more expensive.
• Future Health: Consider your family history and potential future health issues. If there’s a possibility your health could decline, locking in a permanent policy now could provide peace of mind and guarantee coverage even if your health worsens later.

Long-Term Goals

• Duration of Coverage: Do you need coverage only for a set period (e.g., until your mortgage is paid off, or your kids are financially independent), or do you want lifelong protection? Term policies work well for temporary coverage needs, while permanent insurance ensures that your family will receive a payout no matter when you pass away.
• Building Cash Value: If one of your goals is to build a financial resource that you can access later in life (for things like retirement or medical expenses), upgrading to permanent insurance may be a good option. Permanent policies often have a cash value component that grows over time.

Coverage Needs

• Evaluate Current Coverage: Does your existing term policy provide enough coverage for your current financial responsibilities? If your needs have changed—such as getting married, having children, or buying a new home—you may need more coverage than your current policy offers.
• Future Premium Costs: Keep in mind that term life insurance premiums typically increase with each renewal as you get older. Compare these future costs with the fixed premiums of a permanent policy to see which makes more financial sense over time.

Final Advice

Taking the time to really think about your options can make all the difference in feeling confident with your life insurance decision. Whether sticking with your current policy because it fits your budget or upgrading to get lifelong protection, it’s important to understand how each choice impacts your future. A broker from Protect Your Wealth can break things down in simple terms, guiding you through the costs, benefits, and what will work best for your family’s needs. That way, you’re not just making a decision for today, but ensuring peace of mind for tomorrow.

Frequently Asked Questions (FAQs) About Renewing RBC Term Life Insurance Policy

Find a solution for what you’re looking for 

Making the right choice about your RBC term life insurance renewal comes down to understanding your needs and exploring your options. At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure the best solution for you and your needs. We provide expert life insurance solutions, including no medical life insurance, critical illness insurance, term life insurance, and permanent life insurance to build the best package to give you the protection you need. 

Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia, Alberta, and Manitoba including areas such as Mississauga, Vancouver, Calgary, and Winkler.