Your RBC Term Life Insurance Is Renewing: What to Do Next

What this page covers

What Actually Happens When Your RBC Term Life Insurance Renews

Your policy renews by itself, and RBC cannot ask you anything to allow it. The contract says that at each renewal date the policy renews automatically without requesting evidence of insurability, as long as your premiums are paid up to that date. There is no medical, no questionnaire, and no new application. Your health at renewal has no bearing on the renewal price.

What surprises most people is the shape of it. The level premium you have been paying covers the term you selected and nothing beyond it. After that, RBC YourTerm renews yearly, with the premium rising at every renewal date, and every one of those prices was calculated and printed in your policy schedule the day the policy was issued.

How the price behaves over the life of the contract

That last point matters more than it looks. An RBC YourTerm policy does not simply stop at the end of the term and leave your family with nothing. It keeps renewing, yearly, all the way to 100. The question was never whether coverage continues. It is what it costs to let it. Older RBC contract generations may set this out differently, so confirm the renewal and expiry provisions in your own policy.

Guaranteed renewable term works along broadly similar lines across the market, though the details vary by insurer and by contract, and we cover the general mechanics in our guide to what to do when your term life insurance expires. What differs most from carrier to carrier is the price on that schedule and the options sitting beside it, which is the rest of this page.

Why the Renewal Premium Jumps, and How to Judge Whether Yours Is Fair

The biggest thing I get from clients calling about a renewal is the shock of just how much the premium has gone up. Most were under the belief that it would not change, or at least would not change so drastically.

Part of it is simply age. Insuring a fifty-five-year-old costs more than insuring a thirty-five-year-old, and no pricing structure can hide that. But there is a second reason, and it is the one worth understanding. A guaranteed renewal is a promise made without any fresh information about you. RBC has to renew you whether you are in excellent health or seriously ill, so the price has to cover everyone in that position. Insurers set guaranteed renewals to protect themselves rather than to compete for your business, and the result often sits well above what the open market charges someone your age who remains readily insurable.

What the open market charges for new coverage, by age

Sample premiums are for illustration only. They assume male non-smoker status, standard underwriting, $500,000 of coverage and a 10-year term, using current carrier rates at the time of quoting. Final premiums depend on age, sex, coverage amount, term length, smoking status, health history and insurer approval. These figures are not an offer of coverage. A female non-smoker on the same profile pays materially less at every age.

Roughly a doubling every decade, and then it steepens. That is the honest floor of what age alone does, and it applies to anyone buying new coverage from any insurer, not just to you.

So here is the test. Someone who bought a 20-year term at thirty-five for around $30 a month reaches fifty-five and sees a renewal figure. That figure is not automatically bad. It is only bad if it is well above what the same person could buy today, and at fifty-five a brand new 20-year term on that profile runs about $209 a month while a new 10-year runs about $98, on the same illustrative basis set out above. Your renewal number is printed in your policy schedule. Put it beside those and you have your answer in about a minute.

The Financial Consumer Agency of Canada makes the same point in plainer terms, noting that premiums may increase when you renew a term policy. What it cannot tell you is whether yours increased more than it had to. That part takes a comparison.

Option One: Let It Renew, and When That Is the Right Call

Renewing is the default, and defaults get a bad name they do not always deserve. My initial intent is never simply to say let us replace this with another policy. There are policies out there that are in the client’s best interest and do not make sense to replace, and I do not think we can ever universally say, unequivocally, that a plan is not the best plan at that time.

There are four situations where letting an RBC policy renew is often the better outcome, and in every one of them the reason is the same: the guarantee is worth more than the saving.

• Your health has changed since you applied. This is what you have been paying for. A new application means new underwriting, and a condition that appeared in the last ten years may turn a clean rate into a rated one, or may mean no offer at all, depending on the condition and the rest of the file. Renewing sidesteps that entirely. If this is your situation, read our guide on applying with a pre-existing condition before you let anyone submit anything.
• You need the coverage for one or two more years, not ten. Because renewal is yearly, you can keep it for exactly as long as you need and cancel in writing when you are done. A new 10-year term gives you a guaranteed premium for ten years, and you can cancel it early, but you go through underwriting to get it and you are buying a longer guarantee than your situation calls for. Paying a high annual rate for a year or two can be the cheaper and simpler answer.
• You are mid-investigation right now. Tests booked, a specialist referral outstanding, a follow-up not yet done. An open investigation often leads to a postponement until the testing or follow-up is complete, depending on what is being looked at and the rest of the file. Let the policy renew, close the loop with your doctor, then look again.
• The amount left is small. On a modest face amount the gap between a renewal price and a new-business price can be narrow enough that a fresh application, a medical and a new two-year contestability window are not worth the trouble.

If none of those four situations is yours, and you remain readily insurable, renewing may well be costing you money for a guarantee you are not using. The next three options are where that money goes instead.

Option Two: Apply for New Coverage Before the Renewal Takes Hold

If your health is reasonable, this is the option that most often wins, and it is the one the old version of this page barely mentioned. You apply for a brand new policy, priced on who you are today rather than on a promise made without any information about you. Current term pricing can make replacement worth examining, particularly when an older policy is approaching its guaranteed renewal rates, and in my experience a policy written eight or ten years ago can cost more than the same coverage placed now.

It is not free of consequences, though, and two clocks restart the moment a new contract is issued. Neither is a reason to avoid replacing. Both are reasons to sequence it properly.

Renewing your existing policy restarts neither clock. Converting it restarts neither clock. Only a new contract does. That is the genuine cost of replacing, and for many healthy applicants it is outweighed by the price difference, though that depends on the full file.

There is one more thing worth knowing about how the new application is priced. Depending on age and amount, a healthy applicant may be able to place a substantial amount of coverage with RBC on the strength of a tele-interview and vitals, with no blood work and no paramedical exam. That does not mean RBC will be the cheapest for you, and requirements are set by the insurer case by case. It means the process can be faster and less invasive than most people expect, and speed matters when a renewal date is approaching.

Whether RBC or another insurer wins depends entirely on your file. The point of shopping it is that you find out before the renewal price takes effect, not after. Compare current term life insurance rates across carriers and put the best of them beside the figure on your renewal notice.

Option Three: Convert to Permanent, and Why the Deadline Is an Age

Conversion is the most misunderstood option on this page, and the misunderstanding is specific. People assume the conversion window opens at renewal. It does not. Conversion is not tied to your renewal date at all.

Converting moves some or all of your term coverage onto a permanent RBC plan with no evidence of insurability, subject to the conditions in your contract. No medical and no health questions. That is the entire value of the privilege and it is the reason it matters most to the people who need it most.

The new premium is based on your age at conversion and the permanent rates in effect then, so it will not resemble what you have been paying. Permanent coverage lasts for life provided the policy remains in force and its contractual requirements are met, and most permanent plans build a cash value you may be able to access through a policy loan, a withdrawal or a surrender. Each of those routes can carry tax consequences, interest costs, or a reduction to the death benefit, and none of them is a savings account. We cover the mechanics in our guide to permanent life insurance in Canada.

The Part Most People Miss: Your Rate Class Can Expire Long Before Your Conversion Right

If you qualified for a preferred or optimum class when you applied, that class carries onto the permanent policy only if you convert within the first ten policy years, and only if the permanent plan you are converting into offers preferred classes. Convert after that and the new policy is priced at the standard class corresponding to your smoking habit, whatever your health looks like. The conversion right itself can run much longer. The rate class does not.

To illustrate: on a 20-year term, the rate class advantage lapses in policy year eleven, which is years before the policy reaches its first renewal. Almost nobody converts in year eleven because they planned to. They convert then because that is when someone finally looked.

Converting is not automatically the right answer

It is not one size fits all, because perhaps the company that has the term policy has higher permanent rates than another company. Conversion keeps you with one insurer’s permanent shelf without shopping it. If you have no major health concerns, it may make more sense to look elsewhere and buy permanent coverage on the open market instead.

Where it often makes clear sense is the opposite case. If you are looking for lifelong coverage and there are health concerns, converting may be the most practical route available, because it is the way to obtain permanent coverage without being reassessed.

And it does not have to be all or nothing. Depending on the company, maybe it makes sense to convert fifty percent of the policy and put the other fifty percent back into a term policy. RBC allows that on eligible contracts: a partial conversion moves part of the coverage to permanent and carries the remainder forward as a new term rider on the permanent policy, without evidence of insurability, at a term length you choose rather than the one you started with.

One practical caution. If your premiums are being waived under a disability waiver rider, the policy generally cannot be converted while that waiver is running, with a narrow exception for a conversion made on the date the privilege ends, in which case the permanent plan available is the lowest-premium one on offer. Contracts vary on this, so confirm it against your own policy well before the deadline rather than at it.

Option Four: Reduce the Coverage or Let It Go

Dropping or reducing can be an option at renewal. I do not think it is necessarily always the way to go, but if the mortgage is gone, the children are independent and the income it was replacing has stopped, you may simply need less than you did when you applied.

Reducing is straightforward mechanically. A written request, a minimum decrease of $10,000, and the remaining amount has to stay above the plan’s minimum. The change takes effect on the monthly processing day after RBC receives it, and the new premium is calculated on the rate band that matches the smaller amount. There are two consequences worth knowing before you send that request.

Increasing coverage is not the same conversation

People often assume that if coverage can be reduced at renewal it can be increased at renewal too. It cannot, not in the same way. An increase is a minimum of $50,000, requires evidence of insurability satisfactory to RBC, is priced at your attained age using the rates and class determined at the time of the increase, and starts its own two-year contestability and suicide window from its own coverage date. In practice that is a new application wearing the old policy’s name, and it is usually worth comparing against simply buying a separate policy on the open market.

Before you reduce, check whether you are solving the right problem

There are specific mechanisms and renewal options that can be worked with carriers that RBC themselves may not advise, or their call centre staff might not be aware of. That is not a criticism of the people answering the phone. It is that a service line handles the request you make, and reducing is a request they can process immediately.

Does it make sense to reduce? To reduce and convert? To partially change it? To look at alternative options entirely? There are a lot of factors, which is why it is worth having someone look before you send the form.

If you do decide to cancel

Cancellation has to be in writing. If your last monthly premium was paid on time the cancellation takes effect on the monthly processing day after RBC receives the request. Annual payers get the unused portion of the premium back. There is no cash value in a term policy, so nothing is returned beyond that.

And letting it lapse is not the same as cancelling it. Stop paying and the policy terminates at the end of the 31-day grace period on its own, which is fine if you intended it and expensive if you did not, because getting it back requires evidence of insurability you may no longer have. If you have decided you are done, do it deliberately and in writing. Before you do, it is worth knowing the common reasons applications get declined, because the coverage you already hold is worth more than it looks once you cannot replace it.

The Fifth Option That Only Exists on Older RBC Policies

This option is different. It applies only to specific older RBC Term 10 and Term 20 contracts, and its eligibility depends on the original issue date. It is also the only option in this article whose window opens at renewal rather than closing before it.

RBC calls it the Term Switch Privilege. It lets an eligible client move their existing policy onto a current RBC YourTerm rather than simply renewing the old one, at attained-age rates, with a ten percent saving on the premium excluding the policy fee. It is contractual, and RBC notifies eligible clients directly.

Notice the Term 20 window. Three years before renewal. Someone whose Term 20 was issued in 2007 could have started looking at this in 2024, and most of them will not have, because nothing prompts you to think about a policy that is still working.

The catch, and it is a real one

Unlike renewing and unlike converting, Term Switch requires evidence of insurability. Your change forms go to an underwriter. Depending on your attained age and the amount you are applying for, that is either a simplified process or a full one, but either way your health is being looked at.

RBC’s own advisor material puts the consequence plainly: if your health has changed since you applied for your current policy, the cost of the new policy, even with the ten percent saving, may be higher than the cost to renew what you already have. In that case you keep the existing policy. The privilege is not a guarantee of a better price. It is a guarantee of a look.

When it will not be available

The privilege is switched off entirely if you are 71 or older at renewal, if you live outside Canada when it would take effect, if your policy was issued on a special quote, if it carries term riders, or if premiums are being waived under a disability waiver. It also does not apply if you want more coverage than you have now: the new amount must be equal to or less than the original, and asking for more turns it into an ordinary new application with no saving and no simplified path.

Two administrative items catch people out. The policy has to be in force and paid, with no gap in coverage from a missed payment, because the switch is treated as a continuation rather than a fresh start. And if the policy is collaterally assigned or has an irrevocable beneficiary, those designations must be changed before RBC will issue it.

There is also a combination most people never hear about. If you qualify for Term Switch, you may instead be able to partially convert to permanent coverage and carry the remainder forward as a new term rider, without evidence of insurability, and still receive the ten percent saving on the carried-over portion when it is done inside the Term Switch window. Whether that beats a straight switch depends entirely on your health and how long you still need the coverage, which is the whole reason to have it looked at rather than guessed at.

How We Review an RBC Policy Before It Renews

Five options is a lot to hold in your head, and you do not have to. What follows is the actual sequence I work through when someone sends me a renewal notice, in the order I work through it. It takes one conversation.

I am basically looking at four things: current age, health status, what the renewal notice says about pricing, and whether any conversion options are still available or have expired.

The reason the order matters is that steps two and four are the ones with deadlines attached. A price comparison keeps. A conversion window does not, and neither does a switch window. If somebody runs quotes first and checks the contract afterwards, the quotes might be lovely and the option that would have beaten all of them might already be gone.

It also helps when the broker reviewing the file can compare both the RBC options already available inside your existing contract and the external market. That makes retaining, converting or replacing the policy genuine alternatives rather than assumptions made before the file is reviewed.

Common Questions About Renewing an RBC Term Policy

Check Your RBC Policy Before It Renews

If your RBC term is approaching renewal, the useful move is to look at the renewal schedule, the conversion deadline and the current replacement options together, before anything is cancelled and before the new premium takes effect. The goal is to work out what is worth keeping, which sometimes means keeping exactly what you have.

As always, the goal is to find the most cost effective policy that fits your needs. Sometimes that is a new policy from a different insurer. Sometimes it is a conversion. Sometimes it is the contract already sitting in your filing cabinet, and you should be told that plainly by someone who has no reason to say otherwise.

Protect Your Wealth is based in Hamilton, Ontario and serves clients across Ontario, British Columbia, Alberta, Manitoba, Saskatchewan, New Brunswick and Nova Scotia. If you are weighing a replacement, it is worth reviewing the life insurance companies operating in Canada and how the main types of coverage differ before you apply anywhere.