PSI Life Exam Practice Test

What right does a policyowner have when a Term Life policy is renewable?

1. The right to amend policy terms

2. The right to renew without showing proof of insurability

3. The right to transfer ownership of the policy

4. The right to increase the coverage amount

The correct answer is: The right to renew without showing proof of insurability

When a Term Life policy is renewable, the policyowner has the right to renew the policy without providing proof of insurability. This is a significant advantage for the policyholder, as it allows them to continue their coverage even as they age or if their health status changes. The absence of a requirement to demonstrate insurability means they can maintain their life insurance protection without the risk of being denied renewal based on potential health concerns that could arise over time. This feature is crucial for individuals who may worry about their ability to obtain life insurance in the future due to health issues, making it a vital aspect of renewable term policies. In contrast, amending policy terms, transferring ownership, or increasing coverage amounts are not typically rights associated with the renewal of a Term Life policy. These actions usually require specific procedures or may not be permissible under the original terms of the policy itself. Thus, the ability to renew without showing proof of insurability stands out as a key right that enhances the value of a renewable term life insurance policy for the policyowner.