What is the purpose of renewable term assurance?

The purpose of renewable term assurance is to allow the policyholder to renew their insurance coverage without undergoing new underwriting processes. This feature provides a significant advantage because it ensures continuous coverage even if the insured's health deteriorates over time. As individuals age or if they develop health issues, obtaining new life insurance can become challenging or more expensive due to increased risk assessments. Renewable term assurance mitigates this concern by enabling the insured to maintain their life insurance coverage at the end of the term, typically at the prevailing premium rates applicable for that age, without needing to reassess their health status. This element of the policy is particularly beneficial for individuals who may wish to maintain protection for their dependents or intended beneficiaries without the hassles of re-evaluating their medical history.

Other options do not align with the primary function of renewable term assurance. For example, decreasing premiums over time might be a feature of some plans but is not a characteristic of renewable term assurance. Covering the insured for life is contrary to the term nature of this product, as it typically only provides coverage for a specified period. Guaranteeing a fixed payout can apply to various insurance products, but renewable term assurance focuses primarily on renewal and not on the payout structure in this context.