Maria, a 68-year-old retiree in Nova Scotia, purchased a Term-20 policy when she was 48. The policy is now due for renewal. Her financial advisor, Alex, notes that Maria still has a mortgage and wishes to leave a small inheritance to her grandchildren. What is the most likely consequence if Maria chooses to renew her Term-20 policy?

Question: Maria, a 68-year-old retiree in Nova Scotia, purchased a Term-20 policy when she was 48. The policy is now due for renewal. Her financial advisor, Alex, notes that Maria still has a mortgage and wishes to leave a small inheritance to her grandchildren. What is the most likely consequence if Maria chooses to renew her Term-20 policy?

Answer options: ✅ The premium for the renewed Term-20 policy will be significantly higher than her original premium, reflecting her attained age and increased mortality risk.

• The policy will automatically convert to a permanent plan with no change in premium.
• She will be required to undergo a new medical examination to qualify for the renewed policy.
• The death benefit will likely be reduced to keep the premium affordable at her older age.

Correct answer: The premium for the renewed Term-20 policy will be significantly higher than her original premium, reflecting her attained age and increased mortality risk.

Explanation: Upon renewal, term insurance premiums are recalculated based on the insured's attained age, leading to a significant increase in premiums, as mortality risk sharply rises with age. No new medical is required for renewal, and the death benefit typically remains the same, as per the nature of renewable term insurance.