How is the renewal premium for a Renewable Term Policy typically calculated?

The renewal premium for a Renewable Term Policy is typically calculated based on the insured's attained age. As the insured grows older, the risk associated with insuring them increases, which is reflected in higher premiums at renewal. This calculation ensures that the premium aligns with the current risk profile of the insured rather than the original age at which the policy was taken out.

Since the policy allows for renewal without the need for additional underwriting, the insurer adjusts the premium rates according to the insured's current age at the time of renewal. This approach reflects the increasing likelihood of claims as individuals age, making it a standard practice in life insurance policies, especially term insurances that can be renewed.

Contrastingly, using the policy's original age or fixing the rate at the initial amount would not account for the natural increase in risk over time, which could lead to financial losses for the insurer. An average age might not accurately reflect the increased risk faced by older policyholders either, as it fails to address individual circumstances impacting health and mortality as one ages.