Annual Renewable Term Life Insurance

There is a type of life insurance called annual renewable term life insurance. This type is just the same as your regular term Life Insuranceexcept that it will only last for a year. If you insure yourself for this type of term life, it will only cover you for the specified period of time.

When the specified period of time expires you are no longer covered and you need to buy a new one or renew your plan. Usually your premiums will increase.

The simplest type or of -Life Insurance is the annual renewable term life insurance since it only last for one year. The death benefit is paid to the insured during or within the specified period of time that the policy stipulates. The insurer will not pay if even for only a day after the specified time. The premiums for a one year policy will be based on the probability that the person would die within a year. And the chance a person dies within a year is very much unlikely or is very low. Since it is very low Life Insurance Companies rarely offer this form of insuring a person. The truth is one year term is seldom offered.

There are so many problems associated with these form of insuring yourself. First, you have to contend with the increasing premium every time you will renew your policy. Secondly, if the insured contracted a terminal illness and did not die within the specified period of time on the policy, you may be classified as uninsurable. Now you cannot find an insurer to insure you. So the best thing you can hope for in this scenario is if the insured dies before the policy expires.

With these kinds of scenarios playing out on this form or type of insuring yourself, some Life Insurance Companies have decided to fix the problem. There is a new feature called re-insurability. Thus if this feature is included in your term life insurance policy, you will be able to renew your insurance as long as you want to without having to provide the proof of insurability. The most common type is what they call (ART) Annual Renewable Term. This is very similar to a one year term life insurance.

ART or annual renewable term is a better option than a one year term life. In this form, the premium is paid for one year of coverage but the policy is guaranteed to be able to continue each year for a given number of years. The number of years is anywhere from 10 to 30 years or occasionally up to 95 years. The drawback to this form is that as the insured ages, the premiums go up. You will eventually end up paying more than what a permanent insurance would have normally cost you.