Annual Renewable Term Life Insurance!
What is Renewable term insurance?
Annual Renewable term or ART is the simplest form of term life insurance. It’s essentially a term coverage of one year. Because the likelihood of dying within a year is low for anyone that the life company would accept for the coverage, purchase of only one year of coverage is rare. The premium paid is determined by the probability of the insured dying in that one year. As we mentioned previously, the insurance industry is big business with little sympathy or compassion (to be honest.) It’s all about insure ability, probability, life expectancy and of course profitability.
One of the challenges in qualifying for a renewable term policy is proof of insure ability. That is, how healthy are you and what is the likelihood of you dying? Say you purchase a one year term life policy, within that year you are unexpectedly diagnosed with a terminal illness that allows a 12-24 life expectancy.
It is now 14 months later and you are still celebrating life, but your one year term life policy is now expired. Because of the terminal illness, the insured would likely be uninsurable after the initial expiration of the term policy and would be unable to renew the policy or purchase a new one. Quite a pickle. However, there are versions of term life insurance that will assist you in bypassing this challenge and deems proof of insurability unnecessary to obtain coverage.
ART-Annual renewable term life insurance policy
You would purchase an annual renewable term policy. In this set up, the premium is paid for one year of coverage, but the policy is guaranteed to continue coverage each year for a given period of years.
This period varies from 10 to 30 years, or sometimes until age 95. As the insured ages, the term premiums exponentially increase with each renewal period, eventually becoming unaffordable as the rates for a term insruance policy would eventually exceed the cost of a permanent/whole life policy.
Looking for other types of term life insurance check them out here Types Of Life Insurance.