Annual Renewable Term

In-Depth Description - Annual Renewable Term

Term insurance provides death benefit protection for a term of one or more years. Death benefits are paid only if the insured dies within the specified term of years. Term insurance typically provides the largest immediate death benefit for each premium dollar.

Most term insurance policies are renewable for one or more additional years even if the insured's health has changed. Each time the policy is renewed for a new term, premiums increase.

Term policies generally contain a conversion feature. This enables the policyowner, prior to the final conversion date, to exchange the term policy for a permanent plan of life insurance such as whole life or universal life, without evidence of insurability. Premiums for the new policy will be higher than what the policyowner had been paying for the term insurance.