Question: What is annual renewable term life insurance?

Answer: Annual renewable term is a type of term life insurance that is renewable at the end of each term year. Policyholders purchase term life insurance for a specific coverage period, usually between five and thirty years. Although you are guaranteed the right to renew your coverage each year during the term period, this type of term life insurance policy typically increases in cost each year. Oftentimes, annual renewable term is affordable at the start of the policy; however, the plans can become costly by the end of the term.

The yearly renewable term insurance policy, sometimes referred to as the policy, needs some explanation. I think of this policy as a pressure policy if you intend to keep it for more than one year. Here is why I feel this way. When you buy the yearly renewable term insurance policy the premium you are quoted is for you at the given year that you request the quote. At this same time next year you will pay a premium for a person in your same exact situation but one year older. The following year the premium increases again as you will be paying a premium for a person two years older.

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