What Is Annual Renewable Term (ART) Insurance?

Annual renewable term insurance (ART) is a form of term life insurance which offers a guarantee of future insurability for a set number 💦of years. During the stated period, the policyholder will be able to renew each year without reapplying or taking another medical exam to reaffirm eligibility. The design of an ART po🎶licy is to cover short-term insurance needs.

These policies are underwritten using the same mortality tables as other life insurance products. Also, they're the least expensive form of life insurance to buy.

In an ART policy, the monthly or yearly fees known as premiums continue on a one-year contract basis. They may increase on the renewal of the insurance contract. As the insured ages, the premium will increase. The policy pays a 澳洲幸运5官方开奖结果体彩网:death benefit whi✨ch remains the same with the contract's extension.

As with other types of insurance, ART policyholders designate at least one 澳洲幸运5官方开奖结果体彩网:beneficiary. Unless the insured states explicitly otherw🌳ise, the recipient will remain the same throughout the terms.

Comparing ART Policies vs. Level Term Policies

Annual renewable term insurance is a less common type of term life than level term insurance. Level term coverage has a premium rate which remains the same for a specified number of years, usually between 10 and 30 years. With both term insurances, the death benefit does not rise in value as it would with 澳洲幸运5官方开奖结果体彩网:universal life or whole life policies.

The primary difference between ART and level term are in the calculation of premiums due. ART premium payments increase each year, and the level term premium does not. ART insurance policies determine the premium based on the risk that a person will die in the current year, a probability that tends to increase the longer someone has the policy. Also, level policies may have a term reaching up to 30 years, while ART policies have a limit of one year.

Most insurance providers will allow a term-life policyholder to convert their coverage to a universal or whole life policy. Buyers should also understand that a term life product is not suited for long-term 澳洲幸运5官方开奖结果体彩网:estate planning.

Real World Example

Annual renewable t🔯erm insurance is a short-term life insurance product and may not be best suited for most situation🎃s. As an example, imagine a 42-year old father of three children who recently lost his job as a marketing director.

As a result of the change in his employment, he no longer has access to his former company's group life insurance policy. He might be a good candidate to buy annual renewable term life because he needs temporary coverage for his family's protection🐎 and anticipates purchasing group life insurance thrꦫough a future employer soon.