Reasons You Might Consider an Annual Renewable Term Life Insurance Policy

By Tes Kurtz on December 26th, 2009

Term life insurance is the most basic and inexpensive form of life insurance. It provides coverage for a specified term; usually 10, 20, or 30 years.

When it comes to term insurance, you do have options. A level term life policy, which has set premium amounts for the entire term, is what many people opt for. However, there are situations when an annual renewable term life (ART) insurance policy may be your best bet.

What Is An Annual Renewable Term Life Insurance Policy?

Annual renewable term life insurance allows for your policy to be renewed each year without additional proof of good health. It provides security in the form of a coverage guarantee. Even though contracts are renewed on a yearly basis, you are guaranteed future insurability for a specified number of years--typically 10 to 30 years--as long as you pay your premiums on time.

Term periods are subject to a maximum age limit. Most states do not allow term policies to be renewed beyond the age of 75 or 80. Aside from that exception, your annual renewable term life insurance policy automatically renews when you pay the premium due.

Level Premium Term Versus Annual Renewable Term

The biggest difference between a renewable term and level term life insurance policy is premium cost. Level term policy premiums are set for the full term. You pay the same amount every month or year (depending on how your payments are scheduled) for the life of the policy.

Renewable term premiums start out pretty cheap, but as you age the premiums rise. Because premiums increase each year, there may be a point when the insurance becomes too expensive.

Would You Benefit from Renewable Term Life Insurance?

Renewable term life is intended for people to use for a short period of time--perhaps a couple of years.

You might choose annual renewable term over level premium in a business-related situation. Let's say you took out a loan to start up a new business. Low-cost insurance would provide you the ability to pay off the loan in a year or two, plus protect your loved ones from being burdened by debt should something happen to you.

You may also consider this type of term policy if you want life insurance coverage for a short period of time. For example, if your child has just entered college and you want to make sure you have life insurance coverage until graduation, this policy might be one you should consider.

In short, renewable term life insurance provides low-cost premiums in the early years of coverage without having to provide proof of insurability to renew your policy. Renewable term life is an affordable way to protect your assets, and provide you with peace of mind.

To get started, compare quotes from multiple insurance companies to choose the best policy for you and your family.

Source :
Renewable Term Life Insurance: The Advantages and Disadvantages • finweb.com • http://www.finweb.com/insurance/renewable-term-life-insurance-the-advantages-and-disadvantages.html

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