Which of the following best describes annually renewable term insurance?

A) Neither the premium nor the death benefit is affected by the insured’s age.

B) It requires proof of insurability at each renewal

C) It provides an annually increasing death benefit.

D) It is level term insurance.

Ans. B. It requires proof of insurability at each renewal

The term insurance with no limited term where the coverage period is annually updated and the insurance company asks for evidence of health insurance at the end of each policy year is called annual renewable term policy. This implies that the insurer may ask for a yearly review on the insured’s health as well as their risk factors. If there are indications thereof, the premium may be increased or even the insurance may opt not to renew the coverage. On the contrary, while annual renewable term policies are similar, they have different level term insurance since the premium steadily increases as the insured person’s riks of mortality increase along with age. A standardized death benefit as well as the two important characteristics that serve to differentiate annually renewed term insurance from other term life insurance products, are the annual premium adjustments and the necessity of presenting medical proof of insurability at each level of renewal.

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