What is annual renewable term life insurance?


An annual renewable term policy is a one-year policy that the insurer guarantees to renew each year for a set number of years.

The big difference between this type of policy and a "guaranteed level premium" term policy is how the premiums are handled. Annual renewable policies have lower premiums early on, but they become more expensive with each renewal. Guaranteed level premium policies average out the cost over the life of the policy so you'll pay the same every year.

Because an annual renewable policy's savings are front-loaded, if you don't know how long you'll need life insurance — or you think there's a good chance you'll drop your life insurance policy early — you can save money by choosing an annual renewable policy.