Which statement best describes Annually Renewable Term?

Which statement best describes Annually Renewable Term?

• A. It has a level premium for the entire term
• B. It automatically renews every year without evidence of insurability, and premiums rise with attained age
• C. It cannot be renewed
• D. It converts to permanent coverage after renewal

Answer: (B)

Annual Renewable Term is a term life policy that provides coverage for one year at a time and can be renewed every year without evidence of insurability. The key idea is that you can keep renewing without proving you’re still healthy, but the premiums rise each year because the insured’s age increases and the insurer’s risk grows. That combination—annual renewal without EOI with premiums increasing as attained age rises—best fits how Annually Renewable Term works. The other statements describe different concepts: a level premium for the entire term is characteristic of level term, not ART; a claim that it cannot be renewed contradicts ART’s fundamental renewability; and a guaranteed conversion to permanent coverage after renewal is not a defining feature of ART itself (conversion can be available in some policies, but not inherent to ART).

Annual Renewable Term is a term life policy that provides coverage for one year at a time and can be renewed every year without evidence of insurability. The key idea is that you can keep renewing without proving you’re still healthy, but the premiums rise each year because the insured’s age increases and the insurer’s risk grows. That combination—annual renewal without EOI with premiums increasing as attained age rises—best fits how Annually Renewable Term works. The other statements describe different concepts: a level premium for the entire term is characteristic of level term, not ART; a claim that it cannot be renewed contradicts ART’s fundamental renewability; and a guaranteed conversion to permanent coverage after renewal is not a defining feature of ART itself (conversion can be available in some policies, but not inherent to ART).