Annual Renewable Term Insurance

• The policyholder purchases an ART policy for an initial term, usually one year.
• At the end of the yearly term, the policyholder has the option to renew the policy for another year at a higher premium rate as the policyholder gets older.
• The premiums for ART policies typically increase each year as the policyholder ages since the risk of death increases with age.
• The policyholder can choose to renew their coverage as long as they continue to pay the increasing premiums.

One benefit of an ART policy is that it can be a cost-effective way to obtain short-term life insurance coverage when the policyholder is young and healthy since premiums are lower compared to other permanent life insurance policies. However, keep in mind that the premiums will increase each year as the policyholder ages.

Please go through the following points to get a fair comparison of ART and other policies. 

• Compared to level-Term Life Insurance, ART policies are much rarer. 
• Unlike Universal Life Insurance or Whole Life policies, the death benefit does not increase with either Annual Renewable Term Insurance or Term Insurance.
• The major distinction is that the premiums for ART and level terms are calculated differently. A policyholder's likelihood of dying during the policy year is factored into the annual renewal cost for ART insurance plans. 
• For a certain period, often between 10 and 30 years, policyholders of Level-Term Insurance pay the same premium. While, costs associated with Annual Renewable Life Insurance Policies tend to rise.
• The period of a level policy might be up to 30 years, but that of an ART policy cannot exceed a year.
• Young, healthy persons benefit most from annual renewal policies because their mortality risk is lower, and they can thus afford lower premiums than older policyholders.