Annual renewal term life insurance is a variation on the usual term life policy. This policy is seen very rarely, however the same principle applies to longer term insurance policies as well. This type allows a prospective policy holder to choose a term life policy at the term of one year and it is renewable at the end of that term.
Because the life expectancy of most is much longer than the term of the policy, depending on the age at which the policy is purchased, the one year life insurance cost is generally low. This is because the likelihood of someone passing on within that year’s time is low.
On the other hand, these are great options that do not have an insurance policy and find out they are not in good health. The premium is much higher in this case, and it is possible the applicant will be turned down because of his health problems.
There are some companies that take advantage of the higher premiums paid and will offer the applicant the policy anyway. This can come as a great relief to the policyholder, especially if he is not expected to need the entire term. This way, the benefits are paid out and the beneficiaries are not left alone with final expenses. .
The other benefit to this type of policy is it is guaranteed to be renewable at the end of the term. For example, should the applicant want a single year of coverage and the policy expires he can renew his coverage for another term. The total term life insurance cost is generally lower than any other, but it is also not likely that any benefits will be paid and that should be considered as well.