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Term Life Insurance: Is "Annual Renewable" Best?Are you short on life insurance, but long on bills? Far too many people make the mistake of allowing their life insurance to lapse during hard times, or of waiting to purchase it in hopes of better times in the future. If you are one of these people, there is one absolute guarantee that should make you rethink your strategy: the longer you wait to purchase life insurance, the more expensive it will be. request a free quote now >> Furthermore, while you may be in excellent health now, the likelihood of accidents or chronic illnesses that would make insurance difficult if not impossible to get is utterly frightening. And if something happens to you, how will those you leave behind continue to pay the bills as well as the additional costs associated with final expenses? If money is tight, you may want to shop Annual Renewable Term since it often provides the lowest rates of the various Term products. It is not available in all states, and you need to examine the policy closely, but if chosen with care, ART can provide your family with that needed protection. ART is exactly what it sounds like—insurance for one year. High face values are available at very low prices. Once the policy is issued, it is guaranteed renewable every year with no additional medical underwriting, although the premium will increase slightly each time you renew the policy. These increase become steeper as you get older. Also, if you choose the right company, you will be able to convert the policy to whole life whenever you are financially able to do so. Of course, the whole life will be more expensive than the ART, but some companies even give you credit for what you have already paid. ART is a viable choice for people in the following situations: You are between jobs but don't want your family to be without protection. You need insurance for a limited time period—say to cover a major loan or a complicated business transaction You are involved in a dangerous, but temporary occupation. You are a small business owner and want to insure employees, but have a frequent turn over. Thus you would want to drop the insurance when the employee leaves. Your finances are limited but you want to pass medical underwriting requirements while you are young and/or healthy. The following points should be kept in mind when purchasing ART: ART must be renewed every year, and the premium will go up. ART is guaranteed renewable regardless of changes in your health ART face values can be adjusted—generally down unless you can pass the medical underwriting again. ART is not whole life, and does not accumulate any cash value. However, some companies may give you partial credit toward conversion to whole life. You cannot borrow against ART, but most policies have additional riders available for children, spouses, accident or dismemberment, among others. |
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