The term life insurance is for a fixed term. The policy covers the insured for a fixed duration of time. After the coverage period is over the insured can take money in cash or continue the policy with an annual rate that usually increases.
The annual renewable life insurance policy is the simplest as it lasts for one year only. The death benefit is paid to the beneficiary if the insured dies within this one year. Any claim is not entertained after this one year. The probability of a person dying in one year is very low so the purchase of this kind of policy is very low. As the age of the insured increases, the premiums also go up.
With a renewable insurance policy there is a problem that a person encounters .If a person encounters a terminal illness within one year but does not die, at the end he is left with the illness and no insurance. Because of the terminal illness he can also not renew the policy. Some companies have worked on it and brought a new feature known as re-insurability. According to this a person can renew a policy even if he is ill. A common policy in this category is Annual Renewable Term. This policy can be renewed every year till the insured reaches up to the age of 95.As it involves a greater financial risk for the carrier, renewable term coverage generally costs more than annual renewable policies. The conditions associated with this may differ from company to company.
