Copyright (c) 2010 Mark Manderson

For some shoppers, annual renewable term life insurance (ART life insurance) is preferable to ordinary term insurance. Let's compare the two, then analyze which is better for you, personally.

—How does annual renewable term life insurance differ from ordinary term insurance?—

The primary difference between the two is that ART coverage only lasts for a single year, but the policy can be renewed so that your coverage in effect lasts for many years without a gap. Renewing a policy means that you are offered the same death benefit as before, and you are charged premiums under the same rate class as before. You do not need to prove your insured's insurability when you renew. No more health exams! However, this does not mean that your rates will be exactly the same from year to year; each year, your rates increment marginally as your insured grows older.

—The good and the bad—

Standard term policies are designed to last between five and 30 years. If the insured's health fails during said time, you will have a harder and more expensive time obtaining a new term policy after the original term of coverage ends. With ART, on the other hand, you can renew coverage with no concern for the insured's health, as long as the insured is younger than the maximum age set by the insurer. The maximum varies from company to company but may go as high as 95.

Because of the flexibility of ART and its incrementing premiums, it isn't as simple as term insurance, and it can be more expensive. Term insurance lets the policyholder pay a fixed premium for a predetermined number of years, making its cost very easy to evaluate and making its maintenance quite simple.

Another, perhaps more practical, downside is that shopping for ordinary term insurance is so easy, and shopping for ART insurance takes more work. There are hundreds of websites that can let you compare term insurance rates from multiple insurers, for free, online, instantly. That makes it easy to choose a product and provider. Finding a website to let you compare ART quotes is quite another matter—in fact, if you can find one that makes good on such a promise, you're a better searcher than I.

—Is it the right product for you?—

You may have already figured out the answer to this question. An important factor in choosing a life insurance product is how comfortable you are. Have you allocated risk to where you are most willing to deal with it? Are you confident in your ability to maintain your policy and collect on it if necessary? Are you willing to go through the steps of even shopping around for your product?

Yes, generally you should consider whether one option is more cost effective than another for you. However, you may be able to rule out some products before you even get to that step. Is annual renewable term life insurance right for you?