Annual renewable term (ART) life insurance is a type of term policy that provides coverage for one year at a time and automatically renews each year without requiring new underwriting. The key feature of ART is that premiums increase each year as the insured ages, reflecting the higher mortality risk. ART starts with the lowest possible premiums of any life insurance product but becomes increasingly expensive over time.
ART is most useful for short-term coverage needs — typically one to five years — where the insured needs coverage but anticipates the need ending in the near term. Common scenarios include covering a short-term business loan, bridging a gap between policies, covering a temporary financial obligation, or providing coverage while waiting for a group policy to take effect. For these short-term needs, ART can be the most cost-effective option.
For longer-term needs (5+ years), ART is generally more expensive in total than level term insurance. Because premiums increase each year based on attained age, the cumulative cost over 10, 20, or 30 years is substantially higher than a level term policy for the same period. Additionally, the rising cost can create a financial strain in later years, potentially causing the policyholder to drop coverage when they still need it — precisely when their mortality risk (and their family's need) is greatest.
Most ART policies guarantee renewability up to a certain age (often 80 or 95) without evidence of insurability, which means you can continue coverage even if your health deteriorates. Some ART policies also include a conversion feature that allows you to convert to a level term or permanent policy without new underwriting. A licensed agent in our network can help determine whether ART or level term is more appropriate for your specific situation.