Annual Renewable Term Life Insurance (ART) Definition

The Dictionary of Insurance Terms and Definitions

Annual renewable term life insurance functions the way that the earliest life insurance policies did.  A policyholder's coverage lasts for only a single year, but he can renew the policy after that time.  The new policy will offer the same death benefit and keep the insured in the same rate class as before.

In other words, when you renew annual renewable life insurance, you don't have to prove the insured's insurability anew.  It doesn't matter if he/she has developed a terminal illness or a drinking problem; he/she remains in his/her original rate class.  A significant difference between annual renewable term life insurance and ordinary term life insurance, however, is that each year, the policyholder's premiums do increase by a margin, to reflect the increasing age of the insured.

Annual renewable term life insurance cannot be renewed indefinitely.  Insurance companies typically set a maximum age for renewal.  Once the insured's age exceeds the limit, the policy on him/her cannot be renewed anymore.

Group life insurance policies typically are examples of ART life insurance.  The distinguishing feature of ART life insurance, that is, that coverage can be extended without new proof of insurability, is insignificant in group life insurance, though, because with group life insurance, insureds don't have to prove their insurability in the first place.