Pros and Cons of Annual Renewable Term Life Insurance

The annual renewable term life insurance is one that gives you coverage for a period of 1-30 years, while also giving you the option to renew at the expiration of your contract. While it could be appealing due to the renew option it has, it is essential that you know both the pros and cons before you go ahead to purchase it.

Without further ado, below are some of the advantages and disadvantages of annual renewable life insurance.


Low cost of premiums: One significant advantage of the annual renewable term life insurance policy is that its premiums are cheaper than those of permanent life insurance.

Renewal of policy: As the name implies, the annual renewable term life insurance gives you the option of renewing your policy after the expiration of the initial contract term. Thus, you get to enjoy whole life insurance by merely converting before the end of your policy contract.

No need of re-qualification during renewal: When renewing your policy at its expiration, there’s never a need to begin the process of applying and qualifying for the policy all over again. Also, you do not need to undergo any medical exams to determine your health status. Thus, you can readily renew your policy even if you have a terminal illness.


High premium payments in later years: When you eventually file for renewal, the amount of premium you pay at that period increases and continues to do so as you grow older.

No cash value component: Annual renewable term life insurance has no cash value component. Thus, the only benefit your beneficiary gets when you pass on is the death benefit of your policy and no more.