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While life insurance products cover you for at least five years, but annual renewable-term life insurance allows you to get coverage for a shorter period i.e 1 year. You can pay the premium of the policy together for a year and then renew it after 12 months to enjoy coverage for another year.
An annual renewable policy does not require you to take a medical test every time you renew it after 12 months. The medical test is usually undergone once at the time of underwriting.
Since the premiums are paid for an entire year they are cheaper as compared to the ones that you pay on a monthly, quarterly or half-yearly basis. Also, the premiums of an ART policy increase every year as you age or as you get health issues.
The eligibility criteria for an Annual Renewable Term insurance is same as that of any term insurance policy. Following are some of the factors that you might want to consider.
The age limit of buying an ART policy is 18 to 65 years. Beyond this age, the buyer is considered more vulnerable to critical health conditions.
The limit for a salaried person is up to 3 lacs to 4 lacs, and the limit for a self-employed person is up to 4 lacs to 5 lacs.
The annual renewable policy offers coverage for a shorter period, and you can renew your policy annually. Let's see how it works:
Here, we've listed the premium rates of a yearly renewable term plan for Rs. 1.5 crore cover over 30 years for a 25-year-old in excellent health.
Renewable Term Plans | Annual Premiums for Male | Annual Premiums for Female |
ICICI Prudential iProtect Smart | Rs. 11,470 | Rs. 11,316 |
HDFC Life Click 2 Protect | Rs. 14,316 | Rs. 12,168 |
Kotak Life Kotak e-Term | Rs. 11,859 | Rs. 11,505 |
Edelweiss Tokio Life Zindagi Protect | Rs. 12,285 | Rs. 11,984 |
Aegon Life iTerm Prime | Rs. 13,563 | Rs. 13,559 |
SBI Life eShield Next | Rs. 14,789 | Rs. 14,728 |
The annual renewable term insurance might have certain cons, but the number of pros is quite considerable. Still, the drawbacks may make you wonder, ‘Why should I choose an ART plan?'
To get the right answer, check out the pros and cons of annual renewable-term life insurance.
Pros | Cons |
With annual renewable-term life insurance, you can get more flexibility as compared to other life insurance products. | Typically, plans start with cheaper premiums in the early years, and they'll increase with each passing year based on the policyholder's age. |
The premiums of annual renewable-term life insurance are typically low in the early years, making it appealing to buyers and those who need to cover a very short period. | Under the ART plan, you only get cover for a very short period of time, and you've to renew your policy each year to continue your plan. |
It is one of the simplest types of term insurance plans. Just buy, pay a premium in a lump sum, and renew the plan annually. You can also add riders to ART plans. | ART policies only offer temporary coverage and are rare as compared to regular term plans. |
Annual Renewable Term Life Insurance is an ideal option for you in case you need cover for a very short period of time or already hold an employee cover from your job. However, the main drawback of ART is that, in the long term, you could end up paying more in premiums.
Therefore, this type of plan is only recommended when you have short-term life insurance needs. Before you buy Annual Renewable Term Life Insurance, be mindful of how much premiums you'll pay in future years, not just the first year's premium.
Check and compare plans from 21 IRDAI-approved term insurance providers before purchasing a term plan.
Annual renewable-term insurance is an ideal option for you at the early stage of life when you need temporary insurance to address a short-term financial risk. Each passing year, you've to renew the policy, and the premiums will increase simultaneously.
Under a level-term plan, premiums remain constant throughout the policy tenure, and under annual renewable-term life insurance, premiums will increase with every passing year.
An annual renewable term life policy lets you get coverage for a shorter period based on your needs.
One of the primary benefits of the ART plan is premiums will be cheaper as compared to other life insurance products.
You can renew your annual renewable term life insurance annually by contract.
With each passing year, the premiums will increase, but the death benefit and policy's face amount— remain constant.
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Sahil is a passionate content writer with over two years of expertise in the insurance domain. He uses his knowledge in the field to create engaging content that the customer can relate to and understand. His passion lies in simplifying insurance terminology, ensuring a hassle-free understanding for potential policyholders. With his outstanding collaborative efforts with people, he understands different perspectives and keeps readers' viewpoints at the forefront of his content writing approach.
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