Annual Renewable Term Life Insurance Offers Dependable Coverage
Insurance companies have a tendency to get bad press while
, the carriers that sell insurance are often portrayed as thieves. Sure, some accusations may be true, but life insurance is exempt to the complaints weighed against other insurance products. Frequently, the negative claim against insurance companies (particularly, health insurance) is that once a patient becomes ill, the insurance company drops his or her coverage.
The way health insurance policies work, it is legal for insurance companies to sell you coverage, only to abandon you once medical expenses start pouring in. Unlike life insurance, health insurance is renewed on an annual basis. Because of this, if you were to develop a serious medical condition, your health insurance coverage may expire long before you have finished your last medical treatment. Therefore, when it is time to renew coverage, either more often than not you will be denied coverage due to your new health status, or they will require a drastic increase in your premiums.
However, life insurance works differently. There are options that allow you to purchase a insurance policy, which is renewed on an annual basis. The difference between the life and the health insurance policy is that when it renews, your physical condition will not be reexamined. You will remain in the same rate class you had when you first purchased your renewable term policy.
Instead, your life insurance rates will increase slightly, every year. This is in order to reflect your advancing age. So, your rate does increase, but it has nothing to do with your health and is a gradual increase.
Insurance carriers will often place a cap on how far an annual renewable term life insurance coverage can be continued. For example, a carrier might sell an ART policy that can be renewed until the insured turns 60 years old, thus limiting the use of insurance to protect only against an early death. Still, a person could get several decades of coverage out of an ART policy, without revealing him or herself to the threat of increasing premiums or of becoming uninsurable.
There are also alternatives to annual renewable term life insurance that are more secure than health insurance. A standard term life insurance policy is not renewable, but its term of coverage is longer than a year. Life insurance companies typically sell term policies of 5, 10, 15, 20, and sometimes 25 or 30 years. If you fall ill during the term of coverage, the insurer may have to wait a long time before the policy expires, depending on the length of the policy you buy and when you become ill.
by: Angela Rosas
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