Connecticut Life Producer Practice exam

What is annually renewable term insurance (ART)?

1. A policy that requires renewal every year without proof of insurability

2. A policy that has fixed premiums for life

3. A policy that offers lifelong coverage at a single premium

4. A policy that provides no death benefit after the term ends

The correct answer is: A policy that requires renewal every year without proof of insurability

Annually renewable term insurance (ART) is characterized by its unique structure that allows the policyholder to renew the coverage each year without the necessity of providing proof of insurability. This feature is particularly advantageous for individuals whose health status may fluctuate over time, as it ensures that they can maintain their life insurance coverage even if they experience a decline in health. With ART, premiums can vary each year based on the insured's age, but the convenience of guaranteed renewability without a new health assessment makes it appealing for those seeking short-term life insurance solutions. The other options describe different types of insurance policies that do not align with the key features of ART; for instance, fixed premiums for life or lifelong coverage at a single premium pertain to permanent or whole life insurance, while the lack of a death benefit after the term concludes is not applicable, as ART does provide coverage during the active term.