What happens to premiums in an Annually Renewable Term policy upon renewal?

In an Annually Renewable Term (ART) policy, premiums increase upon renewal based on the insured's attained age. This reflects the fundamental nature of term insurance, where the risk of mortality increases as a person gets older. As individuals age, the likelihood of a claim being made rises, necessitating higher premiums to ensure that the insurer can cover potential payouts.

It's important to recognize that these adjustments are not based on past claims history or any form of rating for good health but are strictly tied to the age of the policyholder at the time of renewal. Therefore, policyholders will see their premiums rise annually, reflecting this increasing risk.

This characteristic of ART policies provides a clear understanding of cost expectations, indicating that individuals should be aware of the financial implications as they continue their coverage over the years.