Annual renewable term (ART) is a type of term life insurance that provides one year of coverage at a time with the option to renew annually without evidence of insurability, typically up to a specified age. Premiums start relatively low but increase each year as the insured ages, reflecting rising mortality risk. ART can be useful for short-term needs, as a temporary bridge to longer-term coverage, or in business planning where insurance needs may decline over time. However, if held for many years, rising ART premiums can become more expensive than level term or permanent insurance alternatives. Carriers may allow conversion from ART to permanent products, preserving insurability while shifting to more stable premiums.

Advisors recommend annual renewable term when clients need immediate coverage for a short horizon, expect their insurance needs to decrease, or want a flexible, renewable option while deciding on long-term plans. They explain the tradeoff between low initial premiums and later increases, often showing projections that compare ART costs with longer level term durations. In business contexts, ART may fund buy-sell agreements or key-person coverage during early, high-growth years. Advisors also watch for opportunities to convert ART policies to permanent coverage before health changes make new underwriting difficult. Understanding annual renewable term helps advisors match temporary needs with cost-effective products without inadvertently locking clients into a rising premium structure longer than intended.