Which of the following describes yearly renewable term insurance?

• A. It has a fixed premium for the lifetime of the policy.
• B. It covers 1 year and is renewable without evidence of insurability.
• C. It can only be converted to whole life after 10 years.
• D. It results in decreasing coverage over time.

Answer: (B)

Yearly renewable term insurance is characterized by its structure, allowing the policyholder to obtain coverage for one year at a time, with the option to renew the policy annually. The unique advantage of this type of insurance is that it can be renewed without requiring any evidence of insurability, meaning that the insurer does not need to reassess the health or risk profile of the insured when they choose to renew. This creates a seamless transition into the next policy year, making it an attractive option for those who may have concerns about their health or changing circumstances over time.

The nature of yearly renewable term insurance is that the premiums may increase each year based on the insured's age and the insurer's risk assessment, but the renewal itself remains straightforward and guaranteed. This structure provides flexibility and accessibility for individuals who may need short-term coverage or those looking for a temporary insurance solution without the need for extensive re-evaluation at each renewal point.