What Is Annual Renewable Term Insurance?

Annual renewable term insurance is a type of life insurance that provides coverage for one year at a time, with the option to renew annually without undergoing another medical examination.

In Canada, this coverage is sometimes called yearly renewable term (YRT) insurance. Unlike traditional level term life insurance, annual renewable term insurance generally has premiums that increase each year as the insured person gets older.

It can provide flexible protection for Canadians who need temporary life insurance coverage.

How Does Annual Renewable Term Insurance Work in Canada?

When you purchase annual renewable term insurance, your policy provides life insurance protection for an initial 12-month period.

At the end of that period, you can generally renew your coverage without providing new medical evidence, provided you meet the policy's renewal conditions.

For example, suppose an Ontario resident purchases $250,000 in annual renewable term insurance at age 30.

Their first-year premium might be $300. At age 31, the premium could increase to $330, followed by another increase at age 32.

These figures are illustrative. Actual premiums depend on the insurer, coverage amount, and policy terms.

What Are the Benefits of Annual Renewable Term Insurance?

Annual renewable term insurance offers several potential advantages:

• Flexible coverage: Renew insurance annually based on your financial needs.
• Lower initial premiums: Starting premiums may be lower than comparable long-term level premium policies.
• Simplified renewal: Eligible policyholders can renew without additional medical underwriting.
• Temporary protection: Coverage may suit short-term financial obligations.

However, increasing premiums can make the policy expensive over time.

Annual Renewable Term vs. Level Term Insurance

The main difference is how premiums change.

Annual renewable term insurance generally increases in price every year as the insured person ages.

Level term insurance typically maintains the same premium throughout a selected period, such as 10, 20, or 30 years.

Both provide a death benefit if the insured person dies while coverage remains active.

Is Annual Renewable Term Insurance Worth It?

Annual renewable term insurance may suit Canadians who need short-term protection or expect their insurance needs to change.

However, those seeking predictable long-term costs may prefer level term coverage.

At PolicyNinja, Canadians can explore life insurance options suited to their financial goals.

Get a Life Insurance Quote to compare available coverage options.