Yearly Renewable Term
A type of term life insurance that provides coverage for one year at a time and automatically renews each year without requiring new medical underwriting, though premiums typically increase with age. The policyholder can usually renew the coverage up to a specified maximum age, such as 95 or 100.
Example
“David chose a yearly renewable term life insurance policy that started at $200 per year for $250,000 in coverage, knowing the premium would increase annually but that he could renew without medical exams until age 95.”
Memory Tip
Think 'YRT' - Year by Year, Renews Tomorrow, with rising rates as you age like climbing stairs year by year.
Why It Matters
Yearly Renewable Term provides flexibility for people whose insurance needs may change frequently, offering guaranteed renewability without medical exams while keeping initial costs low. This can be valuable for young families or those with temporary insurance needs, though the increasing premiums can become expensive over time.
Common Misconception
Many people assume that because premiums start low, yearly renewable term remains affordable long-term. However, premiums can increase dramatically with age, often becoming much more expensive than level term insurance after 10-15 years, making it unsuitable for permanent insurance needs.
In Practice
Jennifer, age 30, buys a $500,000 yearly renewable term policy for $300 in year one. By age 35, her premium has risen to $400 annually. At age 45, she's paying $800 per year, and by age 55, the premium has jumped to $1,800 annually. While she's guaranteed the right to renew without medical exams, the cumulative premium increases mean she's now paying six times her original rate, prompting her to consider converting to permanent life insurance.
Etymology
This insurance product name combines 'yearly' (annual periods), 'renewable' from Latin 'renovare' meaning to restore or refresh, and 'term' from Latin 'terminus' meaning boundary or limit, reflecting the temporary nature of the coverage.
Common Misspellings
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