Yearly Renewable Term Life Insurance

A yearly renewable term life insurance policy has a term length of one year and can be renewed annually. This type of insurance can be a helpful bridge between traditional term policies, but it can be expensive in the long run.

Jennifer Schell Headshot
  • Written By
    Jennifer Schell

    Jennifer Schell

    Financial Writer

    Jennifer Schell joined Annuity.org in 2022. She is a professional writer with more than three years of experience creating content for a variety of industries ranging from travel to tax accounting. She combines her strong writing skills and her passion for educating others to write engaging and informative financial content for Annuity.org.

    Read More
  • Edited By
    Savannah Hanson
    Savannah Hanson, financial editor for Annuity.org

    Savannah Hanson

    Senior Financial Editor

    Savannah Hanson is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

    Read More
  • Financially Reviewed By
    Stephen Kates, CFP®
    Stephen Kates, CFP® Headshot

    Stephen Kates, CFP®

    Expert Contributor

    Stephen Kates is a Certified Financial Planner™ and personal finance expert specializing in financial planning and education. Stephen has expertise in wealth management, personal finance, investing and retirement planning.

    Read More
  • Updated: November 21, 2022
  • 4 min read time
  • This page features 3 Cited Research Articles
Fact Checked
Fact Checked

Annuity.org partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

Cite Us
How to Cite Annuity.org's Article

APA Schell, J. (2022, November 21). Yearly Renewable Term Life Insurance. Annuity.org. Retrieved December 6, 2022, from https://www.annuity.org/life-insurance/types/term/yearly-renewable-term/

MLA Schell, Jennifer. "Yearly Renewable Term Life Insurance." Annuity.org, 21 Nov 2022, https://www.annuity.org/life-insurance/types/term/yearly-renewable-term/.

Chicago Schell, Jennifer. "Yearly Renewable Term Life Insurance." Annuity.org. Last modified November 21, 2022. https://www.annuity.org/life-insurance/types/term/yearly-renewable-term/.

What Is Yearly Renewable Term Life Insurance?

Yearly renewable term (YRT) life insurance, also known as annual renewable term (ART) insurance or renewable term insurance, is one variety of term life insurance.

Term life insurance remains in force for a specified number of years, usually between one and 30. A term life policy will only pay out a death benefit if the policyholder passes away during the policy’s term.

What sets YRT apart from other types of life insurance is the short term and easy renewability of the policy. A YRT policy has a term of only one year, but the policy can be renewed each year, usually without providing proof of insurability.

Stephen Kates, CFP® Headshot
Yearly renewable term policies are most useful as a bridge to a longer traditional term policy or a permanent policy. If you think you’ll need insurance longer than a few years, traditional term policies may be more affordable.

How Does Yearly Renewable Term Life Insurance Work?

Renewable term life insurance is usually specified by a clause in the policy’s contract. The clause guarantees that the policyholder can choose to renew their policy at the end of the term and won’t have to provide evidence of insurability if the premium is paid.

Pro Tip
Insurance customers may have the option to add a renewable clause to their policy even if the term is not annual.

A yearly renewable term life policy has an unusually short term of only one year. Each year, your insurance company will inform you of the new premium amount you’ll pay to renew the policy for another year. Because premium rates are calculated based on age, you’ll pay a higher premium each year you renew.

The renewal process is pretty automatic, says Earl Jones, a licensed agent with Farmers Insurance. Your insurance provider won’t require you to undergo a medical exam, Jones says, unless your policy has lapsed, which typically occurs 60 days after coverage ends.

Pros and Cons of Yearly Renewable Term Life Insurance

A YRT life policy can offer a flexible and low-commitment way to get life insurance coverage, but you may find that the drawbacks of this type of insurance outweigh the benefits. Before you decide to purchase a life insurance policy, consider its advantages and disadvantages.

Advantages

The short term of a YRT policy is a significant benefit for some consumers. Most term life policies start at five years, so if you need coverage for less time than that, a YRT policy makes sense.

The initial premiums of a YRT policy might be more cost-effective. Because you’re only paying for one year of coverage, the premium for a new YRT policy is inexpensive compared to most term life premiums.

Disadvantages

The biggest disadvantage of YRT life insurance is the increasing premium costs. As chartered life underwriter Natasha Cornelius told Annuity.org, “Renewal premiums are much higher than the initial fixed rate. Each year the policy owner chooses to renew, the premiums will increase.”

Because of this, YRT life insurance may not be the most cost effective choice if you need coverage for several years. Eventually, the premiums will become so expensive that you would have been better off purchasing a traditional term life policy.

Is Yearly Renewable Term Life Insurance Right for You?

Renewing your life insurance each year might make sense if you don’t want to keep your coverage for a long time, according to insurance agent Zhaneta Gechev. For example, if you’re in good health and only need coverage for a few years while your children go through college, Gechev says renewing might be a sensible choice.

Some consumers also use a YRT life policy as a bridge towards a longer-term policy. For example, if you recently quit smoking, getting a term life policy could still be prohibitively expensive. A YRT policy can make sure you’re still covered while you wait until you won’t be charged a higher premium for tobacco use, usually two years after you quit.

An annual policy might also make sense for people who are between jobs. If you are going from one employer-sponsored life insurance plan to another, there might be a waiting period in between where you don’t have coverage. The temporary YRT policy helps fill in the gaps between coverage.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: November 21, 2022

3 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. GBU Life. (n.d.). Select Choice Term Life Insurance Series. Retrieved from https://gbu.org/life-insurance/select-choice-term-life/
  2. National Association of Insurance Commissioners. (2022, June 23). Types of Life Insurance. Retrieved from https://content.naic.org/cipr-topics/life-insurance
  3. Van Haaften, E. (n.d.). Yearly Renewable Term Life Insurance. Retrieved from https://affordablelifeusa.com/yearly-renewable-term-life-insurance/