Tennessee Insurance Practice Exam

What type of Term insurance is known to be renewable?

1. Decreasing Term

2. Level Term

3. Annual Renewable Term

4. Whole Life

The correct answer is: Level Term

The type of term insurance that is known to be renewable is Annual Renewable Term. This insurance provides coverage for one year at a time, with the option to renew each year without needing to provide evidence of insurability. This feature is particularly beneficial as it enables the policyholder to maintain coverage in the event of deteriorating health, which might otherwise prevent them from obtaining new coverage. While Level Term insurance does provide consistent coverage amounts over the term, it isn’t inherently renewable after the stated term unless specified in the policy. Whole Life insurance, on the other hand, is a permanent form of life insurance that does not require renewal and is not classified under term insurance. Decreasing Term insurance, while it has its own unique characteristic of providing coverage that diminishes over time, also does not automatically offer renewal provisions like Annual Renewable Term policies do. Thus, Annual Renewable Term is the correct type of term insurance known for its renewable feature.