What does an Annually Renewable Term policy allow?

An Annually Renewable Term policy is designed so that the policyholder has the option to renew the policy each year without needing to prove their insurability at that time. However, with each renewal, the premium typically increases based on the insured's age and the insurer's current underwriting guidelines. This means the correct understanding of the policy is that it automatically renews on an annual basis, but with a premium that adjusts upward as the insured ages, which reflects the increased risk to the insurer.

Other features such as the rights to convertible policies or having a fixed premium over the life of the policy do not apply specifically to Annually Renewable Term policies. Each of these would pertain to different types of policies with their own unique characteristics. The essence of an Annually Renewable Term policy lies in its renewable nature and the annual increase in premiums, making the chosen option a clear reflection of its fundamental principle.