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Comparison of level term and annual term premiums

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Term life insurance comes in many different forms, but they all provide insurance protection for a fixed period of time. Annual renewable term (which in the past was the most prevalent form sold) provides coverage one year at a time. Each year as the policy premium increases, the insured has the option of renewing the coverage for the next year. There are no physical exams to pass--paying your premium continues the policy. As the chart illustrates, the premium for annual renewable term insurance can increase dramatically from one year to the next.