What features characterize annual renewable term insurance?

Annual renewable term insurance is characterized by a level face amount with increasing premiums. This type of insurance allows the policyholder to maintain the same amount of coverage throughout the term, which is typically one year, while experiencing an annual increase in premium costs. The rationale behind the increasing premiums is based on the increasing age and associated risk of the insured each year.

This premium adjustment reflects the insurer's perspective that as individuals age, the likelihood of a claim increases, which justifies the rise in premium costs for the same coverage amount. If a policyholder were to look for consistent coverage without the need to undergo a new underwriting process annually, annual renewable term insurance provides a flexible solution. It allows them to keep the same face value while acknowledging the changes in premiums over time.

The other choices present different forms of coverage that do not align with the structure of annual renewable term insurance. For instance, decreasing face amounts or fixed face amounts without renewability suggest different products which do not capture the essence of the renewable structure and the dynamics of premium adjustments that characterize this insurance type.