Texas Life Insurance Practice Exam

Annually Renewable Term (ART) insurance is characterized as the purest form of term insurance because it provides a straightforward death benefit for a specific term, which is renewed annually. The key feature of ART is that it allows the policyholder to renew the coverage each year without requiring a medical examination, although premiums will increase with each renewal based on the insured's age.

Term insurance, in general, is designed to provide coverage for a specified period and does not accumulate cash value or include investment components, distinguishing it from whole life or universal life insurance products. This simplicity and focus solely on providing a death benefit during the term make ART a clear example of pure term insurance.

In contrast, other options, such as perpetual insurance with fixed premiums, refer to whole or permanent life insurance policies that provide ongoing coverage and build cash value. Therefore, recognizing ART for its tailored, annual renewable structure without additional features helps clarify its classification within insurance products.