What is a characteristic of term life insurance?

Term life insurance is characterized primarily by its provision that allows for renewal without the need for evidence of insurability. This means that policyholders can renew their coverage at the end of the term without having to go through another underwriting process or provide proof of their current health status, which could otherwise result in higher premiums or denial of coverage. This feature provides significant convenience and security for the insured, as they can maintain life insurance protection even if their health changes over time.

This characteristic distinguishes term life insurance from permanent life insurance policies, which typically do not have a renewal feature in the same manner and often require evidence of insurability to secure continued coverage. In contrast, guaranteed cash value is a feature associated with permanent life insurance, and while term policies may have lower premiums initially, they do not build cash value. Premiums that increase annually are more typical of certain types of renewable term policies but do not reflect the inherent nature of term life insurance, which is primarily designed to provide coverage for a specific period at lower initial costs without cash accumulation or lifetime premium increases.