1-Year Term Life Insurance—most commonly called Annual Renewable Term (ART)—is built for short coverage gaps when you need protection right now, but you’re not ready to lock into a longer level-term policy yet. ART can be a practical tool during transitions like a job change, a pending move, a short business obligation, or a brief period where you’re waiting on a longer-term underwriting decision. It’s designed to be flexible and fast, not necessarily the cheapest long-run solution. That’s why many shoppers who need coverage beyond a brief bridge period often get better value from a short level-term option like 5-Year Term Life Insurance, which can deliver more pricing stability without the annual increases that naturally come with ART.

At Diversified Insurance Brokers, we see ART used best when it’s tied to a clear timeline and a specific risk window. Think of it like a safety net you place under a short-term situation: “I need coverage until my employer benefits begin,” “I’m replacing an older policy and I want overlap,” or “I’m waiting on a longer-term offer and I don’t want to be exposed.” When that timeline is realistic, ART does exactly what it’s supposed to do. When the timeline is vague or open-ended, ART can become expensive simply because it’s easy to renew and postpone a better long-term decision.

What Is 1-Year Term Life Insurance?

1-year term life insurance is a policy that provides a fixed death benefit for a one-year period. As long as the policy stays in force, you can typically renew it each year without taking a new medical exam (subject to carrier rules, state availability, and the policy’s terminal age). Because it renews annually, it’s widely referred to as Annual Renewable Term or ART. The death benefit stays the same during each one-year term, but the premium usually increases as you renew because the insurer is repricing based on your attained age.

ART is often chosen when someone needs coverage quickly and the time horizon is uncertain. It can also be used to avoid a short period of exposure—like switching employers where new benefits aren’t active yet, waiting for a mortgage closing that requires proof of coverage, or bridging coverage while a larger policy goes through underwriting. If your goal is “coverage now” with minimal commitment, ART can be an appropriate comparison.

How Annual Renewable Term Pricing Works

ART premiums are based on your attained age, which means cost typically increases each year as you renew. That’s not a hidden feature—it’s the core design. The first-year premium can look very attractive, especially for younger applicants, because you’re only locking the rate for one year at a time. In exchange for that flexibility, you accept annual repricing as you get older.

Here’s where most shoppers need a reality check: ART is usually not meant to be held for many years. After a few renewals, the year-over-year increases can add up quickly, and the total cost can exceed what you would have paid for a level-term policy with stable premiums. If your need is likely to last beyond 12–24 months, it’s smart to compare ART against a short level-term option like 5-year term or even a 10-year term policy to see how the longer-run math works when premiums don’t reset annually.

If you’re trying to choose the “right term length,” it helps to start from the obligation you’re actually protecting. Are you covering a debt payoff timeline, income replacement during a transition, or a short window until another policy is in force? If you want a broader planning lens for term selection, this guide can help frame the timeline logic: How to Choose the Right Term Length.

Why 1-Year Term Life Insurance Exists

ART exists because not every life insurance need fits neatly into a 10-, 20-, or 30-year window. Sometimes you need a short bridge policy while finalizing a longer plan. In those cases, ART can be a practical tool because it offers coverage quickly and can renew without restarting medical underwriting each year. You’re essentially buying flexibility and speed for a defined period of time.

ART can also be useful when you’re not ready to commit to a longer term because your life is in motion. Maybe you’re changing careers, relocating, selling a business, timing coverage with a buy-sell agreement, or waiting until a temporary health issue resolves. Those scenarios can justify short-term coverage. The key is that the scenario should have an end date you can reasonably plan around—otherwise ART can become the default “easy renewal” path that people stick with longer than intended.

Advantages of Annual Renewable Term Life Insurance

The primary advantage of ART is flexibility. You can start coverage quickly, you don’t have to guess what you’ll need 10 or 20 years from now, and you can typically renew annually without a new medical exam. For the right situation, that flexibility matters more than locking in the lowest possible long-term cost.

ART can also function as a “coverage gap” tool. If the choice is ART or having no policy in place for a short period, the ability to get protection in force can be the difference-maker—especially for families with dependents, individuals with shared financial obligations, or business owners who want coverage in place while larger planning decisions are being finalized.

Another overlooked advantage is planning clarity. ART can help you avoid rushing into the wrong long-term term length because you felt pressure to buy something immediately. In that sense, ART can be a bridge that buys time to get the long-term decision right.

What to Watch Out For With 1-Year Term Life Insurance

The biggest downside of ART is the annual premium increase. If you renew year after year, cost can rise faster than most people expect, especially as you move into later ages. This is why ART is usually best treated as a short-term bridge—not a long-term family protection plan.

Availability is another consideration. ART exists, but it’s not marketed as heavily as level-term policies, and rules vary by carrier and state. Some carriers may offer ART mainly through specific distribution channels, and some may structure renewability differently. If you need a short-term policy and ART isn’t available or doesn’t price well, a short level-term option is often the next best comparison.

Finally, people sometimes misunderstand what “renewable” means. Renewable typically means you can renew without new medical underwriting, but that doesn’t mean the price stays favorable. It simply means you’re not re-proving insurability every year. If you’re trying to preserve insurability while you work through a transition, renewability can matter. If you’re trying to keep the premium low long-term, level-term is usually the better tool.

Best Use Cases for 1-Year Term Life Insurance

ART is most valuable when you have a temporary need and you can reasonably expect the need to end soon. A common example is a job transition: group coverage ends and new employer benefits won’t begin for a few months. In that window, ART can keep your family protected without forcing you to commit to a long policy you might not want.

ART can also make sense when you’re replacing a policy and want brief overlap so there’s never a day without protection. This matters when you’re coordinating underwriting, changing ownership, or updating beneficiary planning. People who have been through a complicated underwriting process often value continuity, and a short-term bridge can reduce stress while a new plan is finalized.

In business situations, ART can be used to cover a short obligation—such as a loan or contract requirement that will be satisfied soon. If the need truly ends within a year, ART can be a clean solution. If it might extend beyond that, a short level-term option often becomes more predictable.

If you’re using a short policy to cover a larger underwriting strategy (for example, you’re pursuing a larger face amount or managing a complex health history), it can also help to understand how carriers treat medical details and file review. This page is a useful primer for shoppers who worry a condition could complicate approval: Life Insurance with Pre-Existing Conditions.

When 5-Year or 10-Year Level Term Is Usually a Better Deal

If there’s a meaningful chance your need lasts more than a year or two, level-term coverage often becomes the better value. A 5-year term can still feel “short-term,” but it stabilizes the premium and usually provides more predictable budgeting. A 10-year term extends that stability further and is commonly used for defined obligations that don’t end quickly—like early family years, debt windows, or income replacement during a set period.

One of the biggest planning mistakes we see is someone buying ART expecting they’ll “switch later,” then renewing longer than intended as life gets busy. Premium increases gradually become the new normal, and the shopper ends up paying long-term pricing for a short-term tool. If you suspect your need will last several years, it’s worth comparing up front so you’re not forced into expensive renewals by default.

If you’re uncertain about timeline, a practical approach is to decide whether you want to buy flexibility or buy price stability. ART buys flexibility. Level-term buys stability. Neither is “right” in a vacuum; it depends on your life stage and the obligation you’re protecting.

Convertibility, Renewability, and Why Policy Details Matter

ART is renewable by design, but the details still matter. Policies specify a terminal age when renewals stop, and carriers can structure renewals differently. If you’re using ART as a bridge, the key question isn’t just “can I renew?” It’s “what does renewal look like, and does it still make sense after year one?”

Some term designs (including certain ART structures) can offer conversion privileges, allowing you to convert to permanent coverage without re-qualifying medically. That can be valuable if you’re trying to preserve insurability. Conversion rules vary by carrier, so if you care about that option, it’s worth understanding the mechanics here: Convert Term to Permanent Life Insurance.

Conversion can be useful in a real-world scenario where health changes after policy issue. For example, someone may take short-term coverage now, then later decide they need longer-term protection. If health has worsened, conversion can offer a path to keep coverage without starting over medically. The trade-off is that permanent coverage typically costs more than term, and conversion often has product limitations. Still, for some people, that option is a key part of the decision.

Underwriting Options for 1-Year Term Life Insurance

Even though ART is short-term, underwriting still matters. Depending on your age, health history, and coverage amount, you may qualify for accelerated or no-exam underwriting. In other cases, a brief exam can unlock better pricing or a stronger approval outcome. If you want a clearer idea of what carriers evaluate and why exam requirements vary, this guide breaks down what to expect: What Is a Life Insurance Exam?

Underwriting is also where an independent brokerage adds value. The goal is to avoid mismatches—submitting to a carrier that doesn’t fit your profile and risking an unnecessary decline—especially if there’s any complexity. Even a short-term policy should be handled carefully if health history, prescriptions, build, or driving record could influence outcomes.

Comparison: 1-Year Renewable vs 5-Year vs 10-Year Level Term

ART can be the right tool for a brief need, but it’s usually not the best long-run value if you keep it for several years. A 5-year term often provides the “short-term” feel people want with much more predictable pricing, and a 10-year term can provide budget stability for obligations that don’t end quickly. The right choice depends on how confident you are the need ends soon, and how important predictable premiums are for your household.

Case Example

A 29-year-old job seeker needed coverage until employer benefits began in six months. ART offered immediate protection without committing to a longer term. Later, when the need for coverage continued beyond the initial transition, a 5-year level term policy made more sense because it reduced renewal-driven premium increases and stabilized budgeting. The important point is not that ART was “bad,” but that ART worked best as a bridge—then the plan evolved to a more stable structure once the timeline became clearer.

Beneficiaries, Claims, and Taxes

Regardless of term length, beneficiary setup matters. Keeping primary and contingent beneficiaries updated helps ensure benefits go where you intend, especially after major life events. Claims are typically paid after the insurer receives required documentation, and proceeds are often paid income-tax-free in many situations. For planning conversations that go deeper, it helps to understand the exceptions and where structure matters: Is a Life Insurance Death Benefit Taxable?

If your goal is simply to protect a household through a defined window, term life insurance is often the most efficient tool. If you’re evaluating whether term is the right fit versus permanent coverage, you may also find value in this broader perspective on how people think about life insurance in long-term planning: Is Life Insurance a Good Investment?

Common Mistakes to Avoid With Annual Renewable Term

The most common mistake is renewing ART longer than planned because it was easy, then realizing later that costs escalated. Another is choosing a face amount without tying it to a real obligation. ART should solve a specific problem for a specific window. Finally, people sometimes ignore renewal limits and conversion rules, then discover their options are narrower than expected when they actually want to make a long-term move.

A helpful habit is to set a “decision date” when you buy ART. For example: “I’m buying ART for 12 months, but I will re-shop at month 6.” That keeps ART functioning as a bridge instead of a default renewal habit.

Why Work with Diversified Insurance Brokers?

We help clients match the right term length to the real timeline of their obligations. When a 1-year solution truly fits, we’ll show you ART options and explain what renewals look like. When a short level-term is the smarter value, we’ll show you the math and help you compare carriers side by side. Start with our life insurance services, and if you want a broader view of what an independent shop can do for you, see how to choose the best independent insurance agent.