Define "annual renewable term" life insurance.

Annual renewable term life insurance is designed to provide coverage for a specified term, typically one year, and it is renewable at the end of each term without requiring the policyholder to provide evidence of insurability. The key characteristic of this type of policy is that while it can be renewed annually, the premiums generally increase with each renewal as the policyholder ages. This reflects the higher risk associated with insuring an older individual, which is why the correct answer indicates that premiums increase as the policyholder's age advances.

This structure allows for flexibility and provides a temporary coverage option that can be beneficial for those who may need life insurance for only a short period, such as during times of financial obligation or while raising a family. Unlike whole life insurance, which provides lifelong coverage at a fixed premium, annual renewable term policies adapt to the risk profile of the insured over time.