What generally happens to premiums in a yearly renewable term life insurance policy?

In a yearly renewable term life insurance policy, premiums generally increase each time the policy is renewed. This is due to the fact that the policyholder's age advances every year, which raises the risk associated with providing life insurance. Consequently, insurers adjust the premiums to reflect the higher likelihood of a claim as the insured gets older.

This characteristic of yearly renewable term policies makes them unique compared to other types of policies where premiums may remain level or are fixed for a specific period. The clear understanding of this dynamic is crucial for individuals considering their options in life insurance, as it impacts both immediate budget planning and long-term insurance affordability. Thus, recognizing that premiums increase with age is essential for informed decision-making in choosing a life insurance policy.