Advisors Blog

Opportunities with Affordable Annually Renewable Term

Published on June 25, 2020


During these financially uncertain times, life insurance protection is more critical than ever. However, clients may not be able to commit premium dollars for permanent or longer duration term coverage. For literally pennies on the dollar, Annually Renewable Term (ART) offers an extremely affordable premium for the first few years, giving clients protection they need without a significant cash outlay.   

Term to Term Conversions

American National (ANICO) has a unique ART product that offers term to term conversions (as well as the standard term to UL conversion). The ability to convert to 20 or 30-year term within the first three contract years (subject to age restrictions) or to permanent products can protect the client’s long term insurability while maintaining low out of pocket costs. 

Business Cases

In many business cases, whether key-person or buy-sell, there is a short-term need of 5 years or less. This can be for a myriad of reasons, but in many cases it is due to the age of the individual. ANICO ART is issued to age 65 and can be utilized as the perfect insurance planning vehicle to economically solve that issue.

Non-Smoker Rates for Smokers

When a case is first quoted at preferred non-tobacco rates, and it turns out the client smokes the occasional cigarette or alternate tobacco product, the premium can easily double or triple. The ANICO ART is a perfect reflex solution where even at tobacco rates the initial premium is probably equal to or lower than the new smoker rate on the original duration. This strategy provides the insured time to cease tobacco usage and qualify for non-smoker rates at a later time. This becomes a very cost efficient “placeholder” and way to save a case where smoker rates were not anticipated.

Be careful to use ART strategically, only when the need is truly short-term or the premium must be held very low initially. The ART premium will quickly skyrocket after the first several years, so make sure there is an acceptable strategy to convert to term or permanent coverage - or end up losing the coverage entirely. For more information about ANICO’s Signature Term products, please click below.




We at GBS Insurance thank you again for your business. For more information or insurance quote requests, please contact your brokerage manager or give us a call at (800) 473-5966

For agent use only - not for use with the general public.

Corporate CA License No. 0D87913


21820 Burbank Blvd., Suite 301

Woodland Hills, CA 91367

Phone: (800) 473-5966

GBS Insurance and Financial Services, Inc. do not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

© 2020 Arthur J. Gallagher & Co. 




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