What does 'annual renewable term' in life insurance indicate?

'Annual renewable term' in life insurance refers specifically to a type of term policy that allows the insured to renew the coverage each year without the need to provide evidence of insurability. This means that as the insured ages or if their health status changes, they can still maintain their coverage without facing the potential rejection that might occur with a new policy application. Each renewal usually comes with a higher premium due to the increased risk associated with the older age of the insured, but the guarantee of renewal is a key feature of this type of policy.

In contrast, the other options present characteristics that do not accurately describe annual renewable term policies. For example, premiums that stay the same for the life of the policy refers to term policies that are level term, not renewable each year. Saying coverage lasts for a lifetime describes whole life or permanent insurance rather than term insurance. Lastly, a non-cancelable policy is one that the insurer cannot terminate as long as premiums are paid, which is not a standard guarantee of an annual renewable term policy, where renewal is contingent on the ability to pay the premium and the specific terms of the policy. Thus, the correct answer embodies the unique flexibility provided by annual renewable term life insurance.