What does 'annual policy' mean?

An 'annual policy' refers to an insurance policy that provides coverage for a specific term of one year, after which the policy will need to be renewed for continual coverage. This type of policy typically outlines the terms, conditions, and premiums applicable for that year. It is common in various types of insurance, such as health, automobile, and home insurance, where the policyholder must assess their needs and either renew the policy or make adjustments at the end of each year.

Other options present different definitions that do not accurately reflect what an annual policy represents. For instance, a policy that is valid for a lifetime pertains to whole life insurance or similar products, which contrasts with the finite term of an annual policy. Monthly payments refer to the frequency of premium payments and do not define the duration of coverage. Seasonal coverage implies that the policy is restricted to certain times of the year, which is again not the case for an annual policy that spans a full year regardless of the season.