Term Life Insurance
What is Term Life Insurance?
Term life insurance is basically the least expensive option to get life insurance protection. A term life insurance policy provides a specific amount of life insurance coverage for a set number of years. The cost of the insurance is guaranteed for the number of years in the term you choose. The most common term lengths are 10 and 20 years. However, they can be as short as 1 year and as long as 40 years. If the person dies during the insurance term, the insurance amount is paid to the beneficiary, tax-free. Term is typically the least expensive type of life insurance.
How much does term insurance cost in canada?
The cost for term life insurance will vary based on:
Age |
A younger person is typically less expensive to get life insurance for compared with an older person. |
Gender |
Males cost more to insure than females |
Health |
Insurance costs are usually quoted for “standard” prices, which reflects the average health of a person that age. Excellent health? You may be eligible for a discounted rate. Health conditions? There may have a surcharge for insurance. |
Smoking Status |
Use nicotine? Expect to pay about 2x as much for insurance. This includes cigarettes, vaping and all other nicotine products. |
Amount of coverage |
As the death benefit increases, so does the cost of insurance. |
Length of term contract |
A Term 20 (20 years long) will cost more than a Term 10 (10 year contract). Sadly, you don’t get a discount for committing to a longer policy. You pay more because you are covering the risk of you dying for a longer period of time. More risk? more cost and that’s why the increase is seen. |
Are There Different Types of Term Life Insurance?
Yes! Not all term insurance policies are the same – choosing a reputable term life insurance broker will help you understand the most suitable term policy or policies for your needs. Term policies can vary on the amount of insurance and length of the contract, as well as features or benefits from the insurance company.
One of the main differences is whether the term policy is renewable and convertible.
What Is a Convertible Term Life Policy?
A term life insurance policy that is convertible means that you can change a part of the policy amount to a permanent type of life insurance.
This is a great option for those that want to have permanent coverage at some point, but want to keep the costs lower initially.
What Is a Renewable Term Life Policy?
If your health deteriorates, you may find this becomes an important option. You can take the renewal rate and rest easy, knowing you still have insurance protection. If your health is stable or improves, your broker can help you apply for the different products at a lower rate.
Is Term Insurance Right For Me?
Term life insurance can be a great fit for many people. For example, when you are financially planning in case you have a need to:
- Replacing your lost income and maintain your family’s standard of living;
- Provide financial security for your dependents, such as future education costs and other needs;
- Guaranteed that costs of daily living and debt (i.e. mortgage payments) are covered;
- Pay for funeral costs and other final expenses;
- Leave donations for an important charity or another legacy project that is of value to you.
What is an Insurance “Rider”?
Many term life plans offer the option of additional insurance coverage (such as critical illness or life insurance for your child) that are called riders. This means you can add extra coverage attached to a single policy. It means more coverage insurance is bundled together, without unnecessary administration costs. An insurance broker can help you understand when this will help balance your insurance and financial needs.
