Term Life Insurance

What is term life insurance?

Term life insurance is an easy-to-understand and affordable coverage for Canadians. There are different terms that can be chosen such as term 10, 20, or 30 years. 

Most insurance companies offer term insurance that is renewable and convertible.

This means that once the term has finished, you will have the option of either renewing your policy for another term or converting that policy into a permanent insurance policy regardless of any adverse health conditions that may have arisen during the term.

The premiums will be fixed and will not increase during whichever term you choose, however, once the term finishes then the insurance will renew at a much higher price.

How long should the term be?

When choosing the length of a term life insurance policy you want to ensure that your coverage will last as long as you need it.

Shorter length terms may seem more attractive initially as they are much cheaper than longer terms, however, you will not save any money in the long run.

Let's compare a few different life insurance terms for a healthy 25-year-old male with a need for $500,000 for 30 years.

Years 0-10 10-20 20-30 Total Paid (After 30 Years)
Term 10 (Monthly) $27.45 $65.25 $135.90 $27,432
Term 20 (Monthly)
$31.05 $31.05 $220.50 $33,912
Term 30 (Monthly) $36.90 $36.90

Even though a shorter term may look initially more attractive, you will end up paying more in the long run.

Take our Recommendation Quiz and find out exactly how long your term should be.

Who should choose term life insurance?

Term insurance is used most effectively when purchased and used for a specific period during your life such as having kids, buying a house, marrying, etc. 
It is an affordable option to cover you and your loved ones during the most important years. 
Once the term expires the insurance company is contractually bound to renew the coverage at the posted renewal rates regardless of any adverse medical conditions you have incurred over the years. 
However, if you are still in good health it is usually a better option to not renew and shop the market for a new policy as it will most likely be much cheaper.
Term life insurance is much like renting a house, it is the more affordable option and a likely good choice for most people.

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