Term Life Insurance

What is Term Life Insurance?

A term life insurance policy provides a specific amount of life insurance coverage for a defined number of years. The cost of insurance (premiums) are guaranteed for the length of the term you choose, e.g. 10, 20, or 30 years; if you die during that time, the insurance amount is paid to your beneficiary, tax-free. The average cost of life insurance per month will depend on a person’s age, health, and lifestyle. There are different types of life insurance: term is typically the least expensive.

Are There Different Types of Term 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. One of the main differences is whether the term policy is renewable and convertible.

What is a Convertible Term Life Policy?

Some term plans include an option to convert from term life to a permanent/whole life insurance product. This can be helpful in the event of unexpected health or financial change. A convertible term life policy means that, for a portion of the contract, you can change (convert!) a portion of the death benefit from temporary (term) to permanent (universal or whole life). Depending on the insurance provider and the length of your term policy, the eligibility period to convert your policy will differ. If you are comparing quotes between several providers, this option may be of value to you and help with your decision.

What Happens When Term Life Insurance is Over?

Term life insurance policies can usually be renewed. You can find out ahead of time what your renewal options are before you accept the initial policy offer. For example, if the policy includes a guaranteed renewal rate, then it will be available no matter what changes to your health. A renewable term life policy means it has a guaranteed option to get another term policy when the current one expires, and you can get another term coverage even if your health deteriorates. It doesn’t mean you have to take the renewal, but it gives you options no matter what happens.

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.

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.

What Are The Benefits of Term Life Insurance?

Term life insurance provides some distinct advantages over other types of coverage:

1. More Protection

Term insurance is usually the least expensive life insurance option. The cost (paid monthly or annually) is less compared to permanent life insurance and most mortgage insurance protection.​

2. More Flexibility

Term insurance is attached to the person(s) and not a bank or financial institution. In many cases, it can also be converted to a different type of insurance product in case your health or financial situation changes.​

3. Best Value

Term life insurance is paid directly to the beneficiary, instead of a bank or specific institution (for example, the way that mortgage insurance is paid out). The recipient has complete control over how they utilize the death benefit.

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.

Life insurance is like a roof leak –

the longer you wait, the more expensive it gets!