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Term life insurance is one of the many options for you to protect your family and finances. It ensures that you will have something to pass down to beneficiaries during a specific time or term. It is one of the easier forms of life insurance to invest in and understand. ThinkInsure works with the leading term life insurance providers in Canada. Our advisors can compare the best term life insurance quotes and plans to get you a policy that meets your protection needs and budget.

Here, you’ll learn about how term life insurance works, how it compares to other types of coverage, how to get quotes and get answers to common questions.

What is term life insurance?

Term life insurance is the most straightforward and simple to understand life insurance option – also a reason why it is one of the most popular types of life insurance. As the name suggests, you purchase this life insurance for a defined time (5 years, 10 years, etc.). If the insured passes away during this time, benefits will be paid out.

It provide short-term protection at the lowest cost for a set period of time. It is a very affordable option and suited to young families on a tight budget or homeowners holding a large mortgage.

How term life insurance works

Term life insurance is a product with a defined time period. It is valid for the duration of your policy. For example, if you take out a term 10 policy, it will be valid for 10 years. If you take out a term 20 policy, it is valid for 20 years.

The plan comes with a guaranteed death benefit. This will be paid out if the policyholder passes away while the plan is active. There are no savings or cash value components to this product.

Often you can extend your term insurance at the time of renewal – at a rate that is suitable for your age. The new rate could be much higher than your original policy, a reason why many people opt for longer policies – which locks in your premium. At a certain point, you won’t be able to renew due to your age or state of health. You’ll pay premiums on a monthly or annual basis, and there is no cash value in the policy.

How to get term life insurance quotes

Want the cheapest term life insurance in Canada? We all know that the best way to get the lowest rates is to shop around. Great news – you can compare quotes right here by following these simple steps:

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What are the types of term life insurance?

There are many different choices to consider. These allow you to choose a policy that fits your needs and your budget. There are three main policies:

Level term policies

While some insurance companies will have specific names for their products, they generally are defined by the number of years of the policy.

Term 10 (valid for 10 years)
Term 15
Term 20
Term 30
Term 40
Term-to-65
Term to 100

Yearly renewable term (YRT) policies

These policies do not have a defined timeframe. They can be renewed annually. However, your premiums will change each year. They will increase as you age.

Decreasing term policies

These plans have a death benefit that decreases each year. You pay a fixed premium for the duration of the plan.

You will also have coverage options to choose from regardless of the length of time you choose. This will vary by company so it’s important to compare quotes.

Who needs term life insurance?

It is ideal for people in several situations. It is popular among people with limited budgets because of its cost-effective options. Young parents with children often choose this plan to get a reasonable amount of coverage at lower premiums.

It is also attractive to people who only need it for a specific timeframe. For example, you only need coverage for a 10-year period, at which time you will have other financial means to rely upon.

When should you buy term life insurance?

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You should get a quote long before you need it. This gives you the comfort of knowing that your debts will be paid, and you have provided financial security for those important to you. It is a popular choice for people who :

Have a mortgage or other large debts.
Want flexibility.
Need loss-of-income protection.
Are concerned about affordability.
Want to cover their children’s post-secondary education.
Run businesses with complex situations or significant start-up debt.
Are on a limited budget

Term insurance vs. whole life insurance

Term and whole life insurance are two of the most common and popular. Term is a pure life insurance product whereas whole life offers you an investment component. It is for a specific timeframe while whole is for the duration of your life. Of the two, term can be significantly more affordable.

How is term life insurance different than universal life insurance?

Universal life insurance falls under the whole or permanent life insurance umbrella. You have these policies for the rest of your life, and you can invest in a cash value component that can grow your investment over time. Term life is limited to the number of years you select, only offers a death benefit, but it is the more affordable of the two choices.

How much does term life insurance cost?

This is one of the most affordable options. It can cost you as little as a few hundred dollars per year to over $2000 annually, based on your age. Cost is directly correlated to your age. As you get older, you will pay more. The term you choose will also have a big impact. Just like other life insurance products, things like your health, occupation, gender, smoking status, and other factors are used. Speak with our advisors today to get an accurate estimate of your premiums.

What are the advantages and benefits of term insurance?

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Why should you choose a term life policy over another type of life insurance? Here are some of the key advantages :

It costs the least of all options initially.
Strong, temporary protection during times of high financial risk.
Time limited so if you’re financial situation has changed, you don’t have to renew.
Flexibility to renew if you still require short-term coverage.
Low-cost protection and income security for partners, spouses or children.
It may be able to convert to permanent life insurance.

Some of the potential drawbacks include:

You are limited based on the timeframe you choose
You will pay more as you age
You will not receive the death benefit if you outlive the policy
When the plan ends, you will need to purchase a new policy

Reasons to get a term life insurance policy

It provides financial security for you and your family at a cost that you can afford.

Provide an immediate infusion of cash for an estate.
Pay final expenses such as a funeral or unpaid taxes.
Provide an income for your loved ones.
Pay off your outstanding debts – mortgages, business loans and taxes.
Ensure a comfortable living standard for those you leave behind.

What happens after your term life insurance ends?

All term life insurance policies come to an end. You need to understand what is available before you choose this type of plan. When it comes to an end, you have four main options:

Expire: You can simply allow it to expire.
Renew: You can renew it. Most policies have an automatic renewal.
Upgrade: You can upgrade to a plan that is longer than the previous one.
Convert: You can convert to a permanent plan.

When your policy ends, your premiums will be reassessed. In most cases, they will increase because you are older than when you originally purchased the plan.

Term life insurance FAQs

Should you get term life insurance?

It is a viable option for individuals looking for an affordable solution to protect their family. It can also be ideal for those who are looking for temporary coverage. Whether or not it is right for you will depend on your specific situation. Speak with a life insurance advisor to get help with assessing your needs.

How much term life insurance do I need?

The amount you need will largely depend on your specific situation. There is not a blanket amount that can be applied to all individuals. It depends on your financial and family situation. Generally, you should have enough coverage to pay off your current debts (mortgage, student loans, credit cards). Your policy should be enough to replace your income should you die. Determining these numbers will give you an idea of how much you require.

Can I sell my term life insurance policy in Canada?

No, you cannot sell your policy. But you can cancel it if you no longer want the coverage. Cancellation fees may apply.

Does term life insurance cover accidental death?

Yes. Your plan will pay out your death benefit if you die from accidental causes. Your policy will provide you with a complete list of what types of death are covered.

Does term life insurance cover disability?

No, this is not part of your coverage. You can take out a separate policy for disability and critical illness insurance. This will protect you if you are injured or become ill and cannot work.

What is simple issue term life insurance?

Also referred to as simplified term life insurance, it is a plan that has fewer health questions and no medical exam as part of the application process. It is designed for people in good health who want a simple policy that can be issued right away (often within 60 minutes).

What is a direct term life insurance policy?

This is a type of term life that is offered online. Consumers can get it directly from the insurance company. You can complete all steps in the application process online without having to talk with an agent. This affords you the time to fill out your application at your own pace.

Does term life insurance expire?

Yes. Your plan has an expiry date. When it expires depends on the plan length selected. For example, if you choose a 15-year term, your plan will expire in 15 years from the date the policy was issued.

Can you renew a term life insurance policy?

Most plans include a renewal clause. So, yes you can renew it. In most cases, your plan will automatically renew for a defined period. Upon renewal, you can expect your premiums to increase.

Tips for purchasing term life insurance

Saving money and getting the best rates for term insurance is the goal. Here are some tips :

Speak to a professional: There are many options available to you. Make sure that you understand the details of your policy.
Ask questions: Don’t assume that you know the definition of terminology in your policy. Ask for clarification about items like disability, death benefit, and beneficiary.
Understand the different types: It’s easy to get confused. Learn the benefits of term life insurance over other types.
Review your needs before renewal: Review your situation with your advisor.

Get a term life insurance quote

At ThinkInsure, our advisors are ready to help you with all your term life insurance needs. Protecting your family’s future and getting coverage starts with a quote. Contact us to get started.

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