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Term Life Insurance

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Term Life Insurance

Term Life Insurance in Canada

Amongst all life Insurance products, Term life insurance is the simplest and purest form of insurance. It is a reasonably priced means of guaranteeing financial stability for your loved ones, if the unexpected happens. Term life insurance gives you the peace of mind that your family will not be burdened with debt or lost income, whether you plan to start a family, purchasing your first house, or preparing for retirement.

Common terms or for simplicity, we can call periods include 10, 20, 30 or 40 years. Some insurance companies also offer even more flexible options where you can pick your own term, like pick-a-term policy offered by Industrial Alliance.

At Aarna Insurance, Our advisors can help you conduct a thorough need analysis and help you find the right product.

 

Types of Term Life Insurance in Canada

When it’s time to choose and decide which is the right type of term life insurance (a question that boggles many….), keep in mind it depends on your financial goals, lifestyle, and the obligations you want to protect and this generally differs from one person to another.

  • Level Term Insurance: The premium you pay and the death benefit your beneficiaries would receive - remain the same for the entire period.
  • Decreasing Term Insurance: Typically used by individuals who want their insurance coverage to shrink over time, usually to match the decreasing balance of a loan or mortgage. The death benefit decreases gradually, but the premium remains the same throughout the term.
  • Designed to cover debts that reduce over time, like a mortgage. The premium of this type of policy is further lower than the typical level term insurance for the same benefit amount.
  • Convertible Term Insurance: Offers a flexible option allowing you to convert your term life insurance into a permanent policy—such as whole life or universal life insurance—without undergoing a medical exam.
  • Conversion at any point during the term, even if your health declines, providing the opportunity to extend coverage for the rest of your life.
  • Renewable Term Insurance: This policy lets you renew your policy at the end of the term without a medical exam. This is useful if you want to maintain coverage beyond the initial term but don’t want to lock into a new long-term policy.

 

For more in-depth knowledge, some specific scenarios and FAQs about Term Life Insurance in Canada, please refer to our Blogs

Medical Considerations

In Canada, many insurers offer both medically underwritten and no-medical-exam options.

  • With Medical Exam: Medically underwritten policies usually require a medical exam. Typically, if you’re applying for higher coverage amounts or if you are a high risk candidate. Can involve basic checks like blood pressure, blood tests, and a review of your medical history.
  • No Medical Exam: These plans are convenient but typically come with higher premiums. Coverage amounts for no-medical-exam plans are often lower than traditional options. Ideal for people who prefer a simpler, quicker application process, have pre-existing health issues or are high risk candidates.

 

Age Considerations

  • 20s and 30s: Lock in Low Rates. This is prime time to get a policy since you are likely in good health, which means lower premiums. If you are starting a family or buying a home, it’s a great way to lock in coverage at affordable rates.
  • 40s and 50s: Balancing Coverage with Affordability. With age, risks go up and as such premiums go up in your 40s and 50s, but term life is still valuable. With growing kids, college expenses, or a mortgage, you might consider a 20- or 25-year policy to secure your family’s future until retirement.
  • 60s and Beyond: Shorter-Term Coverage. In your 60s or older, you might not need as much coverage coz by now you must typically be free from your liabilities, but a shorter-term policy (10-15 years) can still help with final expenses or leave a small legacy.

 

Benefits

  • Affordable Premiums: Term life insurance is budget-friendly, since it only covers you for a fixed number of years without building cash value. This keeps premiums much lower than permanent life insurance, making it easy for families to get coverage without overspending.
  • Flexible Coverage: Pick the term length that fits your life—10, 20, 30, or 40 years, or sometimes even custom options. It provides an individual enough flexibility to match up with big goals like paying off a mortgage or saving for kids’ education.
  • Simple and Clear: No confusing terms or hidden costs. Term life insurance is straightforward, with no investment parts or fluctuating premiums—just clear, dependable coverage.
  • Extra Coverage with Riders:
    • Critical Illness Rider: Pays out if you’re diagnosed with a serious illness.
    • Waiver of Premium Rider: Stops payments if you become disabled.
    • Accidental Death Benefit: Boosts the payout if death is due to an accident.
  • Convertible Option: Many term policies let you switch to permanent life insurance later without a medical exam, giving you flexibility if your needs change.