Life Insurance
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What is term life insurance?
Term life insurance provides life insurance protection for a defined period. If the insured person dies while eligible coverage is in force, the applicable death benefit is paid to the named beneficiary. Term coverage generally does not build cash value.
In Canada, term insurance is commonly considered for temporary financial obligations such as a mortgage, family income replacement, children’s dependency years or business debt.
The Financial Consumer Agency of Canada explains that term life insurance pays a death benefit if death occurs within the specified coverage period and that term policies generally do not include cash value.
Choose a term that matches the length of the financial need.
Term products vary by insurer. Common designs include fixed terms and coverage to a stated age. The important question is not simply “Which term is cheapest?” but “How long does the obligation actually last?”
10-Year Term
May suit shorter obligations or situations where a shorter guaranteed-premium period is appropriate.20-Year Term
Often considered for mortgages, growing families and medium-term income-replacement needs.
30-Year Term
TCan provide a longer initial guaranteed-premium period for longer family or debt obligations, where available.Other Terms / Term-to-Age
Some insurers offer other term lengths or coverage to a stated age. Availability and issue ages vary by product.
1Initial Term
The first guaranteed coverage period under the contract, assuming required premiums are paid.Renewal
Some contracts allow coverage to renew after the initial term. Scheduled renewal premiums may be substantially higher.
Conversion
Many term contracts include a right to convert eligible coverage to an eligible permanent policy without new medical evidence, subject to the contract.
FAQ (Frequently Asked Question)
Start with the income your family may need, mortgage and other debts, children’s or education needs, final expenses and other obligations. Then subtract savings and existing insurance available for those needs. A detailed needs analysis can refine the estimate.
Match the term to the expected duration of the obligation. A shorter need may support a shorter term, while a mortgage, young children or long income-replacement period may justify a longer initial term. Availability and issue ages vary by insurer.
Depending on the contract, coverage may end, renew at scheduled premiums, or eligible coverage may be convertible to an eligible permanent policy. Another option is to apply for new coverage, which normally requires current underwriting.
Many renewable term policies have scheduled premium increases at renewal. Review the renewal schedule before buying instead of comparing only the initial premium.
Many term contracts include a conversion privilege for eligible coverage without new medical evidence. Conversion ages, deadlines and available permanent products differ by insurer and contract.
Possibly. The outcome depends on the diagnosis, treatment, control, complications and the insurer’s underwriting. Different insurers may assess the same medical history differently..
Some insurers offer simplified-issue or other products with reduced medical evidence requirements. Pricing, coverage limits and eligibility can differ from fully underwritten insurance. “No medical exam” does not necessarily mean “no health questions.”
No. Optional mortgage life insurance is generally tied to the mortgage and pays the lender based on the insured mortgage balance. Personally owned term insurance allows the policy owner to select coverage and name the beneficiary, subject to the contract and applicable law.
Workplace coverage should be included in the calculation, but review the amount and what happens if employment changes or ends. Personal coverage may be considered where a financial gap remains.
It is possible to have more than one policy, subject to insurer underwriting and financial justification. Some people use layered policies with different term lengths to match obligations that end at different times.
The Canada Revenue Agency states that most amounts received from a life insurance policy following someone’s death are not reported or taxed as income. Ownership, estate, corporate and other circumstances can create additional tax or estate considerations, so complex cases should be reviewed with the appropriate tax and legal professionals.
There is no single insurer that fits every applicant. Premiums, underwriting, conversion provisions, issue ages and product features differ. Compare the contract and underwriting fit for the specific need rather than relying on one generic ranking.