10 Year Term Life Insurance is the most affordable life insurance product available in Canada and is very commonly purchased by many Canadians.
It is a life insurance product that has premiums (the cost of the policy) that are level for 10 years. The death benefit (the coverage amount) is also level for 10 years. At the end of the 10 years the insurance policy typically renews automatically at higher premiums (higher cost), again level for another 10 years. This process can continue until the expiration date of the policy.
A 10 year term life insurance policy for $500,000 will have the same premium for the length of the term (10 years). It will also have the same coverage amount for the length of the term ($500,000).
Who Is 10 Year Term Life Insurance Designed For?
10 Year Term Life Insurance is most commonly used by family members in their 20’s, 30’s, 40’s and 50’s looking for insurance protection for approximately 10 years to cover such things as the last years of a mortgage, other short term debt (student loans, credit card debt, line of credit, etc.) or until their children and/or spouse are self-sufficient financially. It is also purchased quite often because it is the most affordable type of life insurance available in Canada.
- Affordable when compared to other life insurance policies
- Peace of mind knowing that your beneficiaries will receive a lump sum amount, tax free in the event of your death
- The rates (cost of the policy) are guaranteed for the length of the term of the policy
- Policies are very customizable which allows you to ensure that it suits the needs of you and your family
- Renewable (see below)
- Convertible (see below)
Most life insurance companies in Canada have a feature available called “renewable” or “renewability” where they allow you to continue your 10 year term policy after the initial 10 years.
At the end of the initial 10 years, the insurance policy typically renews automatically at higher premiums (higher cost), again level for another 10 years. This process can continue until the date of the policy which is typically around age 75 for most life insurance companies in Canada.
The reason the premiums are higher after the first 10 years is because the insurance company does not require any health questions or medical evidence (blood, urine, etc.). They are assuming that something has changed in your health which is why the policy premiums increase. If you are in good health and still need life insurance at the end of the 10 year term, you are usually better off applying for a new policy to get a lower premium and cancel your old policy after the new policy is in force.
The longer the length of the term, the higher the premiums will be. For example, a 20 year term life insurance policy costs more than a 10 year term life insurance policy. We recommend contacting us to determine what policy is right for you.
Most life insurance companies in Canada also have a feature called “convertible” or “conversion” which means that the policy owner is allowed to convert (switch) their term life insurance policy to a permanent life insurance policy (whole life, universal life, term to 100) without having to complete a medical exam or health questionnaire. You are just required to do a policy change where you complete some paperwork, select a permanent life insurance policy and pay premiums based on your age and smoking status.
When purchasing life insurance it is very wise to seek out independent, unbiased advice from a life insurance broker who represents all of the life insurance companies in Canada. Feel free to reach out to us by email or phone at 1-877-344-4011 to speak with one of our licensed brokers and determine what product is best for you and your family.