Skip to main content
Ratehub logo
Ratehub logo

Compare term life insurance quotes

Term life insurance is the most common type of life insurance in Canada, but there are important things to consider before you make a purchase.

What is term life insurance?

Term life insurance is a life insurance product that guarantees a death benefit payout to the stated beneficiary within a specific period of time, typically from 5 to 30 years. When you buy term insurance, your coverage amount (death benefit) and premiums (monthly or annual payments) lock-in for the entire term or length of the policy.

When your term expires, you may have the option to renew your policy for a higher cost due to being older or let your coverage expire. Some policies also let you convert to whole life insurance or universal life insurance, typically between one and five years before the policy ends.

When you buy term life, you choose the term length (how long you want to be covered for) and your coverage amount (how much you want your beneficiary to receive when you die). If you die within the term set out by your policy, your life insurance company will pay the coverage amount, also known as the death benefit, to your beneficiary.

When should you buy term life insurance in Canada?

Term life insurance is best for people who have a temporary need for life insurance, and temporary can extend for many years. Some examples include:

  • If you have a mortgage and want to leave your family enough money to pay it off if you die (assuming you don't have mortgage life insurance).
  • If you have young children who need to be provided for if you pass. Term insurance can pay for their education. 
  • If you’re planning to retire and only need coverage for as long as you expect to work. You can get a 25-year term life policy starting at age 40. This way, you have coverage in critical times of raising kids and paying down a mortgage. 
  • Your partner is going back to school, but you can't be left without cash flow if they pass. A 5-year term life insurance policy would be smart. 

Why Ratehub.ca?

A few things we're proud of

  • 1,200,000

    monthly users

  • 9 years

    young

  • Over 1M

    better choices made

  • Trusted partner

    to Canada’s top financial institutions

Types of term life insurance

Despite being a relatively easy to understand product, it's important to know the differences and options you have for a term life policy.

Level term, otherwise known as a level premium policy, is a standard term insurance policy where both the premium and death benefit remains fixed for the life of the term. The premiums for a level term policy are slightly higher than a yearly renewable term life insurance policy because the insurers must account for the increased likelihood of death as you approach the end of your policy. 

Term insurance vs. whole life insurance

 

Product features

Term life

Whole Life

Length of term

1-100 years

Long term coverage as long as you pay the premiums

Avg. cost of a $100,000 death benefit for a 30-year-old female

$10-$15 monthly
(25-year term insurance)

$50-$60 monthly

Does it build cash value?

No

Yes

Cost

Fixed for the life of the term

Fixed for the entire policy

Can you loan or withdraw money from the policy?

No

Yes

Convertible

Yes, can convert to a permanent life policy

No

Best for

Protecting family, assets, and investments

Complex financial plans and estate planning

How much term life insurance coverage do I need?

One of the most important choices in choosing a life insurance policy is deciding how much coverage you need. There are a number of different questions to ask that will influence your decision:

  • Your family situation: If you have young children, how much money would it cost to raise them?
  • Your debts: How much do you owe on your mortgage and other loans? Who will be responsible for making payments if you pass away?
  • Your income: How much do you make after-tax each year? How long will your family need your income to be replaced?

Learn more here: How much life insurance do I need?.

Renewable vs. convertible term life insurance

Renewable term life insurance is coverage that automatically renews at the end of the term. If your coverage expires after 10 years, you’ll automatically be renewed into a new 10-year term. When you choose renewable term life insurance, your premiums will increase at renewal, so it’s a good idea to compare life insurance quotes for term life insurance before your term expires.

Convertible Term Life Insurance gives you the option to convert your term life insurance policy to a permanent life insurance policy. The primary benefit of having a convertible policy is that you won’t have to pass a medical exam to get permanent coverage. If you’re diagnosed with a serious illness while you have a convertible term life insurance policy, you can convert to a permanent life insurance policy you might not otherwise have been able to get. Learn more about this on our renewable and convertible life insurance article.

In the market for term life insurance?

Term life insurance rates can vary wildly, and you won't know what you're eligible for until you get a quote. Compare term life quotes today for free to find the best rate.

Term life insurance case study

Mike is 35 years old, earns $70,000 a year, is married, has 2 children under 5, and has a mortgage with 20 years left to pay with $350,000 outstanding.

  • Cost to raise 2 children to age 18: $500,000
  • Mortgage: $350,000
  • College tuition for two children: $50,000
  • 5 years income replacement: $350,000
  • Term length: 20 years
  • Term life insurance coverage:$1,200,000

In this scenario, Mike’s major expenses are the cost of raising children and his mortgage. In this case, it makes sense for Mike to choose a 20-year term. After 20 years, his kids will be over 18, and his mortgage will be paid off. At that time, he can save money on life insurance by renewing into a lower coverage amount. The amount of coverage you choose is up to you. You might decide to buy enough term life insurance to replace your salary for a certain number of years, enough to pay off your mortgage, or just enough to cover funeral expenses. There’s no rule against having multiple life insurance policies, so you can buy additional coverage any time you need it.

How to extend your term life insurance coverage

Some term life insurance providers allow you to purchase extended coverage, or riders, to cover you for other circumstances:

  • Critical illness provides payout if you develop a life-threatening illness like heart disease, stroke, or cancer.
  • Disability insurance in case you're unable to work for 3 months or more. 
  • You can add a Children’s rider which pays out in the event your child dies.
  • Accidental death pays an additional benefit if your death is the result of an accident.
  • Disability waiver of premium allows you to stop paying your premiums if you become disabled.

Ratehub.ca is not affiliated or otherwise associated with Hub International Canada.

FAQ

Common questions about term life insurance

Which is better term life or whole life?

Can I sell my term life insurance policy in Canada?

What is the best term life insurance to buy?

What happens to term life insurance at the end of the term?

Can you cash in your term life insurance?

Does term life insurance cover accidental death?

Does term life insurance cover disability?

Author Bio

Matt Hands, Business Director of Insurance

Matt started his professional career at CARPROOF where he honed his marketing and analytical skills for over 3 years. Matt then took his wealth of experience to Ratehub.ca’s Toronto offices, working with insurance providers, agents, and brokers to grow and expand the Insurance business unit. He is a thought leader in the community and a valuable insurance resource to respected publications like the Globe & Mail, Toronto Star, Huffington Post, Yahoo News, and 680 news radio in Toronto.

The knowledge bank

By submitting your email address, you acknowledge and agree to Ratehub.ca's terms of use and privacy policy. Contact us for more information. You can unsubscribe at any time.

About Ratehub

We help you find better financial products for your specific needs. Whether you need a mortgage, credit card, savings account, or insurance coverage, we get you the information you need to choose better.

How does Ratehub.ca make money?

Financial institutions pay us for connecting them with customers. This could be through advertisements, or when someone applies or is approved for a product. However, not all products we list are tied to compensation for us. Our industry leading education centres and calculators are available 24/7, free of charge, and with no obligation to purchase. To learn more, visit our About us page.