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What is term life insurance?
Term life insurance is a life insurance product that guarantees a death benefit payout to a named beneficiary for a specific period, typically ranging from 5 to 30 years, with 20 years being the most popular term. If you pass away during the set term, your loved ones can use this money for whatever they wish, including paying off the mortgage, replacing your income, and financing their education, When you purchase a standard term insurance policy, your coverage amount and premiums are locked in for the entire length of the plan.
When the term expires, you'll usually have the option to renew your policy at a higher cost or let your coverage expire. Some policies also let you convert term life insurance to permanent life insurance (such as whole life insurance or universal life insurance), typically between one and five years before the term ends.
When you bind your term life policy, you choose the term length (how long you want to be covered) and your coverage amount (how much you want your beneficiary to receive after you die). Your life insurance company pays the death benefit only if you die within the term.
When should you buy term life insurance?
You should buy term life insurance when you have a temporary need for coverage, such as paying off a mortgage or covering education costs. This temporary need can extend for many years. Here are a few situations where this type of policy can come in handy:
Mortgage
Children
Retirement
Education
Recent Canadian term life insurance quotes
Check out these recent quotes from across the Canadian market – last updated in October 2026. To see what you could pay for a policy tailored to your unique situation, try our free life insurance quote tool today.
- $32/month
20-year term policy with $500,000 coverage
for a 35-year-old, non-smoking male in Toronto, ON
- $43/month
15-year term policy with $250,000 coverage
for a 54-year-old, non-smoking female in Calgary, AB
- $66/month
10-year term policy with $1,000,000 coverage
for a 47-year-old, non-smoking female in Vancouver, BC
Find your best term life insurance quote in Canada today.
We're here to help you find the best term life insurance policy to suit your personal needs. Compare term policy quotes from one of our licensed brokers today to find the cheapest rate.
What are popular types of term life insurance in Canada?
Popular types of term life insurance in Canada include level term, yearly renewable term and decreasing term life insurance. Here’s a brief overview of each:
Level term insurance
Yearly renewable term insurance
Decreasing term insurance
What’s the difference between term life and whole life insurance?
The main differences between term life and whole life insurance are the coverage period, premium cost, death benefit payout and cash value. Below, we cover several differences between the two so you can choose the one that best suits your needs.
|
Feature |
Term life insurance |
Whole life insurance |
|---|---|---|
|
Coverage period |
Term life insurance only covers you during the fixed term you choose – be it five years, ten years, or thirty. |
Whole life insurance covers you for an entire lifetime – from the policy start date until the day you pass. |
|
Coverage needs |
Term policies are well-suited if you only need financial protection for a specific period (e.g. mortgage debt). |
Whole life insurance is recommended if you have a lifetime need for coverage (e.g. estate planning). |
|
Death benefit |
Your death benefit is the set amount purchased – it'll also only be paid out if you pass away during the term. |
Your death benefit is usually also fixed to a certain amount, but it can change it some cases – it's also guaranteed to pay out after you pass. |
|
Cash value |
Term life insurance policies don't accumulate in cash value, so you won't be growing a reserve. |
Whole life plans can accumulate in cash value, so you can access funds during your lifetime. |
|
Withdrawals |
You can't withdraw from a term life insurance policy during your lifetime. |
With whole life insurance, you're generally able to withdraw or borrow against your cash value reserve. |
|
Cost |
Term life is generally much more affordable than whole life – that's because you might not need a payout. |
Whole life insurance policies are eventually paid out, so expect to pay much more for this coverage. |
How do I choose the right term length for my life insurance?
The right term length for you depends on your personal needs, such as your age, retirement plans, mortgage term and whether you have children. Here are a few factors you should consider:
Age & retirement
Mortgage & debt
Children
Cost
What are common term life insurance coverage additions?
Most providers offer extended coverage (or life insurance riders) to protect you in special circumstances, including critical illness insurance, disability insurance and accidental death insurance. While you can add these to your term life policy, you may also be able to purchase some of these as standalone policies. Here are a few common additions to ask your broker about.
Critical illness insurance
Critical illness insurance can be purchased as a rider or a standalone policy. It is exactly what it sounds like – if you're diagnosed with an approved critical illness, your insurer will pay out a lump sum to cover the financial burdens involved.
more about critical illness insuranceDisability insurance
Like critical illness, you can purchase disability coverage as either an add-on or a standalone policy. This type of insurance ensures you'll be financially covered in the event you become disabled and unable to work, acting as an income replacement.
more about disability insuranceChildren's insurance rider
Life insurance for your child can typically be purchased as a rider, on top of your term life insurance policy. This is generally a much cheaper option to ensure your child also has coverage, instead of purchasing them a standalone policy of their own.
more about life insurance for childrenAccidental death insurance
Accidental death insurance can also be purchased on its own or as a rider. As a standalone, the benefit will only be paid out for cases of accidental death. As an add-on, your beneficiaries will receive an increased benefit in cases of accidental death.
more about accidental death insurance
How much term life insurance do I need?
How much term life insurance you need depends on your financial situation, including your existing debt and current income. A rule of thumb is the DIME method, which adds your debts, income, mortgage payments, and education fees. Read our blog to learn how to calculate your term coverage needs.
read blogHow much does term life insurance cost in Canada?
The average cost of term life insurance in Canada is about $34 per month ($408 annually) for half a million in coverage. However, the exact cost you’ll pay depends on personal factors such as your age, health status, and lifestyle. Most Canadians opt for around $500,000 in coverage, while many life insurance brokers now recommend upwards of $1 million due to the changing economic landscape and rising cost of living.
Here is an example of how term life insurance prices can vary by gender and age - assuming a 20-year term with $500,000 in coverage for a non-smoker with no pre-existing medical conditions.
| Age | Sex | Term | Coverage | Cost |
|---|---|---|---|---|
| 20 | Male | 20-year | $500,000 | $29 monthly |
| 20 | Female | 20-year | $500,000 | $19 monthly |
| 30 | Male | 20-year | $500,000 | $30 monthly |
| 30 | Female | 20-year | $500,000 | $20 monthly |
| 40 | Male | 20-year | $500,000 | $44 monthly |
| 40 | Female | 20-year | $500,000 | $33 monthly |
| 50 | Male | 20-year | $500,000 | $121 monthly |
| 50 | Female | 20-year | $500,000 | $81 monthly |
It's clear to see that the older you get, the more expensive term insurance becomes. This is due to the increased health risk factors that come with aging. There is also a slight difference in pricing for males vs. females due to gender based statistics used as part of the rating calculation. Generally, men are seen as a higher risk as they age.
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What factors affect term life insurance rates?
The more risk you bring as a policyholder, the more expensive your insurance will be. Factors that contribute to your risk level include your age, health status, lifestyle and job:
Age
The older you are, the more expensive your term life insurance will be – that's why it's often a good idea to bind policies early.
Gender
Statistically speaking, the life expectancy for females is longer than the expectancy for males, so your term life rates will reflect this.
Health
Pre-existing conditions, family medical complications, and habits such as smoking and excessive drinking lead to higher premiums.
Lifestyle
Participating in high-risk activities on a regular basis, such as skydiving, can lead to higher term life insurance premiums.
Job
If you work in a high-risk industry, such as roofing or logging, you may need to pay more for your term policy.
Policy type
More coverage and longer terms result in higher term life premiums – you'll need to pay more for the additional peace of mind.
What happens at the end of my term life insurance period?
At the end of your term life insurance period, your coverage will expire, and no death benefit will be paid out if you don't pass away during the set period. If you want to extend your policy term, you can look into renewable and convertible life insurance.
A convertible life insurance policy gives you the option to convert your term policy into a permanent policy. The primary benefit of having a convertible policy is that you won’t have to pass a medical exam to get permanent coverage. So if you’re diagnosed with a serious illness while you have an active convertible term life plan in place, you can still get permanent coverage that may not otherwise be available to you.
For more insight on your various options, check out our blog: What to do when your term life insurance expires.
What are the benefits of term life insurance?
Although term life insurance is a temporary coverage solution, it offers many benefits, including long-term flexibility, affordability, and the tax-free benefit:
Simplicity
Term life policies tend to be much easier to understand than permanent life policies. You choose a set death benefit, along with a set term period.
Long-term flexibility
With term life insurance, you generally have options to convert the plan (to permanent life insurance) or renew it when expiration nears.
Level premiums
In a standard term life insurance policy, your premium won't change within the entire term duration – you won't need to worry about a rate increase due to health status or old age.
Affordability
A term life insurance policy is much cheaper than a whole life one – this is because your insurer may not need to pay out the death benefit.
Tax-free benefit
Like all types of life insurance, term life benefits are tax-free. Your beneficiaries won't need to pay taxes on the lump sum amount.
Peace of mind
This also goes for other life insurance products, but a term life policy can provide you with peace of mind when you need it. It's nice knowing your kids will be covered while they're still growing up.