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Matt Hands, VP, Insurance and MoneySense
A term life policy is an insurance product that guarantees a death benefit payout to a stated beneficiary during a specific period of time, typically ranging between five to thirty years. So 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 either renew our policy for a higher cost, or you can let your coverage expire. Some policies also let you convert the term life insurance to 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 (also known as how long you want to be covered for), as well as your coverage amount (also known as how much out want your beneficiary to receive after you die). Only if you die within the term does your life insurance company pay out the death benefit.
Find your best term life insurance quote with us today.
We're here to help you find the best term life insurance policy to suit your personal needs. Compare quotes from one of our licensed brokers today to find the cheapest rate.
Level term insurance
Yearly renewable term insurance
Decreasing term insurance
Age & retirement
Mortgage & debt
Common term life insurance coverage additions
Most providers also allow you to purchase extended coverage (or life insurance riders) to protect you against special circumstances. And 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 you can ask your broker about.
How much term life insurance do I need?
One of the most important decisions you need to make when purchasing life insurance is the coverage amount on your policy. To determine the right number, there are three different factors you should consider – your family situation, your debts, and your income. Visit our blog on this topic to learn more about calculating your term coverage needs.learn more
While the cost of term life insurance depends on various individualized factors, here are a few sample rates we pulled in October 2023. To find out the exact cost you'll be paying, be sure to compare term life insurance quotes with us.
30-year term policy with $100,000 coverage
10-year term policy with $600,000 coverage
20-year term policy with $500,000 coverage
15-year term policy with $300,000 coverage
What factors affect term life insurance premiums?
The older you are, the more expensive your term life insurance will be – that's why it's often a good idea to bind your term policy while you're young.
Statistically speaking, the life expectancy for females is longer than the expectancy for males, so your term life rates will reflect this.
Pre-existing conditions, family medical complications, and habits such as smoking excessive drinking lead to higher premiums.
Participating in high-risk activities on a regular basis, such as skydiving, can lead to higher term life insurance premiums.
If you work in a high-risk industry, such as roofing or logging, you may need to pay more for your term policy.
More coverage and longer terms result in higher term life premiums – you'll need to pay more for the additional peace of mind.
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.
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Request your free term life insurance quotes today, and find out which carrier offers the most affordable policy options to meet your personal coverage needs.
Term vs. whole life insurance – what's the difference?
According to the Canadian Life & Health Insurance Association, 75% of in-force policies were term life plans in 2021. This number consisted of both individual term life plans (40%) and group term life plans (35%). On the other hand, individual whole life insurance policies took up 12% of the market while individual universal life insurance policies took up 13%.
While term life tends to be the most popular type of coverage for Canadians, a survey from LIMRA reported that whole life plans overtook the market in 2022, representing an overwhelming 65% of the country's total life insurance market. Term life, on the other hand, held a much smaller share – just 20%.
The growth in whole policies compared to term policies could be attributed to a market shift, similar to that of pre-pandemic levels. Canadians may no longer be looking for quick, easily-approved coverage in the event of an emergency but are instead, planning for the long run.
individual term life market share in 2021
group term life market share in 2021
What are the benefits of term life insurance?
Term life policies tend to be much more easy to understand than permanent life policies. You choose a set death benefit, along with a set term period.
With term life insurance, you generally have options to covert the plan (to permanent life insurance) or renew it when expiration nears.
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.
A term life insurance policy is much cheaper than a whole life one – this is because your insurer won't actually need to pay out the death benefit if you don't pass away during the set period.
Like all types of life insurance, term life benefits are tax-free. Your beneficiaries won't need to pay taxes on the lump sum they receive.
Peace of mind
This also goes for other life insurance products, but a term life policy can provide you with peace of mind while you need it. It's nice knowing your kids will be covered while they're still growing up.
What term life insurance is best?
What is the most popular term life insurance?
Is term life insurance better than whole life?
Can I sell my term life insurance policy in Canada?
How much term life insurance should I buy?
Can I cash in my term life insurance policy?
Does term life insurance cover accidental death?
Does term life insurance cover disability?
What do I do when my term life insurance expires?
Can I cancel my term life insurance policy?
How do I buy term life insurance online?
When does term life insurance payout?
Is term life insurance tax-deductible?
Is term life insurance worth it?
Matt Hands, Business Director of Insurance
With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read full bio
Ratehub.ca works with partners to help you compare term life insurance quotes from over 20 of Canada's top providers. You won't need to visit multiple brokerages or insurers in order to find the cheapest option for your needs – we shorten the process for you in one go.
Each quote is calculated using the life insurance company's own underwriting process, so you can receive an accurate estimation based on your individualized profile.