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Term life insurance is a low-cost and temporary insurance protection. It is mostly used for meeting a temporary need like mortgage protection or a specific need for fulfilling a large amount of insurance at the lowest price.
It is possible that you might need coverage after the first renewal period. In term-life insurance, it must be ensured that both the initial premium and renewal premium must be confirmed regardless of the fact if the renewal rates are guaranteed at the quoted level.
Term life insurance is ideal for individuals who need temporary and affordable coverage. Here are the key groups who benefit from this type of insurance:
Parents with Young Children
Homeowners your visa printed by a visa office outside Canada (wait for visa office instructions)
Primary Breadwinners
Business Owners
Those with Short-Term Financial Needs
Budget-Conscious Individuals
Estate Planning
Supplementary Coverage
Term life insurance provides coverage for a specified period, known as the term. If the insured person passes away during this term, a death benefit is paid to the beneficiaries.
Term life insurance is widely favored for its simplicity and convenience, often being purchased online or over the phone. With term life insurance, individuals select a coverage duration, typically ranging from 10 to 30 years. Upon approval, policyholders establish a contract with the insurer, agreeing to pay premiums regularly. In exchange, the insurance company promises to pay out a tax-free lump sum, known as the death benefit, to the designated beneficiary if the insured passes away within the specified term. Policyholders have the flexibility to name multiple beneficiaries, providing added assurance that loved ones will receive financial support in the event of their death.
Term life insurance tends to be more affordable than other types of life insurance, such as whole life or universal life, especially for younger individuals.
You can choose the term length based on your needs. For example, you might select a 20-year term to cover the years until your children are grown and independent.
It offers straightforward coverage for a specific period. You pay premiums and, if you die during the term, your beneficiaries receive the death benefit.
Term policies often allow you to purchase a higher death benefit amount for a lower premium compared to permanent life insurance.
Unlike whole life or universal life insurance, term life insurance does not accumulate cash value. This can be seen as a pro if you prefer straightforward insurance without investment features.
Term policies typically have fewer additional features and riders compared to permanent life insurance options.
Term life insurance provides coverage for a specified period (term), typically ranging from 5 to 30 years. It pays a death benefit to the beneficiaries if the insured person passes away during the term of the policy.
In Canada, term life insurance policies can typically be obtained for terms ranging from 5 to 30 years, depending on the insurance company and their offerings.
Many term life insurance policies in Canada offer the option to renew at the end of the term without requiring a medical exam. Some policies also allow conversion to a permanent life insurance policy within a specified period.
If you outlive your term life insurance policy, the coverage ends, and there is no payout. You would need to renew the policy, convert it to a permanent policy (if allowed), or obtain a new policy if further coverage is needed.
Depending on the insurer and the amount of coverage sought, medical exams may be required for term life insurance in Canada. Insurers assess the risk based on the applicant's health and lifestyle.
Premiums for term life insurance are typically based on factors such as age, health, lifestyle, the amount of coverage, and the length of the term. Generally, younger and healthier individuals pay lower premiums.
Yes, riders such as critical illness, accidental death, or disability riders can often be added to term life insurance policies in Canada for an additional cost.
Level term insurance: Provides a fixed death benefit throughout the term of the policy.
Decreasing term insurance: The death benefit decreases over time, often used to cover specific financial obligations like a mortgage.
Yes, term life insurance is generally cheaper than permanent life insurance because it provides coverage for a specific period without the investment component found in permanent policies.
Generally, the death benefit paid to beneficiaries under a term life insurance policy is tax-free in Canada. However, premiums paid on policies used as collateral for loans may not be tax-deductible.