Buying term life insurance in Canada
What is term life insurance? How does it differ from whole life insurance?
A life insurance policy ensures coverage in times of need. If you have purchased life insurance, it will take care of your family’s finances, if you were to pass away. There are mainly two types of life insurance policies in Canada, a term life insurance policy and a whole life insurance policy. A term life insurance policy covers you for a period, it could be for 5 years, 10 years, 20 years, 30 years or 40 years. In the instance of death of the policy holder during the insurance period, the benefits of the life insurance policy will be passed on to their estate or designated beneficiaries. Whereas a whole life insurance policy provides coverage during the entire life time. Once you buy it, it stays with you and it has no time limit as long as the premiums are being paid. This way your family will face less financial difficulties after your death, whenever that may be. The premium on a term life insurance policy can remain level until the end of the term. In the event of death, term life insurance funds can be used to pay any outstanding loans or debts, living expenses, to send your kids to college or pay house mortgage.
How to determine which insurance plan will best suit your needs?
Before you select any life insurance plans you should take note of your current health conditions, the people that depend on you, your savings and your income. Most financial advisers will suggest you opt for a term life insurance policy. Term life insurance costs relatively less than a whole life insurance plan. After the term expires, it can be renewed or converted in to permanent coverage depending on the insurance carrier.
There are a variety of terms available. The most common being a 5-year term insurance policy, 10-year term insurance policy, 15-year term insurance policy, 20-year term insurance policy and 30-year term insurance policy. Choose the appropriate term policy based upon your financial needs.
For example, a newly married couple in their late 20’s who plan on having children soon should consider a 30-year term life insurance policy to cover the child care expenses, education expenses and cover a mortgage.
A couple in their 30’s or 40’s whose children are still dependent on them or are about to start college can opt for a 20-year term insurance to cover college expenses until the kids start earning their own income.
A middle-aged couple in their late 40’s can buy a term life insurance that expires around the time of retirement age.
If you have ten years remaining until your retirement, you may choose a 10-year term policy or if you have 20 years left for your retirement, you may choose a 20-year term policy. This way, your dependents have the means to survive, financially, in the event of you passing away.
An elderly couple in their 60’s who still have some short term debts to cover can consider a short, 5 year term insurance policy.
The term life insurance policy premium is constant for the entire length of the term. After the term ends, the policy will not terminate but it may renew at a higher rate. For example, if you have bought a policy for 5 years, the premium will be stable for 5 years. But at the end of 5 years the premium might increase so make sure to plan accordingly.
Most of the term life insurance providers in Canada have a policy that is either renewable or convertible. Renewable term life policies get renewed automatically at the end of the term. For an insurance policy with a term of 10 years, the premium will automatically renew at the 11th year. This structure used to be quite popular in its earlier years. However, nowadays the cost of premium upon automatic renewal is quite high and customers are unwilling to spend so much. The reason being that up until the mid-90’s, the cost of renewal premiums were a lot less than they are right now.
A convertible life insurance policy is one that can be converted from a term life insurance to a whole life insurance policy once it expires without the need for taking a medical exam. This feature of the policy is quite significant even today. It is most likely to be used in cases wherein you develop a medical condition that cannot be covered under any other life insurance company’s guidelines, then you can convert the term life insurance policy to a whole life insurance policy.
Consider a couple with children who have 15 years until their kids complete college and start living on their own expense. They will initially opt for a 15-year term insurance policy so that in case one of them dies within that 15-year period there is enough finance to cover the rest of the family. Of course, at the end of this term they may convert to whole life insurance.
What the process like to obtain a term life insurance policy?
Purchasing a term life insurance policy is very simple and effortless. You can either buy a term life insurance policy online or contact your insurance broker for more information on how to get the right amount and term of insurance based on your needs and they’ll help you get a suitable quote.
Term life insurance policy providers in Canada
Some of the top companies in Canada providing term life insurance policies are listed below.
- Manulife’s CoverMe term life insurance
- Great-west Life co, Inc.
- Canada Protection Plan
- Industrial Alliance Excellence
- Industrial Alliance
- Empire Life
- RBC Insurance
- CIBC Life Insurance
Ready to take the next step?
Stop waiting until your health worsens and make sure to contact your local life insurance advisor to make sure you have adequate life insurance coverage for you and your loved ones.
Contact Final Expense Ontario’s insurance advisor today to start working on your Term Life Insurance plan.
Final Expense Ontario is here to help you find accommodating Term Life Insurance policies. We help you make your decision with total peace of mind. Call now for a no obligation free consultation 1-800-593-1817 or Get Quote
Don’t leave your family with unexpected expenses when you die. Life insurance can be the last gift you will give.
Talk to a licensed insurance advisor from Final Expense Ontario 1-800-593-1817 to make the decision that’s right for you and your family’s needs.