Life Insurance

Term insurance

Cover for a defined period at a guaranteed premium. Term insurance is what most families should look at first, because most of what they are protecting — a mortgage, children at home, a business loan — has an end date. Pay for cover while the risk exists, and stop paying when it does not.

Why Term

What term insurance is for

Life insurance transfers a risk you cannot carry — the financial consequence of dying while people depend on your income — to an insurer, for a price. Term does that for a fixed number of years and nothing more, which is why it costs a fraction of a permanent policy.

It suits a need with a deadline

A twenty-five year mortgage. Children who will be independent in eighteen years. A business loan personally guaranteed until it is repaid. Match the term to the obligation and the cover ends when the obligation does.

The premium is guaranteed for the term

You know what it costs for the whole period at the point you sign. Nothing is reassessed if your health changes during the term — which is precisely the value you are buying.

The payout is a lump sum, tax-free

If the insured dies within the term, the death benefit is paid to the named beneficiary and is generally received tax-free in Canada. It can be used for anything: clearing the mortgage, replacing income, or simply giving the family room to make decisions slowly.

At The End

What happens when the term runs out

This is the part worth understanding before you buy rather than after.

It usually renews automatically

Most term policies renew for a further period unless you tell the insurer otherwise. The cover continues without new medical evidence — but the premium is recalculated at your new age, and the increase can be substantial. Renewal is a safety net, not a plan.

You have four choices

Let it renew. Convert it to a permanent policy. Cancel it, if the need has gone. Or replace it with a new term policy, which means fresh underwriting and depends on your health at the time.

Conversion is the option to protect

A convertible policy can become permanent cover without new medical evidence, usually up to a stated age. That matters because health changes: if you develop a condition during the term, conversion may be the only route to lifelong cover left open to you. It typically costs little or nothing extra at outset. Check it is there before you sign, because it cannot be added later.

Buy the longest term you will genuinely need, not the cheapest one. A ten-year policy always quotes lower than a twenty. But if the need lasts twenty years you will be renewing at fifty-something rates, or re-applying with ten more years of medical history behind you. Matching the term to the obligation usually costs less over the whole period than buying short and extending.

No obligation

How much, and for how long?

Those are the only two decisions that really matter, and both come from your own circumstances rather than a rule of thumb. Tell an advisor what you owe, who depends on you and until when, and the answer usually falls out in a single conversation.

Talk to an advisor

Term insurance questions

Long enough to cover the obligation. If the mortgage has twenty-two years left, a twenty-year term leaves a gap. Terms of ten, twenty and thirty years are the common options, and the longer ones cost more per year but less over the whole period than renewing.

Nothing is paid out — that is what makes it affordable. It is the same arrangement as insuring a house that does not burn down. If you want money back regardless, that is a permanent policy and it costs several times as much.

Usually only by applying for more, with fresh underwriting. Some policies include a guaranteed insurability option that lets you increase without a medical at set life events — worth asking about if children are likely.

Often, though not always. Lower amounts are frequently issued on health questions alone. Where an exam is needed it is usually a nurse visiting your home, arranged and paid for by the insurer.

No. Lender mortgage insurance pays the lender, the benefit falls as the balance falls, and it ends if you switch lenders. A term policy pays your family, keeps its face value, and moves with you. It is usually the better arrangement.

Protecting a mortgage or a young family?

Call 437-428-2828 and talk it through with a licensed advisor. Mon–Sat, 9am–8pm ET. No obligation, and nobody will push you to buy on the call.

Call 437-428-2828