What is term life insurance?

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Term life insurance is a product usually used to meet specific, but temporary needs; such as a significant life insurance need to cover the loss of a spouse’s income while children are young (maintaining family standard of living), agreement between shareholders (term life insurance will generate enough money to buy back the shares of the deceased shareholder), to cover a mortgage or any other debt, etc. The premium is usually increasing and increases every year, 5 years, 10 years or 20 years (T-1, T-5, T-10, T-20 and T-30).

Example of a 10-year term life insurance policy

For example, a « 10-year Term » policy is one for which the premium will not change for the next 10 years. At the end of the tenth year, the contract will be automatically renewed by the life insurer without questioning your insurability, as a clause in your term life insurance contract guarantees renewal without proof of insurability, so no health questions, for another 10-year term until the contract matures (usually between 70 and 80 years old). The premium will then be adjusted based on your age at renewal (so higher for the second 10-year period, and even higher for the third period, etc.). Fortunately, this renewal premium is guaranteed when the contract is established by the insurer.

Advantages of term life insurance online

For the insured, the advantage is that the premium will be cheaper than any other type of life insurance during the first years of the contract. However, in the long term, the term life insurance premium will increase at each renewal and will eventually cost you much more. Another disadvantage is that the term policy will expire, at the latest, when the insured reaches 80 years old. (you will have the option to convert your term life insurance coverage to permanent life insurance, but the premium will vary depending on your age.) If you are fortunate enough to still be alive when the contract expires, you will be left without insurance coverage, as the life insurer will terminate your policy.

Term life insurance is very popular because of its low initial cost and simplicity; it is not a complex product like universal life insurance which has more sophisticated choices such as, for example, different and flexible insurance costs, and investment and tax-sheltered growth fund opportunities.

100-year term insurance

Despite this, it should be noted that there is a term life insurance product that covers you for life, with level premiums, that is, premiums that will not change for the entire duration of the contract, called « 100-year Term ». This type of permanent protection will provide you with lifetime coverage, at affordable cost, with or without surrender value… Despite its name, this type of life insurance protection is part of the group of Permanent products, such as whole life and universal life. Request a quote for term life insurance.

Term life coverage

Term life insurance is a term life insurance that provides a non-taxable lump sum benefit to beneficiaries upon the death of the insured. Term life insurance is suitable for investors who have life insurance needs in the short term (20 years or less) or those who have long-term needs, but whose budget does not allow for higher premiums.

Characteristics of term life insurance

• Low cost – This is particularly attractive for investors whose budget does not allow for higher premiums in the short term.
• Convertibility – Term life insurance can be converted to a permanent policy without proof of insurability.
• Premiums – Premiums increase with renewals and may eventually become unaffordable.

WHY CHOOSE A TERM LIFE POLICY?

Term life insurance is the easiest to understand. Essentially, the policy you purchase provides coverage for a specific period of time, or « term » of years. If the insured person dies during the « term » of the policy and the policy is still in force (active), the death benefit is paid to the beneficiary.

This type of insurance generally allows customers to initially buy more insurance coverage for less money (premium) than other types of life insurance. Primerica’s philosophy « Buy term and invest the difference » encourages customers to take this premium « difference » and invest it for the future.

WHY IS LIFE INSURANCE IMPORTANT?

You may be wondering: « Do I really need life insurance? ». If someone depends on your income or if you have obligations (debt, mortgage, etc.) that would fall to someone else if you were to die, the answer is « Yes ».

Life insurance acts as a replacement for income. Have you ever calculated how much you will earn over your lifetime? Generally, during your working years, the answer is « a fortune ». The potential risk of losing this earning capacity – the income you will need to finance your family’s major goals such as buying a house, paying for your children’s education, reducing debt, retirement savings, etc. – especially in the early or middle years, is what makes life insurance necessary for most people.

WHAT TYPE OF LIFE INSURANCE SHOULD YOU GET?

You need term life insurance. A common misconception about life insurance is that it is a permanent need for every family. Many financial experts view life insurance as a tool to « buy time » until you accumulate savings – not as a permanent part of your financial life. Term life insurance is generally much more affordable in the early years to provide the right amount of coverage you actually need for your family.

Frequently asked questions — term life insurance Quebec

What is the difference between a T-10, T-20, and T-30?

The number corresponds to the duration of coverage in years. A T-10 protects you for 10 years with fixed premiums, a T-20 for 20 years, and a T-30 for 30 years. The longer the term, the higher the initial premium — but you benefit from a guaranteed rate for the entire period. Choose based on your financial obligations (mortgage, dependent children).

Can my premiums increase at the end of my term?

Yes, at the end of your term, you can renew your policy without a medical exam, but the new premiums will be recalculated according to your age at the time of renewal — and will therefore generally be much higher. To avoid surprises, plan your coverage for the long term from the start with the help of a broker.

Can I convert my term life insurance to permanent insurance?

Most term life insurance policies include an option to convert to permanent life insurance (whole life or universal) without a medical exam, before a specific deadline set out in your contract (often before age 65 or 70). This is a valuable advantage if your health deteriorates over the years.

Does the price vary much by age?

Yes, age is one of the most determining factors. A healthy 30-year-old will pay much less than a 45-year-old for the same coverage. Each year of delay can increase the premium by 5 to 8%. This is why it is beneficial to take out term life insurance as early as possible.

Do smokers pay more for term life insurance?

Yes, smokers and recent ex-smokers generally pay premiums 2 to 3 times higher than non-smokers. After quitting smoking for 12 consecutive months (sometimes longer depending on the insurer), you can request to be reclassified as a non-smoker and benefit from reduced premiums.

What are common exclusions in a term life insurance policy?

The most common exclusions are: suicide within the first two years of the policy, deaths caused by war or criminal activity, and in some cases high-risk extreme activities. Medical misrepresentations at the time of application can also invalidate the policy.

What happens if I miss a premium payment?

Most policies provide a 30-day grace period after the payment due date. During this period, your coverage remains active. If payment is still not made after the grace period, the policy is cancelled. Some insurers allow reinstatement without a medical exam if the request is made quickly.

Can a couple have a single term life insurance policy?

There are joint policies (two-to-pay or first-to-die) that cover two people under a single contract. The first-to-die policy pays the death benefit upon the first death. While economical, these policies have drawbacks: after death, the survivor may be left without coverage or have to obtain new coverage at a higher cost depending on their age and health status.

Can I tie my term life insurance to my mortgage?

Yes, and it is actually one of the most common uses. A T-20 or T-25 can match the duration of your mortgage. Unlike mortgage insurance offered by your bank (whose coverage decreases with the balance), your personal term life insurance maintains a fixed death benefit and your beneficiary receives the full amount.

Why choose term life insurance over permanent insurance?

Term life insurance is ideal for covering temporary but important financial needs: mortgage, dependent children, income replacement during working years. Premiums are much lower than permanent insurance, allowing you to obtain higher coverage for the same budget. It is often the best choice for families with short and medium-term responsibilities.