Term Life Insurance Canada
- What Is Life Insurance?
- What is Term Life in particular?
- Do I Really Need Life Insurance?
- What Other
Situations is Term Life Suited For?
- How Many Years are the Terms?
- What are the
Advantages/Disadvantages of Term?
To be covered under a life insurance policy you must make payments
that are called premiums, and in the case of the death of the insured
person the life insurance company will pay a benefit to the person you choose,
called a beneficiary.
The policy must be in effect at the time of death, and the death benefit
payment is tax-free under current Canadian law when paid to a named beneficiary
that is a resident in Canada.
Life insurance is often used to make sure that funeral expenses,
mortgage payments, and living expenses can be met even though the
insured person has passed away. However, life insurance can also be used
for estate management and investment (permanent life insurance, not term life
Term life insurance is temporary insurance, which covers a person against
death for a limited amount of time (the amount of time covered is called the
"term"). A term might be until children are grown, or until a couple
retires. Most policies have a set term in years (e.g. 10 or 20) and may
be renewable for a second or third term, up to a certain age.
Premiums are guaranteed for the length of the term
Premiums are paid until the term ends, at which time the policy may be
renewable. No benefits are received at the end of the term, regardless of
whether or not any claims were made.
Life insurance is primarily intended for people who have others who
depend on them, and protects those dependents from financial
An important question to ask oneself is: do I have people who depend on me, and
what would happen if I am gone? If you do not have a spouse, children,
etc., or if you do not have a mortgage or any other debt then you may not need
life insurance. However, this situation is rare, and most people need to
know that if they pass away that their loved ones will be taken care of
Term life is also suited for:
Covering a specific debt for a given amount of time (e.g. a
A situation where permanent (whole) life insurance is just not affordable. Term
insurance is cheaper than permanent insurance, and can also be converted to
permanent life insurance at a later date if you purchase a "convertible"
The most common length of term is 10 years. However, it is also possible
to get many other term lengths, such as 5-year, 15-year, 20-year, etc. (depends on the insurance
coverage for needs that exist for a set period of time (automobile loans,
There is no cash value.
cheaper than permanent life insurance.
increase as those insured get older.
Many term life policies can be converted to permanent insurance (up to a
Cannot be used for wealth management.
- If you have more questions see
Frequently Asked Questions -
Next Step: Calculate Your Needs