In the event of death, Canadian life insurance serves the main purpose of transferring financial risk from the deceased policyholder’s family to an insurance company. There are basically two types of life insurance coverage: permanent life insurance (universal and whole life insurance policies) and temporary life insurance (term, group or mortgage, life insurance policies).
Term Life Insurance
This type of life insurance coverage only pays death benefits if a policyholder dies within the time allocated in his/her insurance policy. A term life insurance policy is available in 5, 10, 15, and 20 year terms. Longer terms are also now available. If the insured party passes away after their life policy term has expired, no death benefit payout will be made to the beneficiaries. Term insurance policies can be renewed once they expire, however, any renewed term will be at a higher premium rate than the previous one. If you are in good health, it is better to shop for a new term insurance rather than renewing your previous one, to avoid the increased rate. If you are ready to get competitive rates, get a Canadian term life insurance quote online right now.
A term life insurance policy generally has a maximum age limit of 80 or 85 years depending on the carrier, both for attaining a new policy and renewing an old one. This means that once you reach the age limit, you cannot qualify for a term insurance policy. Also if you are 50 years old, for example, your carrier will only permit you to renew a term life policy up to the maximum age limit. This is what makes this type of life insurance coverage a temporary one with a short-term policy.
Money-Saving Tips for Term Life Insurance
Term life is the most affordable life insurance coverage. The cost is mainly determined by a person’s sex, age, lifestyle, and smoking habits. For example, $1 million in term life coverage can cost $32 for a healthy, non-smoking, 25-year-old male. For a male smoker aged 40, the same term insurance can cost $150. As inexpensive as it may be, there are certain tips that will help you save money by buying only the coverage you need:
- Choose an independent broker over a financial institution, e.g. a bank, when purchasing term life coverage. This way, you will get competitive quotes, which will save you a considerable amount of money especially if you are healthy.
- Purchase a new term insurance rather than renewing your old one. Once your term life policy expires, find a new one with favourable rates to keep from paying high premiums.
- Ask an insurance company about their preferred term life insurance rates. The percentage of persons who qualify for these rates can range from below 50% to 75% and over, depending on the insurance company. Find out if you qualify for these rates to take advantage of them.
- Some insurance companies consider occasional cigar smokers as non-smokers.
- Only purchase policies from carriers that charge the lowest renewal rates for their policies.
- For groups and associations, choose personal term life policies over group policies, which tend to be very costly as you age.
- Compare premium and coverage projections for different term life policies. Choose one with the highest savings over the long run.