Term life insurance: the most cover for the lowest cost
Term life pays a tax free amount to your family if you pass away during the term you choose, usually 10, 20, 30 or 40 years. It is the simplest way to protect a mortgage, your children and your income while they depend on you.
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Everything to know about term life insurance
Who it is for
- Parents with children who rely on your income
- Home owners with a mortgage
- Couples with shared debts and a car loan
- Business owners who need affordable cover for a loan or partner
How it works
- You choose a cover amount and a term, such as 10, 20, 30 or 40 years
- You pay a level premium for the term
- If you pass away during the term, a tax free death benefit is paid to your beneficiaries
- At the end of the term the plan can usually be renewed at a higher price, or converted if the contract allows
What affects the cost
- Your age and health
- Tobacco use
- Cover amount and term length
- Whether the plan is fully underwritten or simplified
Common mistakes to avoid
- Choosing a term that ends before the mortgage is paid or the children are independent
- Buying too little cover to save on premium
- Forgetting to name or update beneficiaries
- Waiting, since premiums rise with age
A 32 year old with a mortgage and two young children might choose 20 years of cover so the family is protected until the mortgage is paid and the children are adults. Illustration only, not a quote.
Questions people ask
What happens when my term ends?
You can often renew for a shorter period at a higher premium, convert to permanent cover if your contract allows it, or let the cover end if you no longer need it.
Can I have more than one term policy?
Yes. Many people layer policies, for example a 30 year plan for the mortgage and a 10 year plan for the years when the children are young.
Is the death benefit taxable?
In Canada, life insurance death benefits paid to a named beneficiary are generally received tax free. Estate and tax details depend on your situation, so check with a tax professional.
How term life works
Three choices decide your policy: how long, how much and how you pay.
1. Pick a term
Common terms are 10, 20, 30 and 40 years. Match it to your mortgage, your children’s ages or the years you expect to be working.
2. Pick an amount
Your beneficiary receives a tax free lump sum. Many families start at 10 to 12 times income, then adjust for debts and goals. Our calculator can help.
3. Lock in your premium
Your premium stays level for the whole term. At the end you can renew at a higher price or convert to permanent cover, if your plan allows it.
Who term life suits
Term is often the first policy people buy, and for many it is all they need.
- Parents who want their children protected through the expensive years
- Homeowners who want the mortgage cleared if something happens
- Couples where one income pays most of the bills
- Business owners with loans, leases or partner obligations
- Anyone who wants the largest cover for the smallest monthly cost
Term, whole and universal life compared
The three main types of life insurance, side by side.
| Term life | Whole life | Universal life | |
|---|---|---|---|
| Coverage period | Fixed term: 10, 20, 30 or 40 years | Your whole life | Your whole life (if the policy stays funded) |
| Premium cost | Lowest to start | Highest, but fixed | Flexible, between term and whole |
| Premiums | Level for the term, then rise on renewal | Guaranteed, can be limited to 10 or 20 years | Can be raised or lowered within limits |
| Cash value | None | Guaranteed, builds every year | Grows with the investments you choose, not guaranteed |
| Best for | Mortgage, children, income replacement | Estate planning, legacy, lifelong cover | Tax sheltered growth, business and estate planning |
| Main trade off | Cover ends if you outlive the term | Costs more and grows slowly | Needs monitoring, underfunding can lapse the policy |
General guide only. Features, guarantees and pricing differ by insurer and policy. Ask me for a side by side quote from several companies.
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Questions people ask
What happens when my term ends?
Cover stops unless you renew. Renewal is usually possible without a medical exam, but the premium is based on your age at that point and can be much higher. Many people plan to convert or replace the policy before then.
Can I turn term into permanent insurance?
Most plans include a conversion option that lets you switch to whole or universal life without new medical evidence, up to a stated age. Ask about it before you buy, because the rules differ by insurer.
How much term life do I need?
A simple starting point is 10 to 12 times your annual income, plus debts and future costs such as education. A proper needs analysis is more accurate, and I do it for free.
Is the payout taxable?
In Canada, life insurance death benefits paid to a named beneficiary are generally tax free. Your estate can face other taxes, so ask me about planning.
Does smoking change the price?
Yes. Smokers usually pay noticeably more than non smokers. Many insurers will re-rate you after a period of being tobacco free.
Find the right term cover for your family
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Book a free consultationCall 306-472-2020This page is general information, not personal advice. Product features, eligibility, guarantees and pricing vary by insurer and policy, and are set out in the policy contract. MS Insurance Inc. is licensed to sell life and health insurance in AB, SK, BC, NB, NS, QC, MB, ON and PEI.