Term life insurance for Ontarians

Term life insurance is for anyone who needs life insurance for a limited period of time (say while your kids are young) and wants more affordable premiums than they would pay for whole life coverage. In general, you save more the younger you are. If you’re a 30-year-old male non-smoker, you could get $100,000 of term life insurance for as little as $10 a month. If you’re 50 years old, the same coverage would cost you about $40. The difference with whole life is that it starts out much more expensive but the premium never goes up.

The amount of coverage you buy depends on what you can afford, and how much money your family will need if you should pass away unexpectedly. Some financial advisors recommend getting enough coverage so that your family will be able to make ends meet for 10 to 15 years without your income. If you earn $50,000 a year, that means at least $500,000. Some people want to be able to pay off their mortgage. The reality is that everyone calculates this amount a little differently. If your kids are older and likely to be able to support themselves soon, you don’t need as much coverage.

Unfortunately, life insurance premiums aren’t tax deductible if you pay for them yourself. Businesses that offer life insurance to their employees can in some cases deduct the premiums as a business expense. In terms of life insurance benefits, they would typically be exempt from taxes, just like most all inheritance.

Unlike whole life insurance, term life policies have no cash value. If you cancel the policy, you don’t get a cash payout.

Yes, most term life insurance policies cover cancer as a cause of death. There is usually an exclusion for pre-existing conditions, so if you already have cancer when you buy the policy, you would not be covered if you eventually pass away from that same cancer.

Term life insurance covers most causes of death, including most illnesses and accidents. Some causes of death aren’t covered like suicide, or you’re killed while committing a crime, and something an insurance company would consider reckless, like car racing or other extreme sports. We can help make sure you understand what your policy covers. You should know, most life insurance policies exclude pre-existing conditions, meaning that if you die of cancer, and it becomes clear that you already had cancer when you bought the policy, the claim would not be paid. Note that as of 2020, many insurers are excluding COVID-19 from new policies.

Term life insurance is, as the name suggests, for a set term, or period of time. If you buy a 10-year term life policy, the monthly premium should not change for the duration of that term. Once the term expires, you will pay more to buy a new policy, say for the next 10 years. By comparison, if you bought a whole life policy, you would be guaranteed the same premiums for your whole life.

Yes, you can certainly convert your term life insurance policy into a whole life policy. You might want to do this if you feel your life insurance needs were temporary, but then discover that you will need ongoing coverage past the end of your current term. Good to know: when you convert a term life policy to whole life, your premiums will go up a lot at first – double or more. But the benefit is that once you have a whole life policy, the premiums will never go up again unless you change the coverage level.

Term life insurance is the least expensive life insurance option for anyone who needs coverage for a limited time, and doesn’t need something with an investment or savings component – like a new parent wanting peace of mind while the kids are growing up. Or maybe you’re starting a new business and want to make sure your family is protected until the business has been running for a while and is providing a regular income. Term life insurance is cheaper than whole life insurance, and is available for 10, 15, 20 and 30 year terms. If you want life insurance for longer, or if you want something with an investment element, you probably want a whole life policy.