Term insurance provides coverage, during a specific period of time (term), at a premium rate that is essentially based upon the amount of coverage and the probability of death during the term. Term insurance is the closest thing to pure insurance protection.
Term periods are typically available for 5, 10, 15, 20, 25, 30 and 35 years, as well as terms to age 65, 70, 75 or 100. Term to (age) 100 policies are basically another permanent insurance option. The face amount of the term policy is the amount of benefit payable to the beneficiaries upon death within the period of the term. Premiums remain level (a constant amount) for the period of the chosen term. The longer the term, the higher the premium.
Some term policies have a decreasing face value, whereby the premium remains the same each year but the face value of the policy declines. This is typical of mortgage insurance provided by banks.
A renewable policy includes a clause that permits you to extend the term of a policy for additional similar periods of time without a medical exam to prove insurability. A convertible policy provides the option of converting a term policy into a permanent policy without the need for a medical exam. This can be a valuable option for a policyholder diagnosed with an illness which would prevent them from acquiring future life insurance. Rather than being faced with continuously increasing premiums converting to a whole life policy, for example, would provide a guaranteed level premium for life or a shorter chosen period of time.
The largest concern with term insurance is that, if you wish to maintain the same face amount on your policy, your premiums will increase as you age, such that it may be prohibitively expensive as you move towards and beyond retirement. For example, the premium for a 5 Year Term policy will more than double in cost on every 5th anniversary year.
I believe the 10 Year Term Policy is the most popular purchased life insurance coverage in Canada, if not North America. The reasons for this are because:
- It is the most aggressive and competitively priced insurance product being marketed today.
- Most people can project what their insurance requirements will be over the next 10 years, but beyond that the picture gets a little fuzzy.
- A 10 Year Term Policy has the versatility which allows it to be utilized for numerous insurance requirements, such as coverage for a mortgage and other personal and business debts as well as for obligations for a partnership agreement and Key Man coverage.
We contact our clients who have 10 Year Term policies prior to the tenth anniversary date of their policies to confirm if their coverage is still required. If it is, we locate and provide them with the option of acquiring a new policy with a much lower premium than what their present renewable policy guarantees.
so that I can assist you to aquire your own affordable insurance policy. Free quotations can be provided by phone, fax or email.