Term Life Insurance

Term life insurance provides temporary insurance for a specified period of time at the lowest cost. It provides affordable protection when you need it most for short and long term life insurance needs.

The term of the policy is when the policy term ends. The most common term is 10 years. Insurance companies offer different term periods of 5, 10, 15, 20 and 30 years. Term life insurance can also be Term to 100, which is permanent life insurance. The premium is guaranteed to remain the same and is locked in for the entire term of the policy. The policy cannot be cancelled by the insurance company other than for non-payment of premium. 

The premium depends on a number of factors including ones age, health, smoker or non- smoker status and the length of the term of the policy. The longer the term of the policy the higher the premium. To get the best rates select a 10 or 20 year term life insurance policy offered by more insurance companies. 

Term Life Insurance Includes Two Additional Benefits:

1. 1. The first benefit is the term life insurance policy is renewable up to a certain age. The most common age used by insurance companies for up to which a policy can be renewed is age 75 or 80. The renewal rates for the new term of the policy is guaranteed at time of purchase.

   2. The second benefit is the term life insurance policy is convertible up to a certain age. This benefit provides an option to convert the term life insurance policy into a permanent life insurance policy without any evidence of insurability or additional medicals even if the health of the insured has changed or the insured is no longer insurable. The policy can be converted into a whole life, universal life or term to 100 permanent life insurance policy. The insured can convert any amount up to the sum insured of the term life insurance policy at any time as long as the coverage is still in force. The premiums for the new permanent life insurance policy are based on age of the insured. Without the conversion option the insured would have to pay substantially higher premiums or not be able to buy permanent life insurance if the insured had a change in health or became uninsurable. 

Term life insurance is ideal for young families building their net worth, paying off their mortgage, saving for retirement and their children’s education.

10 Ways to save on Term Life Insurance Premium

1. 1. Consider paying the premium annually instead of monthly.  Insurance companies charge higher premiums for the privilege of paying monthly. You don’t get any additional insurance for the higher monthly premiums.

   2. Buy a permanent life Insurance policy and add the term life insurance policy as a rider, this will save you the policy fee which is $50.00 to $100.00 per year with most insurance companies.

   3. If you are buying a policy for yourself and your spouse some companies offer discounts and waive the policy fee on the second policy.

   4. If you are going to renew a term life insurance policy consider buying a longer term up front. If you choose a shorter term at time of purchase and plan to renew your term life insurance policy make sure the renewal rates are competitive.  Insurance companies may offer very low rates for the initial term but charge much higher rates on renewals.

   5. In some cases a joint first to die term life insurance policy may be an attractive option with a lower premium than two individual policies. This type of policy is used to insure a specific joint liability such as a mortgage or a loan.

   6. Some insurance companies will offer non-smoker rates if you are a social smoker of cigars or chewing tobacco. Non-smoker rates are lower than smoker rates.

   7. Insurance companies will also offer savings for people in good health, this is called preferred underwriting. A knowledgeable insurance broker can save you a substantial amount of money as each insurance company has their own criteria and underwriting guidelines.

   8. Convert your term life insurance policy into a permanent life insurance policy as soon as you can afford it.  Even though term life insurance is the lowest cost life insurance policy initially over the long term it is more expensive than permanent life insurance.

   9. If you are in good health at the time of renewal of your existing term life insurance policy, apply for a new term life insurance policy. The rates for a new term life insurance policy are often substantially lower than renewing your existing term life insurance policy.

   10. If you are buying insurance to satisfy a creditor (the creditor is the beneficiary on the policy) the premium can be a tax deductible business expense. Please refer to CRA guidelines for interpretation and/or consult your accountant or legal advisor.

There are many purchase options for consumers to buy Term Life Insurance

1. Direct marketers 

   1. Credit Card Companies  

   2. T.V. Commercials

2. Licensed Insurance Brokers

Direct Marketers:

Credit card companies that call you to buy their creditor credit card insurance. T.V. commercials that advertise no medicals required you will be dealing with an agent that is paid a salary not commission. With creditor insurance there is no medical underwriting at time of application. Creditor insurance with direct marketers is part of their group policy. You only know if you are insured when you have a claim (post-claim underwriting). In many cases sales agents in a call centre are not licensed insurance professionals. 

There is always a cost to market insurance products. Insurance brokers are paid commissions to service their clients and shop for rates. With direct marketers it is the cost of running T.V. commercials and having sales agents in a call centre. Insurance companies factor in the cost to market their insurance products into the premiums paid by consumers.

Licensed Insurance Brokers:

When dealing with insurance brokers consumers get a more value for their insurance dollar. Term life insurance policies are medically underwritten at time of application. You know up front if you are insurable before you buy your term life insurance policy.

Insurance brokers carry errors and emissions insurance and are accountable to consumers. Commissions paid to insurance brokers are built into the premiums regardless where the consumer purchases their term life insurance policy. There is no additional cost to use the services of an insurance broker. With Insurance brokers you will be dealing with a professional that has a vested interest in their clients, it is their livelihood.

Contact Us for a Term Life Insurance Quote

The information provided on this web site is intended for general information only. It should not be construed as legal, accounting, tax or specific insurance and investment advice. Clients should consult a professional advisor concerning their situations and any specific insurance and investment matters. While reasonable steps have been taken to ensure that this information was accurate as of the date hereof, Stone-Hedge Financial Group Inc. and its affiliates make no representation or warranty as to the accuracy of this information and assume no responsibility for reliance upon it.