With a term life insurance policy:
- Your family will receive high, short-term coverage at an affordable initial price
- It will allow your family to pay off debts and fund education savings plans
- Premiums will be guaranteed to remain the same for 5, 10, 15, 20, 25 or 30 years, or until age 65
- It can be converted to a permanent insurance policy when the short-term need is no longer necessary
Term life insurance is especially suitable for those looking to cover short to medium-term liabilities such as a mortgage or business loan. For a young family with a tight budget, there is no lower cost option than term life insurance. The premiums of a term life insurance policy remains fixed for the length of its term, after which it will increase by a pre-specified amount. The renewal premium takes into account your increased age and that you may not be as healthy as when you took out the policy. Therefore, it is typically less expensive to apply for a new policy than to renew the old one. The problem is when planning for the future, you don’t know what your health will be like 10 or 20 years from now. So it’s a risk to rely on this method.
Most policies in Canada also have a conversion provision, which allows you to convert all or part of the term policy into a permanent product. When the temporary need is replaced by a permanent one, this is an ideal way of keeping insurance coverage without having to qualify for it again.
If you’re looking for a long-term solution with cash value, permanent life insurance may be more suitable for you.
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