Term life insurance is a common choice for Canadians looking for temporary financial protection for their families. 10-year term life insurance is a specific type of term policy that offers more affordable premiums by providing coverage for a 10-year term. This detailed guide aims to cover everything you need to know about term 10 life insurance in the Canadian context.
What is 10-Year Term Life Insurance in Canada?
10-year term life insurance, also known as term 10 life insurance, is a policy that provides life insurance coverage for exactly ten years.
The “10-year term” refers to the fixed length of time that coverage is in place. Term lengths may vary from 10 to 30 years for term life insurance policies in Canada.
With a 10-year term life insurance policy, your premiums are fixed throughout the entire 10-year term. This means the amount you pay per month or year will not increase over the decade of coverage.
The death benefit also remains the same throughout the ten years. If you pass away at any point while the policy is active, your designated beneficiaries will receive the total tax-free death benefit payout.
If you outlive the 10-year term, coverage expires unless you choose to renew the policy or convert to a different type of permanent life insurance.
Term 10 life insurance tends to have more affordable premiums than longer 20 or 30-year terms. It also costs less than permanent life insurance options like whole life or universal life.
Term 10 offers insurance protection without building any cash value within the policy.
According to the data from Statista, individual life insurance accounts for 65 per cent of the value of total life insurance policies in-force in Canada in 2021 – driven primarily by term life insurance. (source: https://www.statista.com/statistics/611757/life-insurance-product-distribution-canada/). Ten-year terms remain one of the most popular options for Canadians seeking temporary coverage.
Alternatives to 10-Year Term Life Insurance in Canada
While term 10 life insurance meets specific short and medium-term coverage needs, there are 4 other options that Canadians may want to consider as well:
- Longer Term Lengths – Insurers also offer term life insurance for 15, 20, 25, or 30 years. These policies have slightly higher premiums than term 10, but extend your coverage for longer.
- Permanent Life Insurance – Permanent life insurance options like whole life insurance and universal life insurance provide lifelong coverage as long as you pay the premiums. Premiums are higher, but policies build cash value that you can access.
- Group Life Insurance – Many Canadian employers offer group life insurance policies as part of their benefits package. This insurance can supplement an individual term 10 policy.
- Guaranteed Issue Life Insurance – If you have pre-existing health conditions that make qualifying difficult, guaranteed acceptance life insurance options don’t require a medical exam. However, coverage amounts are lower.
For Canadians wanting temporary coverage for 10 years or less, term 10 life insurance is often the most affordable option. A different type of policy may better serve those who prioritize lifelong protection.
How Does Term 10 Life Insurance Work in Canada?
Here is an overview of how a term 10 life insurance policy works in Canada:
- You apply for a 10-year term life insurance policy from a Canadian insurance company and choose your desired coverage amount
- The insurance company will assess your health and other risk factors through the application process to decide on issuing a policy and at what premium cost
- If approved, you pay a monthly or annual premium to keep the term 10 policy active for the entire 10-year term
- Your premium is guaranteed not to increase over the ten years even if your health declines
- If you pass away at any point during the ten-year term, your named beneficiaries receive the full tax-free death benefit
- If you outlive the ten-year term, the coverage expires unless you proactively renew or convert the policy
- At the end of the term, you would need to re-apply, and premiums will likely be higher due to aging
- Term 10 insurance only pays out if you die during the term and does not accumulate any cash value
The term 10 structure provides pure protection for ten years. This contrasts with permanent life insurance, which builds cash value within the policy.
Everyday Situations for 10-Year Term Life Insurance in Canada
There are 4 scenarios where term 10 life insurance can be well-suited to meet coverage needs for Canadians:
Paying Off Short-Term Debt
If you have debts like personal loans, lines of credit, auto financing, or a mortgage that will be paid off within ten years, a term 10 policy can cover the outstanding balance if you pass away prematurely.
Once short-term debts are paid off, the need for insurance coverage decreases significantly. A 10-year term aligns well with this declining need.
Bridging a Temporary Insurance Gap
You may need to bridge a gap between one expiring life insurance policy and securing a new plan. 10-year term insurance can provide temporary coverage if health issues create a waiting period before qualifying for permanent life insurance.
Locking in Low Premiums at a Young Age
Younger Canadians can lock in very low premiums for ten years, which will remain at a level as they age. This avoids having to start with much higher rates at an older age when seeking longer 20—or 30-year coverage.
Matching Specific Short-Term Needs
If you need coverage for specific short-term needs, such as covering family living expenses until the kids graduate or maintaining your spouse’s quality of life over the next decade, a term 10 policy can be tailored to match that temporary need.
Pros and Cons of Term 10 Life Insurance in Canada
There are 4 key advantages and 4 potential limitations to consider regarding term 10 life insurance in the Canadian context:
Advantages
- Lower premiums than longer terms or permanent insurance options
- Ability to lock in guaranteed premiums for the entire ten years
- Can potentially convert to a permanent insurance policy later without new medical underwriting
- Pure protection to cover temporary needs without extra costs
Limitations
- No cash value accumulation or savings element
- Older age at renewal may mean much higher premiums
- May need to provide new medical evidence and qualify again after ten years
- Does not provide lifelong coverage like permanent policies
Overall, term 10 life insurance can provide an affordable way for Canadians to meet short-to-medium-term coverage needs. However, it lacks the lifelong protection and cash value components of permanent insurance.
How Much Does a 10-Year Term Life Insurance Policy Cost in Canada?
The cost of a 10-year term life insurance policy in Canada varies based on 5 factors, including:
Age at Purchase
Premiums are significantly lower when you are younger and buy term insurance in your 20s or 30s. A healthy 30-year-old may pay $30 monthly, while a 55-year-old pays $100 monthly for the same coverage.
Health and Lifestyle
Applicants in excellent health with minimal risk factors will qualify for preferred rates. Those with many medical issues or risky lifestyles may pay higher premiums or be declined.
Gender
Due to differing life expectancies, women of the same age can typically obtain lower term 10 rates than men for an equivalent coverage amount.
Coverage Amount
Higher death benefit amounts mean higher monthly premiums. A $500,000 policy will cost more than a $250,000 policy for any individual.
Extra Riders
Additional riders providing benefits like accidental death, disability, or critical illness coverage add to the base premium costs.
Sample Term 10 Quotes from Major Canadian Insurers
Here are sample monthly premiums for $250,000 of term 10 life insurance coverage from leading companies in Canada:
Age | Gender | Smoker | Sun Life | Canada Life | RBC Insurance |
---|---|---|---|---|---|
30 | Male | No | $27 | $29 | $28 |
30 | Female | No | $21 | $23 | $22 |
45 | Male | No | $42 | $44 | $43 |
45 | Female | No | $32 | $34 | $33 |
60 | Male | No | $102 | $105 | $103 |
60 | Female | No | $79 | $81 | $80 |
Premiums are based on individual risk factors assessed during the application process, but this table provides an approximate comparison of rates between major Canadian life insurers.
Comparing Term 10 Insurance Providers in Canada
When shopping for term 10 life insurance, it’s essential to compare policies from the Top insurance providers in Canada, such as Sun Life, Canada Life, Manulife, RBC Insurance :
Sun Life
- Offers 10, 15, 20 and 30 year term lengths
- Coverage up to $50 million
- Streamlined online quotes and application process
- Strongest financial strength and credit ratings
Canada Life
- Term 10 and Term 20 plans available
- Ability to convert term 10 policy to permanent insurance
- Apply and manage your policy entirely online
- Consistently high ratings for claims-paying ability
Manulife
- Competitive 10 or 20-year term life options
- Coverage amounts up to $50 million
- User-friendly website and mobile app
- Long-standing reputation and highly rated
RBC Insurance
- 10-year and longer term lengths offered
- Coverage from $50,000 up to $25 million
- Smooth online application process
- Backed by RBC, Canada’s largest bank
Always compare term 10 rates and features between providers to find your optimal plan. Working with an experienced independent insurance broker can help you identify your best option.
Who Should Consider a 10-Year Term Policy?
A 10-year term life insurance policy is well-suited for various individuals and circumstances, including:
Young Families and First-Time Parents
For young families and first-time parents, a 10-year term policy can provide essential financial protection during the critical early years of child-rearing. The death benefit can help cover expenses such as:
- Day-to-day living costs
- Childcare
- Future education costs
Homeowners with a Mortgage
Homeowners carrying a mortgage can benefit from a 10-year term policy, as it can help cover mortgage payments in the event of the policyholder’s death. This ensures that loved ones can remain in the home without the added burden of mortgage debt.
Business Owners
For small business owners, a 10-year term policy can provide a financial safety net by:
- Covering business debts
- Providing capital to keep the business running smoothly in the policyholder’s absence
Career-Driven Individuals
Career-driven individuals who expect significant income growth over the next decade may find a 10-year term policy suitable. It offers solid coverage in the short term while providing the flexibility to reassess insurance needs as income and lifestyle change.
Budget-Conscious Shoppers
For those seeking affordable life insurance coverage, a 10-year term policy is often the most cost-effective option. It allows budget-conscious shoppers to obtain significant protection for a set period without a long-term financial commitment.
Those with Short-Term Debts and Obligations
Individuals with short-term financial responsibilities, such as personal loans or car payments, can benefit from a 10-year term policy. The death benefit can help cover these debts, ensuring they don’t become a burden for loved ones.
Older Individuals Seeking Coverage Until Retirement or a Milestone
For older individuals nearing retirement or a significant milestone, a 10-year term policy can provide coverage for a specific period. This can help bridge the gap until retirement benefits kick in or until other financial obligations are met.
Smart Shopping Tips for Term 10 Insurance in Canada
Follow these tips when shopping for the optimal term 10 life insurance policy in Canada:
- Compare quotes from multiple highly rated providers to identify the most competitive pricing
- Consider applicable extra benefits like accidental death, disability riders, or child insurance to enhance your base coverage
- Work with an experienced broker or advisor who can explain all your options
- Look for an insurer with strong financial stability, excellent credit ratings, and high claims-paying ability
- Understand renewal, conversion and extension provisions before committing to any company
- Answer health and lifestyle questions fully and truthfully during underwriting
- Opt for easy online application and digital payment methods when available
- Review beneficiaries often and keep contact information updated
Following these tips will help you secure optimal rates on term 10 coverage that meets your family’s needs and budget.
Related: Tips for Buying the Right Term Life Policy
What Happens When My 10-Year Term Life Insurance Policy Expires?
When your 10-year term life insurance policy expires, your coverage ends, and you’ll no longer have that financial safety net in place. But don’t worry—you have options! Many policies offer a renewal feature, allowing you to extend your coverage without another medical exam. Keep in mind, though, that the premiums will likely go up based on your age at renewal. It’s a good idea to review your current financial situation and future needs before deciding your next steps.
If renewing isn’t the best fit, you can look into converting your term policy to a permanent one, which provides lifelong coverage and builds cash value over time. This can be a smart move if your needs have shifted or if you want to lock in coverage while you’re still relatively young and healthy. Another option is shopping around for a new term policy that better suits your current life stage. Whatever you choose, consulting with a financial advisor who understands the Canadian market can help you navigate your options and find the best solution for your needs.
Explanation of Coverage Ending After the Term
Once the 10-year term is complete, your coverage will end. This means that if you pass away after the term has expired, your beneficiaries will not receive a death benefit payout.
Options for Renewing or Converting the Policy
- Renewing the Policy: Many 10-year term policies offer the option to renew coverage at the end of the term, often without the need for a new medical exam. However, your premiums will likely increase based on your age and health at the time of renewal.
- Converting to a Permanent Policy: Some 10-year term policies allow you to convert your coverage to a permanent life insurance policy, such as whole life or universal life. This option can provide lifelong coverage and may include a cash value component.
Importance of Reassessing Coverage Needs Before the Term Ends
As your 10-year term policy nears expiration, it’s essential to reassess your life insurance needs. Consider factors such as your current financial obligations, family situation, and long-term goals to determine whether renewing, converting, or purchasing a new policy is the best choice for you.
Potential Changes in Premiums and Health Considerations Upon Renewal
If you choose to renew your 10-year term policy, be prepared for potential changes in your premiums. Your new premiums will be based on your age and health status at the time of renewal, which may result in higher costs compared to your initial policy. Additionally, any changes in your health since the original policy was issued could impact your premiums or eligibility for coverage.
Purchasing Term 10 Life Insurance in Canada
There are 5 simple steps to purchasing term 10 life insurance coverage in Canada:
Getting a Quote
You can quickly get a personalized premium estimate using insurer websites or an online comparison portal. Provide details on age, health, coverage amount and other parameters.
Initiating the Application
When ready to proceed, begin a complete application on the insurance company site or through an advisor. You’ll answer in-depth questions about lifestyle, family history, medications, and health.
Completing Policy Requirements
In most cases, for term 10, you will need to complete a paramedical exam and potentially other medical tests depending on your age and desired coverage amount.
Waiting for Policy Approval
If you are approved, the insurance company usually takes 2-3 weeks to review your application and issue a policy.
Making the First Premium Payment
Once approved, you’ll need to pay your first monthly, quarterly or annual premium to put the coverage into effect.
The purchase process for term 10 insurance in Canada is generally quick and can be completed online in many cases.
Beyond Term 10 Life Insurance, there are other types of term life insurance, such as Term 20, Term 25, Term 40, and more. Term life insurance provides temporary coverage for a set period of time, with options for 10, 15, 20, 25, 30 years and beyond. Each policy length meets different needs. Check out these helpful articles to gain more insights into Term 20 Life Insurance, Term 25 Life Insurance, Term 40 Life Insurance, Term 30 Life Insurance, Term to Age 65 Life Insurance, etc. Discover the differences in policy lengths, costs, and best uses for coverage.
Where Can Canadians Buy Term 10 Life Insurance?
You have 3 options to consider when buying term 10 life insurance in Canada:
Directly From Insurance Carriers
Major insurance companies like Sun Life, Manulife, RBC Insurance and Canada Life allow Canadians to get quotes and apply for term 10 insurance directly through their website or contact center.
Through an Independent Insurance Broker
Brokers have access to policies from a wide range of carriers. A broker shops the market on your behalf to match you with your optimal term 10 insurance policy.
Related: Top Life Insurance Brokers in Canada
Via Workplace Group Benefits Plan
Some Canadian employers provide group life insurance plans up to certain coverage maximums as part of the benefits package. You can supplement this with an individual term 10 policy.
Independent brokers can compare many insurers to find you the ideal blend of low premiums, solid financial ratings, added benefits, and excellent service.
Making a Term 10 Life Insurance Claim in Canada
Here are the steps for your beneficiaries to claim on a term 10 life insurance policy in Canada:
- Please contact the insurance provider to report the insured’s death. Most insurers have dedicated claims departments and hotline numbers.
- The company will send the required claim forms to authorize the release of medical records and payment of the death benefit.
- Beneficiaries must submit an official copy of the death certificate to provide evidentiary proof of death.
- The insurance company will review the claim in detail and verify the policy was active at the time of death.
- Once approved, the tax-free death benefit is paid out in a lump sum to the named beneficiaries.
- Benefits are typically paid out in Canada within 1-2 weeks of claim approval for straightforward claims. More complex cases may require further review.
- Beneficiaries are free to use the claim payout to cover expenses, pay off debts, fund education, or invest it.
The streamlined claims process helps beneficiaries in Canada access these vital funds quickly during their time of grief.
Key Takeaways
- 10-year term life insurance provides affordable coverage for a specific period, with fixed premiums and a death benefit payout.
- This policy type is ideal for those with short-term financial obligations, such as young families, homeowners, and business owners.
- Premiums are generally lower compared to other life insurance options, especially for younger, healthier individuals.
- It’s essential to consider factors such as renewability, convertibility, and riders when comparing policies from different providers.
Term 10 life insurance can provide Canadian families, individuals, and business owners with budget-friendly tax-free coverage for a 10 year term.
While not right for everyone, term 10 insurance is well-suited to certain short—and medium-term needs, such as covering a mortgage, bridging a gap, or locking in low rates when young.
Comparing quotes from the top Canadian life insurers, coupled with the guidance of an experienced independent broker, helps ensure you secure competitively priced coverage.
With proper planning, term 10 life insurance can give Canadians invaluable temporary peace of mind, knowing their loved ones will be cared for financially.
Frequently Asked Questions (FAQs)
Q: At what age should I buy term 10 life insurance?
A: The younger you are when you buy term 10 insurance, the lower your premiums will be. Buying in your 20s or 30s locks in the lowest rates.
Q: Who needs to be my term 10 life insurance beneficiary?
A: You can name anyone as the beneficiary - usually a spouse, child, or other family member who depends on you financially.
Q: What happens if I miss a payment on my term 10 life insurance?
A: If you miss a payment during the 10-year term, the policy will lapse and no longer provide coverage.
Q: Can I get a term 10 life insurance policy if I have depression?
A: Yes, you can get approved but may pay higher rates. Severe depression may result in being declined.
Q: Will my term 10 life insurance payout for accidental death?
A: Yes, term 10 life insurance covers death from any cause, including accidents, during the 10-year term.
Q: Can I bundle my term ten life insurance with other types of insurance?
A: Many insurers allow you to bundle term 10 life insurance with things like critical illness insurance for added value.
Q: Can I get term 10 insurance without a family doctor?
A: Yes, you can still get coverage without a family doctor by completing a paramedic medical exam instead.
Q: Will health conditions excluded from the application be covered later in the term 10 policy?
A: No, conditions excluded due to your health when applying will remain excluded over the 10-year term.
Q: Can I adjust my term 10 life insurance death benefit after getting coverage?
A: The death benefit cannot be adjusted during the 10 year term but you can change it at renewal.
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