Term 100 life insurance is a unique life insurance product designed for those who want lifelong coverage but do not need the investment features of whole or universal life insurance. This guide will provide a deep dive into how Term 100 works, who it’s best for, its costs, and how it compares to the alternatives, so you can determine if it’s the right fit for your financial plan.
What is Term 100 Life Insurance?
Term 100 is a permanent life insurance policy. Despite the word “Term” in its name, it does not expire after a set number of years. Instead, it provides a guaranteed death benefit for your entire life, provided you pay the premiums until you reach age 100. This premium is guaranteed never to increase.
The death benefit is paid tax-free as a lump sum to your named beneficiaries upon your death. If you reach your 100th birthday, the insurance company typically considers the policy “paid up”. You stop paying premiums, but the full coverage remains in effect for the rest of your life.
The key differentiator between T100 policies and other permanent life policies is that T100 policies do not accumulate a cash surrender value or investment component. It is pure life insurance protection, which is why it is significantly more affordable than whole life or universal life.
T100 vs. Other Permanent Options
| Feature | Term 100 | Whole Life | Universal Life |
| Duration | Lifelong | Lifelong | Lifelong |
| Premium Cost | Moderate | High | Variable |
| Cash Value | No | Yes | Yes (Investment-linked) |
| Complexity | Low | High | Very High |
Types of Term 100 Life Insurance
Term 100 life insurance is available in different policy structures to suit your specific insurance needs. The main types of Term 100 insurance include:
Individual Term 100 Policies
Individual Term 100 is the most common type, covering a single person. This plan is used to protect your family or beneficiaries in the event of your death. The tax-free death benefit is paid to the named beneficiaries upon the insured person’s death, which can replace lost income, pay off debts, and more.
Joint First-to-Die Term 100
Joint First-to-Die policy covers two people (typically spouses or business partners) but pays out only once, upon the death of the first person. After the benefit is paid, the policy terminates. It is often used to cover a mortgage or provide the surviving spouse with immediate funds.
Joint Last-to-Die Term 100
Joint Last-to-Die policy also covers two people, but it pays the death benefit only after the second person passes away. JLTD policies are almost exclusively used for estate planning, as the funds are typically needed to pay taxes and settlement costs that come due after both spouses have died. Premiums are generally lower than for two individual policies or a JFTD policy.
Who Needs Term 100 Life Insurance?
Term 100 life insurance is a suitable permanent protection solution for:
- Young families – Parents with kids get lifelong coverage to provide for dependents if a parent dies. The rates are the lowest when applying early.
- Single parents – Single moms or dads gain coverage for daily expenses and childcare costs if they unexpectedly pass away.
- Self-employed – Entrepreneurs and small business owners who lack employer group benefits can get individual insurance.
- People with health conditions – Since underwriting for Term 100 insurance occurs upfront, you can secure permanent coverage without worry of declined renewal or much higher re-evaluation premiums later if your health declines.
- Older adults – Those in their 60s and 70s still needing permanent insurance can benefit from guaranteed premiums and no medical requalification.
- Estate planning – Individuals with sizable estates get coverage to pay taxes and outstanding debts, so heirs receive a larger legacy amount.
- Charitable giving – Term 100 proceeds enable making a large tax-free donation to a charity upon death.
Pros and Cons of Term 100 Life Insurance
Term 100 offers an appealing package with lifetime guaranteed coverage. However, the lack of cash accumulation makes it unsuitable for wealth transfer needs beyond just the death benefit.
| Pros | Cons |
|---|---|
| Lifelong Coverage: As long as you pay your premiums, your beneficiaries are guaranteed to receive the death benefit, whether you pass away at age 65 or 105. | No Cash Value: You cannot borrow against the policy or surrender it for cash. |
| Predictable, Level Premiums: Your premiums will never increase, providing certainty about future costs. | No Return of Premium: You will not get your money back if you outlive the need for the policy and decide to cancel it. |
| Lower Cost: T100 offers permanent protection at a lower cost than other permanent policies by stripping out the cash value and investment components. | More Expensive Than Term Insurance: Because it’s designed to last a lifetime and pay out eventually. |
| Excellent for Estate Planning: The tax-free death benefit helps beneficiaries pay estate taxes. | Requires Medical Underwriting: You must qualify based on age, health, and other factors. Higher-risk applicants may pay more or be denied. |
Understand the Lapse Risk Of T100 Insurance
Because T100 has no cash value, it is less flexible than Whole Life. If you experience a financial crisis at age 80 and cannot afford the premium, the policy could lapse, and you would lose decades of “investment” in those premiums.
Pro Tip: Look for a “Waiver of Premium” rider. If you become critically ill or disabled before age 60, the insurance company will cover your premiums for you.
Cost of Term 100 Life Insurance in Canada
Term 100 life insurance usually costs more than regular term life insurance but less than permanent whole life insurance. Their rates depend on:
- Age – The younger you are when applying, the lower your premiums. Rates increase each year as you age.
- Gender – Women often get lower rates than men of the same age due to longer life expectancies.
- Health – Good health results in better rates. Those with medical conditions (also called pre-existing conditions) pay higher premiums.
- Lifestyle – Dangerous hobbies or high-risk occupations also increase rates.
- Face Amount – The higher the death benefit, the higher your premiums.
Example Premium Ranges: To provide a realistic expectation, a healthy, non-smoking 35-year-old might expect to pay between $70 and $100 per month for a $500,000 policy. A 50-year-old in similar health could see premiums in the $200-$300 per month range for the same coverage.
These are estimates; only a formal quote after underwriting can provide an exact price. Always shop rates from multiple providers to get your best deal.
Tips for Purchasing Term 100 Insurance
Follow these tips for getting the best rates and coverage with Term 100 life insurance:
- Compare quotes from at least 3 to 5 different insurance providers to find your best option for rates and service.
- Consider adding riders like a waiver of premium for disability or critical illness to enhance your base policy.
- Apply early while young and healthy. Premiums increase each year as you age. Underwriting is also more lenient for younger applicants.
- Work with a broker for access to a wide range of insurance companies and help choose the right policy. Brokers have expertise in different products.
- Be thorough on your application to avoid any delays or investigations that slow the process. Disclosing all information up front results in faster approval.
- Pick an appropriate beneficiary like your spouse, child, or trust. You can change the beneficiary later if needed.
- Review in-force illustrations so you understand how the guaranteed premiums work over the long term when budgeting.
Alternatives to Term 100 Life Insurance
While Term 100 policies offer lifetime coverage at guaranteed rates, there are other permanent and temporary life insurance options to consider as well:
Term Life Insurance
Regular term life insurance provides temporary coverage over a set period, like 10, 15, 20, or 30 years. Premiums increase at each renewal. While cheaper initially, renewal rates become costly as you age.
Other Permanent Life Insurance
Whole life and universal life insurance offer lifelong coverage and cash value accumulation. Premiums are flexible but not guaranteed. Permanent insurance is better for wealth transfer and estate planning but costs more than term.
Guaranteed Issue Life Insurance
For those with health issues, guaranteed issue life insurance offers simplified underwriting with no medical exam. However, benefit amounts are capped at $25,000, which may be insufficient. Premiums are high and lifelong.
Compared to these alternatives, Term 100 offers a nice middle ground. You get permanent coverage with guaranteed premiums and larger benefit options than guaranteed issue products.
How to Buy Term 100 Life Insurance in Canada
Purchasing Term 100 life insurance involves researching plans, comparing rates, and going through the application/underwriting process:
Getting Quotes
You can request Term 100 insurance quotes by:
- Getting quotes online – Many insurers, like Sunlife and RBC, allow you to fill out a simple form online to get instant rate quotes.
- Contacting insurers directly – You can call insurers’ sales lines directly to speak with an agent and receive quotes.
- Working with an independent broker – Brokers like Life Buzz can provide quotes from a large number of life insurance companies in Canada through a single application process.
Applying for Coverage
The application involves:
- Completing the full application with background, lifestyle, medical history, and other details.
- Setting your coverage amount based on income needs and goals for beneficiaries.
- Selection of any riders, such as those with a waiver of premium, accidental death benefit, or critical illness.
- Going through medical underwriting, including exams and submitting fluid samples.
Remember, be completely honest to ensure your policy is valid when a claim is made.
Receive and Accept the Offer
After reviewing your application and medical results, the insurer will provide a formal offer with the final premium. If you accept, you make your first premium payment to put the policy in force.
Summary: Is Term 100 Right for You?
Term 100 life insurance is a powerful tool for Canadians with permanent insurance needs. While it costs more than temporary term insurance, its locked-in premiums provide peace of mind that your protection will remain affordable for your entire life. If your financial goals align with leaving a guaranteed, tax-free sum of money behind, Term 100 is an option well worth considering.
Frequently Asked Questions (FAQs) on Term 100 Insurance
Does Term 100 life insurance build any cash value?
No. This is the defining feature of Term 100. It is pure insurance protection with no savings or investment component, which is why it is less expensive than whole life insurance.
At what age should I buy Term 100 life insurance?
The best age to buy Term 100 insurance is early on in adulthood, such as in your 20s or 30s. Premiums increase each year, so purchasing when young saves substantially on costs over the long run.
Can I convert my Term 100 policy to whole life or universal life insurance?
Most Term 100 policies do not allow conversion to permanent cash value policies like whole or universal life. A new application for permanent coverage would be required.
Are Term 100 premiums tax deductible in Canada?
No, Term 100 life insurance premiums are not tax deductible in Canada, unlike some permanent life insurance policies. The tax-free death benefit is the main tax advantage.
What happens if I develop a health condition after my policy is approved?
Nothing. Once your policy is in force, your coverage and premiums are locked in. Your rate will not change even if your health deteriorates later in life. This is a key benefit of securing coverage while you are healthy.
Is Term 100 renewable after age 100?
No, Term 100 coverage continues for life after premiums stop at age 100. There is no need to renew or re-qualify for coverage after age 100 once initially approved.
What is the suicide clause for Term 100 life insurance?
Standard across the industry in Canada, if the insured dies by suicide within the first two years of the policy start date, the insurer will not pay the death benefit. Instead, they will typically refund the premiums that were paid.
Can I adjust my Term 100 insurance beneficiaries?
Yes, you can change your beneficiaries at any time by submitting a form to the insurance company, as long as the current beneficiary is not designated as "irrevocable."
