Ben Nguyen 
Life insurance provides financial protection for your loved ones in the event of your death. It comes in two main types: term and permanent life insurance. Term life insurance is coverage for a set period, while permanent life insurance lasts your whole life.
One common term policy is 25-year term life insurance. This article will provide an in-depth look at 25-year term life insurance policies in Canada – what they are, how they work, costs, top providers, and more. Read on to learn everything you need to know about securing term 25 life insurance coverage.
What is Term 25 Life Insurance?
Term life insurance provides death benefit coverage for a specific term length, such as 10, 20, 25, or 30 years. With 25-year term life insurance, the policyholder pays a fixed premium for 25 years in exchange for a death benefit payout if they die during the term.
The key features of 25-year term life insurance are:
- Level premiums – The policyholder pays the same premium each year for the 25-year term. Premiums do not increase with age during the term.
- Level death benefit – The death benefit remains the same throughout the 25-year term. This is the payout the beneficiaries receive if the insured dies.
- Limited policy term – Coverage lasts for 25 years. At the end of the term, coverage ends unless renewed.
- Renewability – Most policies can be renewed for another term without medical underwriting. Premiums increase significantly.
- Convertibility – Many policies can be converted to permanent life insurance without a medical exam before the term expires.
25-year term life insurance is an affordable way to get a high death benefit for a set period of time. It’s ideal for temporary needs like covering a mortgage, providing for young children, or replacing income for survivors.
Types of Term 25 Life Insurance
The two main types of 25-year term life insurance are level term and decreasing term.
Level Term Life Insurance
Level-term life insurance is the most common type of 25-year term policy. With level term:
- The death benefit remains the same over the entire 25-year duration of the policy.
- Premiums are also level and do not increase with age over the term.
- Having predictable level premiums and coverage makes financial planning and budgeting simple.
- Level premiums are higher than decreasing terms, but you get lifelong protection for those 25 years.
- This works well when you need a fixed amount of coverage for the whole term, such as providing for family income needs.
Level-term 25 life insurance offers stability and simplicity, making it the right choice for many consumers looking for medium-term coverage for 20-30 years.
Decreasing Term Life Insurance
With decreasing term life insurance, also known as reducing term, the death benefit decreases incrementally each year over the 25-year term rather than remaining level.
- The policyholder’s life insurance coverage decreases yearly as the term progresses.
- This works well when your needs align with a debt that reduces over time, like a mortgage that you pay down.
- Premiums are generally lower compared to level-term life insurance for the same initial coverage amount.
- However, the death benefit amount drops annually, leaving less protection later in the term compared to the level term.
- Decreasing term 25 is ideal when you need higher coverage early on but reduced insurance later as obligations decrease.
Decreasing 25-year term life insurance policies make the most sense when tailored to a debt that declines with time, like a mortgage you are paying off.
How Does Term 25 Life Insurance Work?
Here is an overview of how 25-year term life insurance works:
- The policyholder applies and must medically qualify based on factors like age, health, family history, and lifestyle. A medical exam may be required.
- Once approved, the policyholder pays a level premium each year for 25 years. This premium is based on their age and health status when the policy began.
- The life insurance company pays out the death benefit (less any loan balances) to beneficiaries if the insured dies during the 25-year term.
- At the end of the term, coverage can be renewed for another term at substantially higher premiums. Policies may also have a conversion option to permanent life insurance.
- If the insured outlives the 25 year term, the policy terminates without paying out a benefit. Some policies offer return of premium features.
Term life insurance provides affordable, renewable coverage for temporary needs like mortgages, income replacement, and final expenses. 25-year terms cover longer obligations.
When Do You Need Term 25 Life Insurance?
Here are some common reasons to consider purchasing a 25-year term life insurance policy:
- You have a 25-year mortgage or debt obligation to cover
- You need life insurance for 25-30 years until children are independent adults
- You want coverage until a specific age, like retirement at 60-65 years old
- You need high life insurance coverage, but permanent insurance is unaffordable
- You are in your 30s or 40s and want coverage until your 70s or 80s
- You own a business and need coverage for buy-sell agreements or key person insurance
The longer-term coverage of 25-year policies works well for these intermediate-term needs.
Pros and Cons of Term 25 Life Insurance
Before purchasing 25-year term life insurance, weigh the key pros and cons:
Pros
- More affordable premiums than permanent insurance
- Can obtain higher death benefit amounts
- Level premiums help with budgeting
- Coverage can be renewed after the initial term
- Can convert to permanent insurance if you need lifelong coverage later
Cons
- No cash value or investment component
- Premiums increase substantially upon renewal
- Health issues may prevent renewing after the initial term
- No coverage after term ends unless renewed
- Maximum term lengths limit how long coverage lasts
Overall, 25-year term life insurance offers affordable coverage for over two decades. Just be aware of limitations if coverage is needed longer.
Cost of Term 25 Life Insurance
The cost of 25-year term life insurance depends on several factors:
Age
Age is a major determinant of term life insurance rates. Premiums increase as you get older, as the risk of death rises with age. A 30-year-old will pay much less than a 50-year-old for the same coverage amount.
Gender
Insurance companies charge lower premiums to females compared to males of the same age, as statistics show women generally live longer. Gender pricing differences have narrowed in recent years but still persist.
Health
Your overall health is key to getting lower-term life insurance rates. Factors like smoking, high cholesterol, diabetes or heart disease will increase your premiums significantly compared to applicants in excellent health. Poor health can even result in denial of coverage.
Lifestyle
Hazardous hobbies like skydiving or motorcycle racing will boost your rates. Tobacco use also leads to much higher premiums – smoking can double the cost compared to a non-smoker. Geography and occupation may also impact pricing.
Coverage Amount
The dollar amount of life insurance coverage you select directly impacts the premiums. More coverage equals higher premiums. For a given individual, a $1 million policy will cost more than a $500,000 policy. However, the cost per $1000 of coverage decreases with higher amounts.
Here are some sample monthly premium costs for 25-year $500,000 term life insurance from top Canadian insurers:
| Age | Male Smoker | Female Non-Smoker |
|---|---|---|
| 30 | $50 | $35 |
| 40 | $100 | $55 |
| 50 | $300 | $140 |
As shown, premiums rise steeply with age. Female non-smoker rates are the lowest, while older male smokers pay the most.
After the initial 25-year term, renewal premiums typically soar to 4-5x the original cost. With a policy renewal at age 55, a person may pay $500 per month for the same coverage that originally cost $100.
Top Insurers for Term 25 Life Insurance in Canada
When purchasing term 25 life insurance, it’s advisable to buy from a highly-rated insurer. Here are some largest life insurance companies in Canada to consider:
Sun Life Financial
- One of the biggest insurance companies in Canada
- Offers both term and permanent life insurance
- 25-year term policies available
- Additional options like critical illness and disability insurance
- AM Best Rating: A+ (Superior)
Related: Sun Life Insurance
Manulife
- Massive international insurer with over 125 years of experience
- Competitive pricing on term life insurance
- 25-year policies with conversion and renewal options
- Also offers investments, health insurance, and banking
- AM Best Rating: A+ (Superior)
Related: Manulife Life Insurance
RBC Life Insurance
- Life insurance arm of the Royal Bank of Canada
- 25-year term plans with the ability to renew and convert
- Return of premium option on some term policies
- Part of Canada’s largest bank providing integrated financial services
- AM Best Rating: AA- (Excellent)
Related: RBC Life Insurance
Canada Life
- Over 180 years of history as a leading Canadian insurer
- 25-year term products available with guaranteed renewability
- Also offers mortgage, critical illness, disability, and annuity products
- Strong reputation for claims-paying ability
- AM Best Rating: A+ (Superior)
Related: Canada Life Insurance
Industrial Alliance Insurance & Financial Services
- Specializes in term and permanent life insurance
- Competitive 25-year term rates
- Policy owners can renew term policies annually beyond the initial term
- Additional offerings include critical illness, disability, annuities
- AM Best Rating: A+ (Superior)
Related: Industrial Alliance Life Insurance IA Review
ivari
- Focuses exclusively on life and health insurance products
- 25-year term plans with the option to convert to permanent coverage
- Policies can be renewed annually after the initial term
- Also offers critical illness, disability, and long-term care insurance
- AM Best Rating: A+ (Superior)
Related: Ivari Life Insurance
When comparing term 25 policies, look for insurers with strong financial ratings, a track record of claims payment, competitive pricing, and added benefits like conversion and renewal options. An experienced broker can help you evaluate your options.
Who Needs Term 25 Life Insurance?
Here are some examples of ideal candidates for 25-year term life insurance:
Young Families
Young couples with new mortgages and babies need high coverage for 25-30 years until the kids are grown and debts are repaid. 25-year terms align well with these temporary needs.
Middle-Aged Parents
Parents in their 40s and 50s often carry the highest financial burdens. Term 25 can provide coverage for college costs, mortgages, income replacement, and other expenses until retirement years.
Business Owners
Owners needing key person insurance or shareholder buy-sell agreements benefit from 25-year terms. This can cover business debts and succession planning for decades.
For medium-length coverage needs, term 25 life insurance provides substantial protection at an affordable cost.
Tips for Buying Term 25 Life Insurance
Follow these tips when purchasing a 25-year term life policy:
- Compare quotes from at least 3-5 top insurers to find the best rate.
- Consider the renewal rates and conversion options when choosing a policy.
- Optimize health first through diet, exercise, and stopping smoking.
- Work with an experienced independent life insurance broker in Canada who can shop multiple carriers.
- Select an insurer with high financial strength and claims-paying ability.
- Discuss riders like waiver of premium and accelerated death benefits.
- Get quotes every 5 years as pricing varies over time.
Following these tips helps ensure you get the best value on your term 25 life insurance policy.
How to Buy Term 25 Life Insurance
Purchasing term 25 life insurance involves the following steps:
- Determine the right coverage amount by tallying income to replace, debts to cover, and funeral/estate costs.
- Get quotes from independent brokers or insurer websites to compare rates.
- Submit your application and supporting documents like financial records and medical history.
- Complete any required medical exam and interviews. Insurers will request medical records from your doctor.
- The insurance company reviews your application and issues a policy if you qualify.
- The initial premium is paid to put coverage into effect. Ongoing premiums must be paid on schedule to keep the policy active.
- Review the policy documents carefully and confirm the details like death benefit, premiums, terms, riders, and renewal options are what you expected.
An experienced life insurance broker can walk you through every step of the application and purchase process.
Where to Buy Term 25 Life Insurance in Canada
There are a few options for where to buy a 25-year term life insurance policy:
- Independent insurance brokers – Brokers shop multiple insurers to find you the best rate. This is the most popular option.
- Insurance company websites – You can get quotes and apply directly through insurer websites. However, this only lets you compare rates from one company.
- Online insurance providers – Websites like Lifebuzz allow you to compare quotes from multiple insurers. This offers convenience without face-to-face advice.
- Banks – Some banks like TD Bank and RBC sell life insurance products. However, their offerings are limited compared to independent brokers.
Independent brokers are typically best for finding the top value on term 25 life insurance tailored to your unique needs.
How to Claim Term 25 Life Insurance in Canada
To make a term 25 life insurance claim, beneficiaries must:
- Contact the life insurance company promptly to start the claims process. Many insurers have dedicated claims departments.
- Complete the claim forms and submit a certified copy of the death certificate to prove loss of life.
- Provide additional documentation as requested to establish rightful beneficiary status and process payout.
- The insurer will validate the claim meets the policy terms and conditions before issuing the payout. This is usually a lump-sum payment by cheque.
- For any disputes or delays, beneficiaries can contact regulators like the OmbudService for Life & Health Insurance for assistance.
The claims process is usually straightforward for valid term life insurance claims. Insurers work to process payouts quickly during this difficult time.
Alternatives to Term 25 Life Insurance
Here are some alternatives to consider beyond 25-year term life insurance:
Permanent Life Insurance
With permanent life insurance, coverage lasts for life. The main types are whole life and universal life insurance. Premiums are higher, but policies build cash value that can be borrowed against. Permanent life insurance is better for lifetime coverage needs.
Related: What is permanent life insurance
Shorter/Longer Term Lengths
For shorter temporary needs, Term 10 life insurance, Term 15 life insurance, Term 20 life insurance may be sufficient and more affordable. For longer temporary needs, we also provide guides to Term 30 life insurance, Term 40 life insurance , and Term to Age 65 life insurance readily available in Canada. Discover how these term lengths differ in price, coverage period, and situations each works best for.
Guaranteed Issue Life Insurance
For those with health issues who cannot medically qualify for term life insurance, guaranteed issue plans are available. Coverage amounts are lower and costs higher, but guaranteed issue plans don’t require a medical exam.
Conclusion
For Canadians needing life insurance coverage for 25 years, term 25 policies can provide substantial protection. Premiums for 25-year term life insurance are affordable compared to permanent insurance. This makes term 25 ideal for covering temporary needs like mortgages, income replacement, and final expenses for several decades. Consider renewal rates and conversion options when choosing a 25-year term life policy. Work with an experienced, independent broker to shop among top insurers like Sun Life, Manulife, and Canada Life and find the best rate for your situation.
If you need an affordable 25-year term life insurance policy to protect your family and lifestyle, visit LifeBuzz.ca to compare personalized quotes from top Canadian life insurance providers. At LifeBuzz.ca, you can easily shop for term 25 life insurance online and find the best rates tailored to your needs. Our licensed advisors are here to guide you through the process from quote to purchase. Get started today!
FAQs about Term 25 Life Insurance
What does 25-year term life insurance cover?
25-year term life insurance provides a set death benefit amount if the insured dies within 25 years. It covers needs like mortgages, income replacement, debts, and final expenses.
How much does 25-year term life insurance cost?
For a healthy 30-year-old male, $500,000 of coverage costs about $50/month. Rates increase with age and health risks. Female and non-smoker rates are lower.
Is term 25 life insurance renewable after the initial term?
Most term 25 policies are renewable for another term without medical underwriting but at much higher premiums. It is often cheaper to reapply for a new term policy.
What is a term 25 life insurance conversion option?
Many term 25 policies have a conversion option that allows switching to permanent insurance later without medical exams if you develop health conditions that make renewing difficult.
Should I choose term 25 over term 20 life insurance?
Term 25 covers longer-term needs but costs more than term 20 annually. Make sure you get quotes for both terms and choose the best fit for your specific needs and budget.
What are the best term 25 life insurance companies?
The top insurers for term 25 life insurance are Manulife, Sun Life, RBC Insurance, Canada Life, ivari, and Industrial Alliance. Compare quotes to find the best rates.
Can I get term 25 life insurance with pre-existing health conditions?
Yes, you may qualify for rated term 25 life insurance with certain health conditions. Premiums are higher than standard rates. Guaranteed issue life insurance is also an option if you cannot get approved for term coverage.
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