Term life insurance is a unique type of coverage that offers both flexibility and affordability. Not only this, but it can help cover other specific financial responsibilities like a mortgage. Of course, your mortgage is probably your family’s biggest expense right now. Just having this burden lifted would help immensely in the financial department. Above all, it is a type of life insurance that is easy to understand.
Term life insurance works like this- you pay a certain amount of money for a term until it renews for another term. If you die during this term when the policy is active, your beneficiaries will be granted a tax-free payment. Now, other factors that will need to be considered, but this is the gist of term life insurance.
Another important thing to note is that this policy can also be converted to permanent insurance, regardless of any major changes.
Understanding The Types Of Term Life Insurance Available
Term life insurance might seem simple at first, but once you start looking for Canadian insurers you will find that there are quite a few to choose from, and they all offer similar or different term life policies. This is because there are several types of term life insurance policies available in Canada, and each is designed for specific needs. Some might be useful in certain situations, whereas others might not.
To learn more about Term life insurance, please take a look at the following links:
Level Term Life Insurance
This is the type of policy that is available with level premium. This is a type of policy that guarantees that your premium remains the same for the length of the policy. It doesn’t matter if the policy is 10 years, 15 years, 20 years, or 30 years. Your monthly or yearly premium will remain the same for the chosen term.
Decreasing Term Insurance
A decreasing term life insurance policy was designed for entirely different circumstances. This policy was designed to cover any expenses that your loved ones might face after your death. For instance, say that you currently own a home with a mortgage. Well, if you die while the policy is active, that mortgage will be cleared and the home will now be paid off. A home is a big financial gain for anyone you leave behind. If they don’t choose to live in it they could always sell it.
Decreasing term policies can also be used to cover loans, which means that you won’t have to worry about leaving anyone with any debt.
All that aside, here comes the real kicker. And, this is where the policy gets its name. They are called decreasing term policies because their value decreases over time. This means that your beneficiaries would gain the most if you died when the policy was first taken out.
Either way, these policies are still excellent ways to provide some financial protection for those you leave behind. Also, as time passes and you keep paying your debts for example your mortgage principle goes down and your liability decreases same way your term insurance is decreasing which keeps premiums very cost effective.
Renewable Term Insurance
Most term insurance policies are renewable term policies that allow you to extend your insurance for additional years without undergoing another medical exam. This is a policy that would come in handy for someone that becomes uninsurable during the span of the policy. If you knew that your health was going to be far worse in a year, you wouldn’t have to worry about meeting the required criteria.
All that being said, your current policy will renew once term chosen is finished. It definitely renews at a higher rate after the initial term is over, but the good news is that you do not need to worry about any of medical or financial underwriting at the time of renewal.
To learn more about renewing your term insurance policy, please
Convertible Term Insurance
Most term policies are convertible.
Term policies are great because they are only for a limited amount of time. They provide a lot of flexibility, but they are also not permanent, which is where the real problem lies. Luckily, with convertible term policies, you will always have the option of making the policy permanent. And, you can do it without undergoing any medical exams or underwriting standards.
To learn more about the different types of permanent policies you can convert your term policy to, please take a look at the following links:
In case your initial term needs extension to permanent, this feature adds a lot of value as you do not need to apply for a brand new permanent policy. Out of the total face amount you can convert full or partial amount as per your needs and affordability to permanent without the need for any medical or financial underwriting.
Of course, with the conversion policies premiums will be affected as permanent policies are comparatively more expensive for the longer duration of the coverage.
To learn more about converting your term policies, please take a look at the following links: