Term life insurance offers simple, affordable protection. You choose an amount of coverage and a set period of time, such as 10, 20 or 30 years. If you pass away while the policy is in force, your beneficiaries receive a tax-free cash payment.
How term life insurance works
- You choose the coverage amount and the length of the term.
- Your premiums stay the same for the whole term.
- If you pass away during the term, your family receives the death benefit, generally tax-free.
- At the end of the term, many policies can be renewed or converted to permanent coverage without a new medical exam.
Who should consider term life insurance?
- Parents who want to replace their income while their children are growing up
- Homeowners who want the mortgage paid off if something happens to them
- Business owners who want to protect partners or business loans
- Anyone who needs a large amount of coverage at a low cost
How to choose the right term
Match the term to how long your family will depend on your income. For example, a 20-year term can cover the years until your youngest child finishes school, and a 25-year term can match a 25-year mortgage. Many families combine a term policy with some permanent life insurance for lifelong needs.
Read more about term life insurance, or start with our simple guide: What is life insurance?
Common questions about term life insurance
What happens when the term ends? Many term policies can be renewed at the end of the term, usually at a higher premium based on your age at renewal. Many also let you convert to permanent coverage without a new medical exam, as long as you do it before a set deadline. Check your policy for the exact rules.
Is the coverage I have through work enough? Group life insurance through an employer is often one or two times your salary, and it usually ends when you leave that job. A personal term policy stays with you no matter where you work.
How much coverage do I need? A common starting point is to add up your mortgage and other debts, the number of years of income your family would need to replace, your children’s education costs and final expenses, then subtract savings and existing coverage.
Is the payout taxed? In Canada, a life insurance death benefit paid to a named beneficiary is generally received tax-free.
Want to compare options? Learn more about term life insurance in Toronto, Brampton and Mississauga.
Talk to Devendra Kumar, Financial Planner (CLU, CHS)
DK Insurance & Investment Inc. helps families across the GTA from offices in Vaughan, Mississauga and Brampton. Call or text +1-647-761-0517 for a free, no-obligation conversation, or send us a message.