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What is a Term Life Insurance policy?

Term life is the simplest and most understandable form of life insurance for everyone. The word ‘term’ in ‘term life’ means the insurance lasts for a certain and fixed “term” or period you choose with the insurance carrier. The ‘term’ here can be 10, 20, 25, or 30 years (maximum is 30 years) depending on your choice/ your decision and your age when you start the policy. 

If you die during the time the term life insurance policy is valid, the insurer (insurance company) has to pay the death benefit amount to a person you designate (following the contract). If not, do not expect that you will get something back at the end of the term (unless you purchase a return-of-premium Term Life Insurance policy).

Similar to other Life Insurance policy, the insurer will require you to do a health check. No company insurer will offer you the Term Life Insurance if your health is risky!

What is a 10-Year Level Term Life Insurance?

10-Year Level Term Life Insurance is also called 10-Year Fixed Term Life Insurance. The name tells everything. 10-Year Level Term Life Insurance is the type of insurance policy that:

  • Provides coverage for a specified 10 year period.
  • Its premium is fixed during the insurance period.
  • Its death benefit is fixed during the insurance period.

Some other points about 10-Year Level Term Life Insurance that you need to know:

  • 10-Year Level Term Life Insurance  is one of the most budget options of life insurance, because of its short period of time.
  • 10-Year Level Term Life is a pure insurance product.
  • 10-Year Level Term Life Insurance offers pure death benefit. No saving or investment benefits should be expected!
  • 10-Year Level Term Life Insurance is able to convert to other insurance products without health and financial due diligence required.

Example of a 10-year Level Term Life Insurance

1) Peter is in his early twenties and has just joined the labor market for less than a year. He is looking for financial protection in the unlikely event of his early death. He buys a $200,000 10-year level term life insurance policy because it is the most budget option that he can find. Every month, he only has to pay a $15 premium. If he passes within the 10-year term, the insurer has to pay out a claim to his beneficiary (in this case – his mom) $200,000. In case Peter dies after this term ends, and he also does not extend or choose any other insurance products, his beneficiary will receive no benefit.

 

2) Marie is 35 years old and she plans to quit her job to do her own business in the next ten years. Her daughter is 12 years old. Marie is totally aware of its risk when she starts-up. Marie wants to make sure that she will be able to cover her daughter’s college fee when she is 18, so she chooses a 10-year level term life insurance policy. With this package, Marie has the responsibility  to pay about $30 premium per month for the consecutive 10 years with $1 million life insurance coverage. Then in case Marie passes away within the 10 year term, her daughter will receive $1 million coverage from the insurance company without paying any tax. A 10 year Level Term Life policy will help protect Marie’s kid with covering living expenses and college tuition. Marie already thinks that if she outlives the next 10 years and her future start-up is successful after that, she will definitely apply for another term or permanent life policy.

How is a 10-Year Level Term Life Insurance Approval process?

Underwriting is directly related to the insurance carrier’s decision whether you are offered the Term Life Insurance or not. Underwriting is the job of a group of insurance assessors whose tasks include: 

1) Gather all the required information about you such as age, health status, occupation, income;

2) Analyze the gathered information to determine the risk when the insurer insures your life. 

The Covid-19 epidemic is negatively affecting mostly every industry, and insurance is not the exception. Insurance industry needs to change to accommodate a pandemic. One of those changes is the underwriting process for 10-year Term Life Insurance. There used to be three main approval/ underwriting processes as follows:

1) Full medical underwriting – the traditional Term Life Insurance
2) Simplified issue underwriting
3) No medical underwriting – Guaranteed issue

However, thanks to Covid-19, one more method of underwriting process to pick when buying 10-year Term Life Insurance is No nurse or or fluid (blood, urine, saliva) underwriting. Basically, this underwriting process is the same as the traditional process – Full medical underwriting, except for fluid testings/nurse not required. Because the underwriting process is not as complete and thorough as the traditional inspection process, the premium when picking the new assessment process is expected to be more expensive than the full medical one. However, the premium is still cheaper than the one with Simplified issue underwriting or No medical underwriting.

How Much Does a 10-Year Level Term Life Insurance Policy Cost?

The table below indicates the competitive monthly and annual rate for a 10-Year Level Term Life Insurance policy in Canada, at different death benefit amounts, different genders and ages. Sample premiums are for people who have excellent (A+) health conditions (in normal health who do not have any medical or lifestyle condition which would increase their future risk of dying) and for non-smokers.

Amount of Insurance
AgeGender$10,000$200,000$500,000$700,000$ 1M
25Male$82.50  Annually

$7.43  Monthly

$158.00  Annually

$14.22  Monthly

$197.95  Annually

$17.82  Monthly

$261.13  Annually

$23.50  Monthly

$330.70  Annually

$29.76  Monthly

Female$76.60  Annually

$6.89  Monthly

$122.00  Annually

$10.98  Monthly

$140.80  Annually

$12.67  Monthly

$181.12  Annually

$16.30  Monthly

$224.50  Annually

$20.21  Monthly

35Male$85.20  Annually

$7.67  Monthly

$160.00  Annually

$14.40  Monthly

$182.20  Annually

$16.40  Monthly

$249.16  Annually $22.42  Monthly$321.70  Annually $28.95  Monthly
Female$81.00  Annually

$7.29  Monthly

$137.00  Annually

$12.33  Monthly

$147.10  Annually

$13.24  Monthly

$189.94  Annually

$17.09  Monthly

$234.40  Annually

$21.10  Monthly

45Male$95.40  Annually

$8.59  Monthly

$283.00  Annually

$25.47  Monthly

$332.05  Annually

$29.88  Monthly

$448.87  Annually

$40.40  Monthly

$598.90  Annually

$53.90  Monthly

Female$89.10  Annually

$8.02  Monthly

$205.00  Annually

$18.45  Monthly

$241.15  Annually

$21.70  Monthly

$321.61  Annually

$28.94  Monthly

$402.70  Annually

$36.24  Monthly

55Male$128.20  Annually

$11.54  Monthly

$537.52  Annually

$48.16  Monthly

$935.95  Annually

$84.24  Monthly

$1,294.33  Annually

$116.49  Monthly

$1,766.20  Annually

$158.96  Monthly

Female$111.70  Annually

$10.05  Monthly

$422.86  Annually

$37.89  Monthly

$667.75  Annually

$60.10  Monthly

$918.85  Annually

$82.70  Monthly

$1,274.80  Annually

$114.73  Monthly

Best Rating: A+

Non-Smoker 

Rate illustration valid as of 15 Apr 2021.

A glance at the graphs reveals that men and women have to pay different rates for a 10-year Level Term Life Insurance. Statistics in Canada have shown that men typically die earlier than women for some reasons, which explains why men normally have to pay a higher life insurance premium compared to women, they consider men as higher risk in comparison with women. Actually, it is more likely that the insurer in Canada usually pays out claims to men sooner.

The above table data shows that men generally have to pay a 30% higher insurance premium than women do when it comes to annual rates of a 10-year Level Term Life Insurance in Canada. This figure is the average for all 4 ages in the table: 25, 35, 45 and 55.

The table also shows that, while gender is an important factor in deciding the term life insurance premium, age counts too. Actually, age is generally considered as the most reliable factor, aka predictor of how long an individual will live. Therefore, we can see that the higher your age, the higher the premium. Assuming health and other factors stay the same, we can draw from the above data table as follows:

A man at the age of 45 has to pay an average 70% more premium than one at the age of 25. And ten years later, when he reaches the age of 55, the premium he has to pay will be nearly 6 times (in average) as when he is in his 20s. Similarly, when a man picks a $10,000 coverage, he at 35 will have to pay more than he at 25. However, the reverse is the case of a man at 35 years old when he chooses a $500,000; $700,000 and $1 million, we can easily see from the above data table that the man at 35 has the options to choose cheaper rates than the man at 25.

To explain this, we can just say that different providers have different price policies at different times.

Moving on to women’s insurance premium rows, all of the related data follow the same trend: higher age, higher premium. A 35- and 45-year-old woman has to pay approximately 7% and 70% more insurance rate than a 25-year-old one respectively, while a 55-year-old woman pays from 2-5 times as much as a 25-year-old one.

The following advice seems to sound cliche but it works for the majority of cases: Buy life insurance now if you can.

Pros and Cons of 10-Year Level Term Life Insurance

+  When the insured dies during that time (10 year period), the insurance company will pay the sum insured to the designated beneficiary. This is the basic benefit of term insurance products. This type of insurance also provides benefits for the beneficiary to pay off family arrears or to take care of the funeral costs when the insured dies.

BUT

– When you reach the end of the 10-year period of this Level Term Life Insurance and you (the insuring object) still live, the policy just ends, you do not get anything from the insurance company.

+ At every anniversary date, you can request a product conversion from a 10-Year Level Term Insurance policy to other life insurance product types without going through a medical re-exam process provided that you meet other criteria required by your current insurance.

BUT

– In case that you want to extend the Level Term Life Insurance, it is okay except for the case that you may turn 60. We all know that not everyone will be forever young and healthy. When you turn 60 or older, you are normally required to undergo the health check, the insurance company will refuse to offer you the insurance when they find out that the death rate is too high. Even if they agree to extend the policy, the premium can become very expensive, possibly beyond your financial budget. This point applies for other life insurance packages when you reach 60.

+ The financial protection is predictable and easy to understand, with unchanging premiums and death benefits. It does not take a lot of your time (and brain cells) to try to figure out everything, from the inside out, like any other insurance packages – more complicated ones.

+ 10-Year Life Insurance Package is the most affordable one, which fits everyone’s budget, from the newly-graduated employees to newlyweds. 10-Year Life Insurance Package is also the best option if you only need coverage for several (10) years, until your children graduate from university, or you have 10 years more to go on your mortgage…

As we can see above, the pros of 10-Year Level Term Life Insurance outnumbers its cons. Also, its cons only affect you when you are too old from an underwriter’s point of view!

Where can I buy a 10-year Level Term Life Insurance policy?

When it comes to insurance, always consider big companies to buy products from them. Have you heard of the ‘Big Ten’ in the Life Insurance Industry in Canada?

1) Manulife

2) Sun Life

3) Canada Life

4) Desjardins

5) iA Financial

6) RBC Insurance

7) BMO Insurance

8) Empire Life

9) Equitable Life

10) Canada Protection Plan

 

The big difference that you often come across among different insurance providers:

1) Death benefit of the 10-year Level Term Life Insurances from different insurance companies vary.

2) Each insurance company has its own set of premium.

3) They have different after-sales and customer care policies.

4) The quality of advisors from insurance companies is also different.

How to Buy a Term Life Insurance policy?

There are two options that you can consider:

Option 1: Buying directly from an insurance company

Option 2: Buying indirectly via an insurance broker/advisor

You may only know details of the 10-year term life insurance from only one insurance company when you choose to work directly with one insurance provider. But if you work through an insurance broker, with just one action of reaching out, you get a more complete comparison of different products from different providers, which normally include price, rider, policy etc.

The benefits of working with the RIGHT broker/advisor

Working with the RIGHT broker/advisor, you will get:

  • Free quotes that match his needs
  • No extra costs
  • Insightful and unbiased advice
  • Ownership of a policy should he choose to proceed buy one

Frequently Asked Questions

Question: What happens if I do not have the chance to use the insurance package at the end of a 10 year term life insurance?

Answer: Congratulations on your outliving the policy. However, you will not have your money returned once the 10-year level term life insurance contract expires unless you purchased a return of premium life insurance policy.

No-one likes to pay for something they will never use, however, life insurance may be a good exception! We do not quite expect that we have to use life insurance one day, while we still enjoy our living journey. Nevertheless, Life insurance provides you with a piece of mind in some decades!

 

Question: Buying a 10-Year Level Term Life Insurance is like throwing money through the window, because we cannot get it back in the future?

Answer: Nope.

In terms of a normal transaction, the customer is paying to get back exactly the “item” you want. The unseen item here is the financial protection (literally money in the future) when there is a risk (your death). It is similar to car insurance, fire insurance, …

 

Question: Should I choose 10-year level term life insurance, or 20-year level term life insurance instead?

Answer: The 20-year level term life insurance is more costly than the 10-year one. However, if you can afford to buy a 20-year policy, it is better, you will be guaranteed coverage for the full 20 years without need to worry which kind of policy you should extend after the 10-year term ends. However, if your finances are running low, you are looking for a more economical choice, a 10-year level term policy might be your choice.

 

Question: Should I get a 10-year level term life insurance or a 10-year decreasing term life insurance?

Answer: The sum assured reduces throughout the policy length for the 10-year decreasing term life insurance. If you are covered for the remaining mortgage repayment on your home, you can consider the decreasing term because the debt also decreases over time.

In case that you have no mortgage, student loans or any other outstanding debts, picking up the 10-year term life insurance policy can be a wise decision. With this policy, your beneficiary will be paid the pre-agreed sum assured if you pass away within the 10-year term (the benefit will be unchanged).

 

Life insurance is designed to protect the finance of your family. Do not skip the chance to protect your beloved ones while you still have the chance. 

 

Contact LifeInsuranceQuote.ca right now to get the most up-to-date quote and advice. We have more than ten years of experience in insurance consulting and have a great team of expert advisors working around the clock for those who seek to buy a Term Life Insurance policy.

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