offers cost-effective way to cover short-term needs: provide an
ongoing income to maintain the family's current lifestyle, pay off
or debts, provide
money for children's education, smooth transition by providing
temporary financial support to supplement the family income, when
one spouse dies.
Under this form of life insurance, the insurance company promises to
pay the death benefit if the insured dies within the the period
specified in the policy. Itís pure protection with no cash
value: when the policy expires or if you cancel, you get nothing -
no cash back, no more life insurance protection.
policies with different terms but the
most common policies are Т10 и Т20. This means that premiums are
guaranteed low during first 10 or 20 years (T10 and T20
respectively). For example, when buying T10, the insured pays
minimum premiums, which are guaranteed for 10 years. Then the policy
will continue to be in force, but the premiums will grow up to the
next guaranteed level, since the insured is older and statistically
more likely to die (Illustration).
So, the premiums are renewed each 10 (or 20) years, and this
contract is called renewable.
usually expire when the insured turns 75-85 years of age(depending on
the insurance company).
Cost of insurance is not high and depends
on the insured's age, sex, health, smoker/non-smoker, and the sum
insured (amount of coverage). Men pay more than women, and rates for smokers are higher
than for non-smokers, which results from more favourable statistics
for women and non-smokers.
Alexander, non-smoker, 40 years of age, can purchase a life
T10 with coverage $250,000 for as low as $25,56 per month. In 10
years the contract will be renewed and the premiums will rise. He
will be offered to pay $128.25 or to cancel the policy. If he is in
good health at that time he can terminate the current policy and
a new T10. If it happened today he would have paid for the new
contract $47,88 per month during the next 10 years. If his health
becomes worse he would have three options:
1) to pay the higher
premiums as per the contract;
2) to reduce the coverage
and pay less;
convert the term life insurance
policy to a
Insurance policy or
Universal Life Insurance policy.
Term and premiums (rates).
The longer term
of the life insurance contract the higher premiums payable to the
insurance company. In the example above, if Alexander purchased T20
with coverage $250,000, the premiums would be $37.80 per month
guaranteed during first 20 years and then they would significantly
companies offer different levels of premiums depending on the
insured's health, lifestyle and family history: usually, three
levels for non-smokers and two levels for smokers. So, in our
example, Alexander could purchase Т10 with coverage $250,000 for
$19.35, $22,50 or $25.56 per month depending on his state of health.
However, medical evidence is required to categorize the
insured into the appropriate premium level.
contracts may be converted to
Participating whole life,
without any additional medical evidence of insurability (no medical
tests and examination). The insured can convert the
policy regardless of his or her state of health at the time of
conversion, even if he or she is no longer insurable. This option is
available until the insured turns 65-70 years old (depending on the
plan and company). Such policies are called
The premium payable under the new (converted) policy issued under a
conversion option will be based on his or her attained age at the
time of conversion.
the insured can complete the conversion without providing
evidence of insurability this option is very important. For example,
you can start your insurance plan from an cheap term life
insurance and adapt the plan to your insurance needs later on
without regard to your health.
Term Life Insurance may be issued as an additional benefit (rider)
to another insurance contract, for example,
Permanent Life Insurance,
In this way insurance companies offer the
possibility to add additional benefits to personalize the insured's
term or permanent insurance coverages.
For example, you have a whole
life insurance contract with $100,000 of coverage and cash value,
which grows gradually in your policy. You considered it's enough
when started investing in your policy, but now you have purchased a
home and have taken a mortgage of $250,000. To protect your
investment in your home you can buy additional T10 or T20 term life
insurance rider to your whole life policy. This rider will provide
the coverage $150,000-$200,000 during the next 10 or 20 years
respectively until the mortgage is almost paid up. It may be more
economical and affordable way than purchasing a separate additional
insurance contract or increasing the coverage of the whole life
Life Insurance coverage.
Insurance Benefits Plans, which cover the employees of one employer,
include Term Life Insurance with limited coverage usually equal
to 2-3 annual incomes of the employee. The coverage terminates as
soon as the employee quits the company (finds another job, retires).
These plans have many advantages but usually they offer very
limited life insurance protection, which can be canceled regardless
of your wish.
Some banks and companies offer Group
Life Insurance for the public. But before purchasing this insurance,
compare cost of insurance as well as insurance terms and conditions
offered by insurance companies with those from banks and different
companies. Neither banks nor different companies can issue insurance
policies: they are the owners of the group insurance policy and you
can be a member of this policy. As you are not the owner of
the policy, it is not your asset and your coverage may be terminated
whether you want it or not.
You can choose a
contract from the Canada's top insurance companies:
Empire Life, Equitable Life of Canada, RBC
Insurance, Industrial Alliance, Canada Life and others.
for more information and free consultation.
If you have
any questions or concerns,