Term Life Insurance in Canada comes in a variety of durations - 5 years, 10 years, 15,20,25,30 and so on. The most common terms however, are 10 and 20 year term. As these two products are the ones that most people purchase, they are the ones that are the most competitively prices.
Term life insurance is insurance that has level premiums for a period (the ‘term’), then the premiums increase and are again level for another term. For example, 10 year term life insurance would have premiums that are level for 10 years, then they increase dramatically and are level at the new, higher level for another 10 years.
The increase at the end of the term is substantial - in many cases to the point of being unaffordable. This is because your premiums are now based on the health of the public at large - the insurance company no longer knows if you’re healthy or not. When you first bought the life insurance policy you would take a medical exam to prove your good health, but at renewal on a 10 year term policy it’s now been 10 years since you’ve proven that, and that means the insurance company assumes your health is now ’same as the general public’ rather than ‘we know you’re healthy for sure’.
And that means that if you’re shopping for term insurance you should purchase a policy for as long as you expect to need the insurance rather than run into a situation where your premium renewals skyrocket, potentially leaving you uninsured or insured at a very high cost.
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