You just took on a $600,000 mortgage with 25 years left.
Why it fits: A 25 or 30-year term sized to the mortgage makes sure your partner can keep the home if something happens to you.
Term Life Insurance
Affordable protection for the years your family depends on you most.
Term life insurance pays a tax-free lump sum to your beneficiaries if you pass away during a set period, typically 10, 20 or 30 years. It is the most cost-effective way to get a large amount of coverage.
Overview
Term life insurance is the simplest and most affordable way to protect the people who depend on you. You pay a fixed premium for a set period, and if you pass away during that time, your beneficiaries receive a tax-free lump sum.
Because term insurance has no savings component, every dollar of premium goes toward protection. That is why a healthy 35-year-old can often get $500,000 of coverage for less than the cost of a weekly coffee.
When term life makes the most sense
Most financial obligations are temporary: a mortgage gets paid off, children grow up, and retirement savings build over time. Term insurance is designed to cover exactly those years. Once your obligations shrink, you can reduce or drop the coverage, or convert part of it to permanent insurance for estate planning.
Choosing a policy
When comparing term policies, look beyond the price:
- Renewability and convertibility: can you renew or convert without new medical evidence, and until what age?
- Riders: waiver of premium, child term and critical illness riders can add valuable protection.
- Insurer strength: we compare plans from Canada’s leading insurers to find the right fit and price for you.
How it works
- 1
Choose your amount and term
Pick a coverage amount (for example $500,000) and a term that matches your obligations, such as the years left on your mortgage or until your kids are independent.
- 2
Pay a level premium
Your premium is locked in for the whole term. Applying younger and healthier means a lower rate.
- 3
Your family is protected
If you pass away during the term, your beneficiaries receive the full death benefit, tax-free, to use however they need.
- 4
Renew, convert or let it end
At the end of the term you can usually renew at a higher rate, convert to permanent insurance without a medical exam, or let the coverage expire.
Key benefits
Lowest cost per dollar of coverage
Term premiums are a fraction of permanent insurance premiums, so you can afford the coverage your family actually needs.
Tax-free death benefit
In Canada, life insurance proceeds paid to a named beneficiary are generally received tax-free.
Guaranteed level premiums
Your rate cannot increase during the term, which makes budgeting simple.
Conversion privilege
Most policies let you convert to whole or universal life later without proving your health again.
Bypasses probate
With a named beneficiary, the payout goes directly to them instead of through your estate, avoiding delays and probate fees.
Optional riders
Add child coverage, waiver of premium if you become disabled, or critical illness benefits to round out your plan.
Who it’s for
You have two kids under 10 and your household depends on your income.
Why it fits: A 20-year term covers the years until they finish school, replacing your income at the lowest possible cost.
You co-own a business and want a buy-sell agreement funded.
Why it fits: Term coverage on each partner provides the cash to buy out a deceased partner's share.
Pros & cons
Pros
- Most coverage for the lowest premium
- Simple to understand and compare
- Premiums guaranteed for the term
- Can be converted to permanent coverage
Things to consider
- No cash value or savings component
- Coverage ends when the term ends
- Renewal premiums rise sharply with age
How it compares
| Term life compared with permanent options | Term Life | Whole Life | Universal Life |
|---|---|---|---|
| Coverage length | 10–30 years | Lifetime | Lifetime |
| Relative cost | Lowest | Highest | Moderate to high |
| Cash value | None | Guaranteed growth | Investment-linked |
| Premium flexibility | Fixed | Fixed | Flexible |
| Best for | Temporary needs like a mortgage or young kids | Estate planning and lifelong needs | Tax-advantaged growth with flexibility |
Run the numbers
Life insurance needsEstimate how much life insurance your family would need to stay financially secure.Frequently asked questions
How much term life insurance do I need?
A common starting point is enough to pay off debts, cover final expenses, fund your children's education and replace 5–10 years of income. Use our life insurance needs calculator for a personalized estimate.
Should I choose a 10, 20 or 30-year term?
Match the term to your longest financial obligation. Many families choose a 20 or 30-year term to cover a mortgage and the years until their children are independent.
What happens at the end of the term?
You can usually renew without a medical exam at a higher premium, convert to permanent coverage, or let the policy end if you no longer need it.
Do I need a medical exam?
It depends on your age and the amount of coverage. Many insurers offer simplified underwriting with no exam for moderate amounts.
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