10 year term life insurance is one of Canada’s most popular forms of life insurance coverage. This policy provides affordable protection for a set period of time, making it ideal for covering temporary needs like paying off a mortgage or providing for your family while your kids are young.
In this guide, we’ll explain everything you need to know about 10 year term life insurance, including:
- What it is
- How it works
- The pros and cons
- Who it’s best suited for
- Costs
- Top insurance companies
- And whether it’s the right choice for you
After reading, you’ll understand if 10 year term life insurance fits your coverage needs and budget so you can decide if it’s the right policy for you.
What Is 10 Year Term Life Insurance?
A Temporary Policy With Level Premiums
10 year term life insurance provides life insurance coverage for a set period of 10 years. It’s called term life insurance because it provides protection for a specific term length rather than lifelong coverage.
With this policy, you pay a level premium amount for the 10 year duration. This means your premium is locked in and won’t increase during the term.
If you die while the policy is active, your designated beneficiaries receive a tax-free death benefit payout. After 10 years, the term ends unless you choose to renew it.
Pure Insurance With No Cash Value
It is important to note that 10 year term life insurance is a purely protective policy. It does not build up cash value like some permanent life insurance policies.
The primary benefit is the death benefit payout. There is no savings component and no cash value accumulation that you can access while alive.
Customizable Coverage Amounts
When purchasing a 10 year term life policy, you get to choose the death benefit amount. This is the lump sum payout your beneficiaries would receive in the event of your death.
You can tailor the amount to your specific needs. For instance, take out enough coverage to pay off debts, cover funeral costs, replace lost income, or leave an inheritance.
Related : Types of life insurance policies
How Does 10 Year Term Life Insurance Work In Canada?
Locked-In Premiums For 10 Years
With a 10-year term life insurance policy, you pay a consistent premium for the entire 10-year term length. This rate is locked in and guaranteed not to increase during that initial period.
For example, a 35 year old male purchasing $500,000 of coverage may pay around $30 per month. That set premium of $30/month would be guaranteed for the full 10-year term.
Death Benefits Paid To Beneficiaries
If you pass away while covered under the policy, the death benefit will be paid out tax-free to your designated beneficiaries. They can use this lump sum payment however they’d like – to pay for funeral expenses, cover daily bills, pay off debts like a mortgage, etc. As long as you continue paying your premiums, the full death benefit amount remains intact for the entire 10 years.
Related: Final Expense Insurance
Renewable After The Term
At the end of the 10 year term, you have the option to renew the same policy for another term length. However, your premium will increase significantly upon renewal since you’ll be 10 years older.
If you still need coverage but want to avoid higher renewal rates, you may consider shopping for a brand new 10 year term policy instead of renewing.
Convertible To Permanent Insurance
Many 10 year term life insurance policies also include a conversion feature. This allows you to convert your term policy to a permanent life insurance policy, like whole life insurance or universal life insurance, without needing a medical exam.
Converting to permanent insurance means you can lock in lower rates now before you develop any health conditions that could make you uninsurable later on.
Read more :
The Pros and Cons of 10 Year Term Life Insurance
Advantages of 10 Year Term Life
There are several key advantages to this type of temporary life insurance coverage:
Lower Cost
Term life insurance premiums are significantly less expensive than permanent insurance since term policies have no cash value component. Among the term lengths, 10 years will typically have the most affordable premiums. This makes it accessible even to those on tight budgets.
Guaranteed Level Rates
Your premium is locked in for the entire 10 years, so you have rate stability without unexpected price hikes during the term. This allows you to accurately budget the same cost each year.
Easier To Qualify
With no cash value accumulation, the underwriting requirements for 10-year term insurance tend to be less stringent than those for permanent insurance. You may be able to qualify for coverage even if you have minor health conditions.
Renewability
Most policies give you the option to renew for another 10 year term once your initial term expires. This allows you to extend your coverage without undergoing new medical underwriting..
Convertibility
Having the ability to convert to permanent insurance without medical underwriting gives you flexibility in case your needs change down the road. This conversion option enables you to secure lifetime coverage even if your health worsens.
Disadvantages of 10 Year Term Life
No Cash Value
10 year term life insurance does not build tax-deferred cash value that you can tap into while alive. Only a death benefit is paid out. It lacks a savings element.
Renewal Rates Increase
Once your initial term expires, renewing for another term will cost significantly more due to your older age. Renewal rates maybe 4-5 times higher than your original premiums.
Short Term Coverage
This policy only provides temporary coverage for 10 years. It lacks lifelong protection that you may ultimately need.
No Return Of Premiums
If you outlive the term, your premiums paid are not returned to you or your beneficiaries. The only payout is the death benefit if you pass away during the term.
Who Is 10 Year Term Life Insurance Best For?
This type of temporary coverage can make sense for certain situations:
Those With Short Term Needs
If you only require life insurance for a short period of time, a 10 year policy may suffice. For instance, you may want coverage while paying off debts, launching a business, or starting a family over the next decade.
Young Families And Parents
Many parents get 10 year term insurance to financially protect their kids until they become adults and can provide for themselves. This coverage helps ensure kids are taken care of.
Limited Budget
The lower premiums make 10-year term life affordable if you’re on a tight budget. You can secure sizeable coverage for less money compared to longer terms or permanent insurance.
Mortgage Protection
Since most mortgages are paid off within 10-15 years, a 10 year term policy works well for homeowners who want mortgage life insurance. It can cover your remaining mortgage balance if you pass away.
Related : Mortgage Protection Insurance
Nearing Retirement
Those approaching retirement age may only need temporary coverage to get them through their final working years.
Overall, 10 year term life insurance aligns well with short-term needs spanning 5-15 years. It provides temporary coverage at budget-friendly rates.
How Much Does 10 Year Term Life Insurance Cost?
Premiums can vary substantially based on personal factors like your age, health, gender, lifestyle and more. Overall, 10 year term life insurance offers some of the most affordable policy rates.
Here are some average 10 year term life insurance rates to give you an idea of pricing:
Sample 10 Year Term Life Insurance Cost for $500,000 Coverage – Male
| Age | Monthly Premium | Annual Premium |
|---|---|---|
| 30 | $25 | $277 |
| 40 | $29 | $322 |
| 50 | $62 | $688 |
| 60 | $200 | $2,222 |
| 70 | $630 | $7,000 |
Sample 10 Year Term Life Insurance Cost for $500,000 Coverage – Female
| Age | Monthly Premium | Annual Premium |
|---|---|---|
| 30 | $18 | $200 |
| 40 | $21 | $233 |
| 50 | $48 | $533 |
| 60 | $149 | $1,655 |
| 70 | $459 | $5,100 |
As illustrated, premiums rise steadily with age. However, 10-year term life insurance remains very affordable even in your 60s and 70s compared to permanent life insurance.
Comparing 10 Year Term Life Insurance Policy From Top Insurers
When searching for the most affordable 10 year term life insurance rates, consider these top life insurance companies in Canada:
- Sun Life: Known for flexible 10 year term life insurance policies with options to renew, convert, and add other coverage. However, premium rates are not among the lowest.
- BMO Insurance: Part of Bank of Montreal, BMO Insurance provides very competitively priced 10-year term life coverage
- Manulife: As Canada’s largest insurance provider, Manulife offers affordable 10 year term insurance across all age brackets and health profiles. Policy options include guaranteed insurability and conversion to permanent life insurance.
- RBC Insurance: 10 year term life policy from this major Canadian insurer often beats rates from other big companies. RBC policies can be renewed up to age 85.
- Empire Life: Specializes in temporary life insurance coverage with flexible 10 year term policy options.
- Wawanesa Life: A reputable mutual company providing low-cost 10 year term insurance with guaranteed renewability.
- Canada Life: Part of Great-West Lifeco, Canada Life offers customizable MyTerm 10 coverage at competitive rates.
Comparing quotes from multiple insurers ensures you find the most savings on 10 year term life insurance tailored to your needs and budget.
The table below shows how premium rates for a $200,000 10-year term life policy can vary between insurers :
| Age | Sun Life | Empire Life | RBC |
|---|---|---|---|
| 40 | $26.27 | $200 | $23.22 |
| 50 | $48.63 | $233 | $41.76 |
| 60 | $107.54 | $533 | $120.60 |
(Source :
https://www.rbcinsurance.com/life-insurance/life-insurance-quote/
https://www.sunlife.ca/prweb/SLFGOdtc/app/DTCGO_/xoOKDY49fLVcC_lacDYjWg*/!STANDARD
https://www.empire.ca/insurance/buy-life-insurance/quote-buy)
Is 10 Year Term Life Insurance Worth It?
For the right person, 10 year term life insurance can be an excellent choice. It provides high coverage amounts at budget-friendly rates.
If you have a temporary need spanning 5-15 years, this short-term policy may be perfect for your situation. The locked-in premiums and large death benefits offer reliability and flexibility.
That said, carefully consider if you may require coverage beyond the 10 year term. While the policy is renewable, premiums become much more expensive at older ages. If you realistically need lifelong protection, a permanent life insurance policy is likely the better option despite the higher initial cost.
Overall, 10 year term life insurance offers quality coverage at an affordable price point for shorter term needs. Just be sure to honestly assess your requirements so you don’t end up lacking protection down the road.
Conclusion
Finding the right life insurance policy requires understanding your budget, timeline, and individual circumstances. For Canadians seeking temporary coverage on a budget, 10 year term life insurance is a top contender.
This guide provided key details on how 10 year term life insurance works, its advantages and downsides, typical costs, the best companies for rates, and whether it aligns with your needs.
The next step is to get life insurance quotes tailored specifically to you. Comparing rates from leading insurers will reveal how affordable coverage can be. If you need help choosing the right policy or want expert guidance from our licensed advisors, don’t hesitate to connect to Insurancedirectcanada.com. We’re here to ensure you get protected with coverage that fits your life and your budget.
FAQs for the 10 Year Term Life Insurance in Canada
What are the eligibility requirements for 10 year term life insurance?
Most insurers allow you to buy 10 year term life insurance between the ages of 18 and 75. You'll need to go through a medical underwriting process that looks at your health, lifestyle, family history, etc. As long as you are reasonably healthy, you should qualify for coverage.
When do the premiums for 10 year term life insurance increase?
Your premiums are guaranteed to stay level during the initial 10 year term. After the term expires, premiums will increase if you choose to renew the policy for another term. The renewal rates will be higher based on your age at that time.
Is 10 year term life insurance just for temporary needs?
While it does provide short term coverage, some people buy multiple back-to-back 10 year term policies to cover needs lasting more than 10 years. This can provide longer protection while still taking advantage of the lower premiums.
What does convertible mean for 10 year term life insurance?
A convertible policy allows you to convert your 10 year term coverage to a permanent life insurance policy, like whole life or universal life, without taking a medical exam. This allows you to extend protection.
Can I get 10 year term life insurance if I have health issues?
Yes, you may be able to qualify for 10 year term insurance even with minor health issues like controlled high blood pressure. Those with major conditions may need to go through extra underwriting.
How do I determine the right coverage amount for 10 year term life insurance?
Consider factors like income replacement needs for dependents, paying off debts and mortgages, college savings goals, and final expenses. Your advisor can help calculate an appropriate amount.
Does 10 year term life insurance accumulate cash value?
No, term life insurance only pays out a death benefit and does not build cash value. Some permanent life insurance policies accumulate cash value, but not 10-year term policies.
Can I cancel my 10 year term life insurance policy whenever I want?
Yes, these policies can typically be cancelled anytime as long as you have paid your monthly premiums. However, there is no refund of premiums if you cancel mid-term.
What happens if I miss a premium payment on my 10 year term life policy?
The policy will usually lapse after 30 days of missed premiums. However, you may have a grace period to catch up on payments before the policy terminates.
Can I get 10 year term life insurance in Canada as a non-citizen or non-resident?
Most Canadian insurance companies will only sell policies to Canadian residents and citizens. However, there may be some exceptions for certain work or travel visas - check with the insurer.
