Term Life insurance is probably the most popular type of life insurance policy sold in the Canadian Life Insurance market. There are many reasons for that which I will go over in this article.
Many of our customers like term insurance because it is a very cheap way to get a large amount of life insurance very quickly. I mean, how else would you be able to get 500,000 worth of life insurance for $20 per month (in some cases)?
Even the insurance companies like term life insurance but their reasons are a little different. Statistics will show that very few people ever get to claim on term insurance because usually the policy is cancelled by the insured before they ever gets to claim on it. So this way it becomes a good source of revenue for life insurance companies.
The flip side however is when there is a claim it is usually huge. That’s what makes it attractive as an alternative to permanent Whole Life type of policies.
Personally, I am a big fan of term insurance, and here are my reasons:
- It is very inexpensive. That means that people can finally buy as much life insurance as they really need. I’m saying that because back in the day (like 20 years ago), when term insurance wasn’t as mainstream as it is today, people were buying Whole life policies left right and center. I really have no problem with Whole Life Policies, except that people tend to buy smaller amounts than they need, just to stay within their budget. To give you an example, a 30 year old could buy $500,000 worth of term insurance vs. $50,000 worth of Whole Life Insurance for just about the same premium. That is 10 times less coverage for the same premium. It is the insured’s family that eventually pays the biggest price as they will get 10 times less money should a premature death occur. I would not want to be the agent that has to explain that to the widow.
- It is very flexible. That means that as your lifestyle changes over the year (and it will), you can easily change your term policy along with your need. That would be more difficult with a permanent plan, as you would have too much invested to make any significant changes.
- You will have more money in your pocket. This is whether you live or die -either way your family will end up getting more. It also frees up more cash for other investments, that you can build up over the years.
There is probably many other reasons to buy term insurance, but these would be the most obvious. As always, we recommend to shop the market, because not all insurance companies charge the same and you want to be able to get the best term life insurance policy at the best rate. To find the best please get a life insurance quote by using our online life insurance calculator which will compare all Canadian Life insurance Companies instantly for you.
