If you have someone who is financially dependent on you and that person didn’t have enough money to support them financially if you had died yesterday, term life insurance is worth it.
You may not need to be insured for your whole life!
TERM INSURANCE, THE SOLUTION FOR TEMPORARY NEEDS
Term life insurance is much cheaper and therefore easier to fit into your budget.
Making sure your mortgage and debts are paid off, your spouse can maintain the same standard of living, and your children can pursue their education and their dreams should be your priority.
Not to mention that your beneficiary will not have to pay tax on the amount of insurance they receive.
Examples of temporary needs in the event of your premature death:
- Are you new to the job market and do you have debts related to your studies?
- Do you live as a couple and share the expenses of rent, utilities and car?
- Do you have a family and your children will finish their studies in 15 years?
- Do you want to ensure the payment of child support to your ex-spouse?
- Do you have a house and a mortgage?
- Are you close to retirement and want to make up the difference until your spouse can withdraw the retirement pension?
- Do you own property or buildings that will have to be considered in your tax return in the event of death?
You can reduce the amount of life insurance at any time
Since life insurance costs much less the younger you are, why not take out a larger amount upfront. You will then have all the flexibility you need to reduce the amount of the insured capital as your needs decrease.
Conversely, you cannot increase the amount of insurance without retaking a medical questionnaire or subscribing to another policy. If your medical condition changes, you may no longer be eligible for life insurance.
Sophie is 30 years old and a single mother of a 5-year-old child. She buys a term insurance policy to insure her son’s future in case she is gone.
At age 30, she takes out $400,000 term life insurance for a monthly cost of $26.40. Premiums are renewable every 5 years.
At the renewal of his policy at age 40, his son is now 15 years old. The premium increases according to her age, but Sophie decides to reduce the amount of insurance to $300,000 to keep the same price of her insurance each month.
At 45, her son is 20. She again decreases the amount of her insurance to $200,000 for the same amount of monthly premium. As her son’s needs diminish, she re-evaluates the situation regularly to either lower the amount or simply cancel her policy.
Sophie, therefore, met her temporary needs and those of her son while maintaining the same monthly premium.
If you have a mortgage, you might even consider taking out two types of contracts.
Benoît is 40 years old. He owns a condo with his spouse. Benoit is responsible for half of the mortgage, or $100,000.
He takes out 25-year decreasing mortgage insurance of $100,000 for a monthly premium of $26.20. At the end of his mortgage, the insurance contract will end but the need will no longer exist either. As he has not made a will, his spouse is not considered his legal heir. He, therefore, names him the beneficiary so that he can redeem his share from his legal heirs in the event of his death.
On the other hand, since they share current expenses equally, he takes out 15-year term insurance to cover the loss of his income in the event of death. Insurance of $180,000 will cost him $24.30 per month. At any time, he may decide to reduce his amount of insurance or cancel his policy if the need is no longer there.
WHAT IS TERM LIFE INSURANCE?
It’s an easy-to-understand life insurance product.
5-year term life insurance, 15-year term life insurance: what does it mean?
It is often the premium renewal figure that is indicated in the terminology. Depending on the contract, you will be insured until an age determined by the contract, generally 80 years old, insofar as you will have renewed the contract at each renewal period.
The premium is then recalculated according to your age at that time, regardless of your state of health.
5-year term insurance means that you will be insured until age 80 but that every 5 years, you will have to renew your contract and accept the new premium.
25-year term insurance, 100-year term insurance: what does it mean?
In a non-renewable contract, it is the duration of the contract that is indicated in insurance jargon.
According to the contract, you will be insured for the period determined by the contract. Premiums are calculated based on your age at enrollment and will not change until the end of the policy term. In this type of contract, the price is more expensive at the beginning and less at the end than a renewable contract since the premium is leveled and therefore equal for the entire duration of the contract.
25-year mortgage insurance means that you will be insured for 25 years and the premium will remain the same for 25 years.
The importance of term of protection
When you take out term life insurance, make sure you can renew the policy for as long as you need.
You are 30 years old. You decide to take out a 20-year term life insurance policy with a term of protection of 20 years. The contract will end in 20 years and you will no longer be covered when you reach the age of 50. If you still need insurance and your medical condition has changed, you may no longer be able to get other insurance.
PERMANENT OR TEMPORARY?
Choosing between a permanent or term insurance contract can be a major factor in the cost of the premium. Take the time to assess your needs to protect your loved ones. Do you need insurance that protects you until age 100 or do you need to protect your income in the family budget until your children are independent or until you no longer have a mortgage to pay?
In summary, temporary protections are often for longer periods than you think and can give you all the protection you need, at a lower cost than permanent protection.
Take the time to assess your needs regularly and adjust your life insurance accordingly.
Term life insurance can meet your protection needs as you need them over time.
The information contained in this document is provided for general information only and depending on your situation, may not contain all the information you need to make a life insurance decision.
This information is not intended to provide advice on the type of insurance that is right for you. Viaction Assurance Inc., therefore, declines all responsibility if you choose to rely on the information contained in this document to make a life insurance decision.