Term to Age 65 Life Insurance

Simon Huften

Simon Huften is the President of Life Insurance Canada.com Inc.

In This Article

• Understanding Term to Age 65 Life Insurance
• Who is Term to Age 65 Designed For?
• Benefits of Term to Age 65 Life Insurance
• Drawbacks of Term to Age 65 Life Insurance
• How Much Does Term to Age 65 Life Insurance Cost?
• Alternatives to Term to Age 65 Life Insurance
• Top Companies for Term to Age 65 Life Insurance
• Examples of Term to Age 65 Life Insurance
• Renewable Option
• Convertible Option
• Summary

Understanding Term to Age 65 Life Insurance

Term to age 65 life insurance is a term life insurance product available in Canada. It is commonly purchased by many Canadians who are looking to provide coverage to their retirement age.

Term life insurance is a type of life insurance which provides a fixed amount of coverage for a fixed amount of years. In this case, term to age 65 life insurance is a life insurance product that has premiums (the cost of the policy) that are level until the insured person reaches age 65. The death benefit (the coverage amount) is also level until age 65. Once the insured reaches age 65, most policies expire. There are some life insurance companies that will continue to provide coverage after 65 at an increased price until age 75-85 depending on the company.

We have created a graph to help illustrate the costs of the premiums throughout the years of the policy.

Who Is Term to Age 65 Life Insurance Designed For?

Term to age 65 life insurance is designed for Canadians who are looking to ensure that they have coverage until a retirement age. It also provides a high amount of life insurance coverage at an affordable price.

It is most commonly purchased by Canadians in their 20’s, 30’s and 40’s who are looking for life insurance protection until age 65 to cover such things outstanding mortgage debt and family protection. It is also a great product to use to provide life insurance coverage up until retirement age.

Benefits of Term to Age 65 Life Insurance

• Term to age 65 life insurance offers a great combination of affordability and the amount of years for coverage.
• It provides the peace of mind knowing that your beneficiaries will receive a lump sum amount, tax free in the event of your death.
• The rates (cost of the policy) are guaranteed to be level (or fixed) for the length of the policy term which in this case is until age 65.
• Term to age 65 life insurance policies are very customizable which allows you to ensure that it suits the needs of you and your family.
• Most life insurance companies offer a renewable option within the policy.
• Most life insurance companies offer a conversion option within the policy.
• If you are in good health, it is possible to get approved without having to complete a medical examination… You only have to complete a health questionnaire by phone. RBC Insurance is an example of a company that provide this option.

Drawbacks of Term to Age 65 Life Insurance

• The premiums (the cost) of a term to age 65 life insurance policy are level until age 65. Some Canadians may not require life insurance coverage until age 65 which could result in the insured person paying more for their life insurance policy than what is required. You should try to match the length of the term you are purchasing with the amount of years that you require life insurance coverage.
• At age 65 the policy, depending on the life insurance company the policy will either expire and no longer be in force or it will renew and increase in price. The increase in cost is typically very high and can be more than 4x the original premium of the policy.

How Much Does Term to Age 65 Life Insurance Cost?

At the end of the day, the cost of a term to age 65 life insurance policy is dependent on the health of the person applying. If you are in very good health you can qualify for discounted rates (preferred rates), but most Canadians end up qualifying for standard rates. There are also other factors which come into play when determining the price of term to age 65 life insurance such as weight, smoking, lifestyle habits, medications, etc. We have put together some sample quotes from RBC Insurance below to give you an idea of the cost of term to age 65 life insurance. All prices are monthly and based on health, non smokers.

*Rates are monthly and based on standard health, non smoker from RBC Life Insurance Company.
**Rates were quoted September 2020 and are not guaranteed. Final rates are determined after an application has been submitted.

Alternatives to Term to Age 65 Life Insurance

For many Canadians, 10 and 20 year term life insurance is a great product to fit their needs. Term to age 65 life insurance may provide coverage for too long as most Canadians do not require life insurance coverage until retirement. Your goal should be to try to match the length of the term with the amount of years that you require life insurance for.

If you feel that you require life insurance for your entire life to cover things such as funeral expenses or estate costs than you should consider permanent life insurance options such as whole life insurance, universal life insurance or term to 100 life insurance.

Top Companies for Term to Age 65 Life Insurance

For the most part, term to age 65 life insurance is very straight forward. It has level premiums and level coverage until age 65. So why would we care which company we buy from? Should we just choose the lowest priced quote? Yes and no.

Life insurance companies are actually rated by a company called AM Best Company. This company reviews life insurance companies’ financial strength, ability to pay claims, history, credibility, etc. to help consumers understand which life insurance companies are the strongest.

We recommend dealing with term life insurance companies that have at least an ‘A’ rating and include the option to renew and convert your term life insurance policy. We also recommend purchasing term life insurance from a life insurance company that has quality permanent life insurance products in the event that you ever choose to convert your term life insurance policy to a permanent life insurance policy.

Not all life insurance companies offer term to age 65 life insurance. The main companies that provide term to age 65 life insurance that we recommend considering purchasing from are…

• Manulife (Manufacturers Life Insurance Company)
• Industrial Alliance
• RBC Insurance (Royal Bank of Canada)
• Canada Life
• Equitable Life
• Desjardins

Examples of Term to Age 65 Life Insurance

A term to age 65 life insurance policy for $500,000 will have the same premium (cost of the policy) for the length of the term. If this case the length of the term is until age 65. The policy will also have the same coverage amount of $500,000 for the length of the term (until age 65). Most people who purchase these types of policies are wanting to have life insurance coverage in force until they are retired or close to retirement.

When the insured person reaches age 65, depending on the life insurance company the policy will expire or they will continue to offer you insurance for a period of time at an increased price (called a renewal). The renewal premium is actually listed in your original policy contract so you can see exactly what the cost will be after age 65 if you look at the contract.

Renewable Option

Most term life insurance companies in Canada have a feature available called “renewable” or “renewability” where they allow you to continue your term policy after the initial term. With term to age 65 life insurance policies, depending on the life insurance company the policy may expire at age 65 or it may renew at in increase cost.

If your policy has the option to renew at age 65, the insurance policy will increase in cost at a higher premium (higher cost). The reason the premiums are higher after age 65 is because the insurance company does not require any health questions or medical evidence (blood, urine, etc.). They are assuming that something has changed in your health which is why the policy premiums increase. If you are in good health and still need life insurance after age 65, you are usually better off applying for a new policy to get a lower premium and cancel your old policy after the new policy is in force.

We recommend contacting us to determine what policy is right for you.

Convertible Option

Most term life insurance companies in Canada also have a feature called “convertible” or “conversion” which means that the policy owner is allowed to convert (switch) their term life insurance policy to a permanent life insurance policy (whole life insurance, universal life insurance, term to 100 life insurance) without having to complete a medical exam or health questionnaire. You are just required to do something called a policy change where you complete some paperwork, select a permanent life insurance policy and pay premiums based on your age and smoking status at the time of converting.

This is a feature that can become very valuable depending on the circumstances of the insured person. If you purchased a term to age 65 life insurance policy and were diagnosed with a health condition that made it so you were unable to ever purchase life insurance again because no insurance company would insure you, having a policy that had a conversion option would be beneficial because it would still allow you to buy a permanent life insurance policy.

The conversion option would allow you the ability to switch your term life insurance policy to a permanent life insurance regardless of your health. The life insurance has to offer you permanent life insurance at regular, standard rates. This would ensure that you have the ability to have lifelong insurance protection regardless of your health.

We recommend that you speak with one of our licensed brokers regarding these options because they can be quite hard to understand without a clear explanation related to your situation.

Summary

Term to age 65 life insurance is a term life insurance product that is usually purchased by Canadians who are looking to provide for family protection until they are close to, or at retirement age. The cost can be quite affordable depending on your age when you purchase the policy. Please contact us if you have any additional questions about term to age 65 or request a quote.