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Term to Age 65 Life Insurance

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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.

 Male – Age 30Female – Age 30Male – Age 40Female – Age 40Male – Age 50Female – Age 50
$500K$59.76$41.40$68.36$50.27$100.98$66.60
$1M$114.30$77.67$129.69$91.71$193.14$126.09

*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 reach out to one of our insurance professionals if you have any questions, or use our free online quoting tool to get an instant quote.

Wrongful or criminal deception intended to result in financial or personal gain.

Also known as a “living benefit rider”, an accelerated death benefit is a rider that can be added to a life insurance policy. It allows the policy holder to access part of their policy death benefit if they have been diagnosed with a terminal illness. The funds are typically used for medical treatment and care.

Accidental death and dismemberment (AD&D) is a rider that can be added to a life insurance policy. AD&D issues a benefit if the insured person dies accidentally or suffers from dismemberment, such as the loss of a limb or the loss of use of a body part.

Accrued interest is interest that has been generated from a life insurance policy but that has not yet been paid out to the policy holder.

Actual age is a method that life insurance providers use to calculate the age of a life insurance applicant. Using this method, your age is determined by your most recent birthday. Another method used is “nearest age”, which determines your age based on whatever birthday is closest to the present date.

Actuarial tables are vital to life insurance companies. Sometimes known as mortality tables, they indicate the statistical probability of death of people based on factors like life expectancy, age, gender, health, and more.

An administrative expense refers to a business expense that is not part of the company’s main operations, such as production and sales. Administration expenses include things like salaries, benefits, insurance, etc.

Adverse selection refers to when sellers and buyers do not have the same information, such as a salesperson knowing the value of a product is less than its cost. In life insurance, adverse selection can include when an applicant does not disclose relevant information to the insurance provider.

A life insurance agent is responsible for selling life insurance policies to people and working with clients to process life insurance claims. In contrast to a life insurance broker, an agent works on behalf of a life insurance company.

When naming a beneficiary for a life insurance policy, there is typically a primary beneficiary and an alternate (or contingent) beneficiary. An alternate beneficiary is the person who receives the policy’s death benefit if the primary beneficiary is unable to claim it.

Annual renewable term (ART) life insurance is a form of term life insurance that offers one-year coverage that can be renewed every year. Because premiums increase with every annual renewal, ART life insurance is best for short-term coverage needs.

An annuity is a financial strategy offered by banks and insurance companies that invests a customer’s money in order to generate an income stream down the line. Annuities are most commonly used to bolster retirement funds.

In the context of life insurance, an applicant is the person applying for life insurance coverage.

A life insurance assignment enables a policy holder to transfer control of their life insurance policy to a third party—typically a close relative.

An Attending Physician Statement (APS) is a document issued by life insurance companies that must be filled in by a physician, providing an overview of a life insurance applicant’s health and medical history.

An automatic premium loan is primarily associated with permanent life insurance policies with a cash value. It enables life insurance providers to deduct any outstanding premiums from the policy’s cash value.

On life insurance applications, you may come across the term avocation. An avocation is simply a hobby, or an activity outside of work that you participate in. Certain avocations can influence your life insurance premium rates.

Backdating is a strategy life insurance applicants can use to lower their premiums with life insurance companies that use your nearest birthday to determine your age. If you are 29.5 years old, you can use backdating to secure a premium for a 29-year-old. You just have to pay premiums for the months that elapsed from your insurance age being 29.

A beneficiary is the person (or entity) that is named on a life insurance policy that will receive the death benefit when the insured dies. Typically, a beneficiary is a spouse, dependent or close relative, though organizations can also be named as beneficiaries.

Burial insurance, also known as final expense insurance, is a type of whole life insurance policy with a modest benefit (usually under $25,000) that is intended to cover funeral and burial costs.

Capital gains tax is a tax paid on the profit generated when an investment is sold. If you terminate a permanent life insurance policy, you will pay capital gains on any income exceeding the policy’s adjusted cost base.

If you terminate a permanent life insurance policy after a set period of time, the life insurance provider will pay you a sum of money, the cash surrender value. This amount is the cash value of the life insurance policy minus any surrender and administration fees.

Cash value life insurance refers to a type of permanent life insurance that comes with a cash value. The cash value increases over time as the policy holder pays into their policy and can be used as collateral for loans or to cover premiums.

A child protection rider can be added to a term life insurance policy to extend coverage to your child or children. With a child protection rider, the policy holder will receive a small death benefit should their child die within the coverage period.

In the context of life insurance, a claim is a request submitted by a beneficiary to the insurance provider when the insured dies to release the death benefit. Essential documents required for a life insurance claim are a death certificate, policy document, and claim form.

A collateral assignment is when a policy holder appoints a third party (usually a lender) as the primary beneficiary of their permanent life insurance policy in order to take out a loan.

In the life insurance industry, company ratings are carried out by independent groups and rank insurance providers based on their financial health. AM Best is one of the most popular online companies for life insurance company ratings.

Concealment refers to when a life insurance applicant does not divulge important information to the life insurance provider, including smoking status, health, avocations, and more. Concealment can lead to a terminated or voided life insurance policy.

A contestability period is a fraud-management clause in life insurance policies. It consists of a one or two-year period in which life insurance companies can review your coverage and deny potential claims.

A contingent beneficiary, also known as alternate beneficiary, is the person or entity who inherits a life insurance policy death benefit if the primary beneficiary can not longer claim it.

Conversion right, sometimes called conversion privilege, is a clause in group life insurance policies that lets the insured switch to an individual life insurance policy without having to undergo a medical exam and underwriting.

A convertible life insurance policy is a type of term life insurance that allows the policy holder to convert their coverage to a permanent life insurance policy without having to apply for a new policy.

In life insurance, coverage refers to the size of a policy. In other words, how much the death benefit is worth. A life insurance policy with $150,000 in coverage will issue a $150,000 death benefit if the insured dies within the coverage period.

A critical illness rider is an optional add-on for life insurance policies that pays out a tax-free lump sum if the insured is diagnosed with or suffers from a covered critical illness, such as a stroke or heart attack.


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