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20 year term insurance

Looking for 20 year term life insurance? Get an instant online quote above, then continue reading for the finer policy details.

What is 20 year term life insurance?

All life insurance pays the same death benefit – if you have $500,000 of one type, and $500,000 of another type, then die, your beneficiaries receive the same cheque. The primary difference amongst different types of life insurance is in how you pay the premiums over time.

20 year term insurance premiums.

20 year term life insurance has premiums that are level for 20 years. Once the policy is issued, the premiums cannot change for the next 20 years. It’s the most common type of insurance sold to Canadians as it matches the timeframe of kids, mortgages, and income earning of many Canadian families.

So what happens at the end of the 20 years? Read the ‘renewable’ section below for more details.

20 year term life insurance important policy features.

Not all 20 year term is the same. Some policies have additional important ‘safety’ features. To use an analogy, all cars have four wheels, but not all cars have safety bags. Similarly , some policies have features that come in to play only when things go wrong, such as your insurability during the course of the policy.

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Renewable:

This feature focuses on what happens at the end of the 20 years. The premiums have been level for 20 years, you’ve maintained the policy, what happens now? Is the insurance just over?
Well, if your 20 year term policy is not renewable, then yes, your life insurance is just over and the contract is no longer in force. This is problematic because now you’re 20 years older so a new policy will be substantially more expensive. And if you’ve developed insurability issues over the 20 years, you may be prevented from getting a new policy entirely.
A renewable 20 year term policy allows you to maintain your coverage past the 20 years. The premiums increase (you’re now older), but you can continue the policy at the higher premiums if you choose.

Convertible:

Convertible policies (or, policies that have conversion) allow you to swap your term policy (that has premiums that either stop because the policy is over, or renew at a higher premium) for a permanent life insurance policy. This swap is done with no medical exam – just a signature. Which means if you become uninsurable during your 20 year term, you can simply swap out your term for a permanent, lifetime policy without any medical consideration. This feature is extremely important to have in your term policy. Given the choice, you should always purchase a policy that has conversion.

Accelerated Death benefits:

This policy feature lets you access a portion of your death benefits while still alive – if you have a limited life expectancy. So if you have a condition that indicates you will pass within a year, Accelerated death benefits may let you receive 25% or so of your death benefit while still alive.

Exchange option:

The exchange option is like the conversion option above. Conversion lets you swap from your term policy to a permanent life insurance policy. The exchange option lets you swap your term policy, for a longer term policy, also without a medical exam. So if you have a 20 year term policy, you can swap it for a term 25 or term 30.  The exchange option is generally only available in the first 5 years of the life insurance policy, and you should note that many company don’t guarantee this option (in other words, they’ll currently allow it, but they don’t guarantee the option will be available in the future).

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