Looking for the best term life insurance? Good news – it may not cost any extra to get it!
Term life insurance prices are based on mortality. But then the life insurance companies refine their pricing based on competitive market factors. And they do this refinement without consideration for whether their policy is the ‘best’ or not. It’s common for some of the best term life insurance policies to be priced in the top three cheapest term life insurance policies in Canada, and only a couple of percent higher premiums than the absolute cheapest.
So what makes the ‘best’ term life insurance the best? There’s a couple of things that are must-haves, and then a number of things that you need to evaluate personally as they’re more opinion based.
First, certainly, price. Term life insurance should have amongst the cheapest life insurance premiums available.
Secondly, the policy should be renewable and convertible (and when available on a term policy, they are offered for free). These two options are basically airbags for your life insurance. You probably won’t need them, but if you do need them, then they’re extremely important to have. And since they’re free, it’s no more expensive to get a policy with these features than a policy that doesn’t have them – so always ask and make sure your term life insurance policy is renewable and convertible.
Next up are the attributes that are more opinion based.
You should consider a policy that has accelerated death benefits. This feature allows you to access a portion of your death benefit while you’re alive, but have a severely limited life expectancy (less than one year).
You should consider a policy that has an exchange option. The exchange option allows you to switch your existing term life insurance policy for a longer term, in the first five years, without a medical exam. Again, it might not be something you expect to use, but since it’s free in policies that offer it, you might as well ensure that your policy has it.
Company size and reputation is often on consumers’ minds. Frankly some of this is just a matter of how much the life insurance company spends on marketing to put their name in front of you so that you’re familiar with it, and may have little to do with stability or even if the company offers strong service. Still, it’s something you may personally want to evaluate. We generally don’t pay much attention to this – but again, it’s a personal choice.
Lastly is customer service, underwriting (some companies are difficult to get a policy with), and claims payment. Since what’s probably going to happen is that you pay your term life insurance premiums for many years and then cancel – so you’ll never experience customer service or claims payments. Nevertheless, most agents (including us) will have an opinion on what companies are great to deal with, and what companies we’d prefer our customers avoid.
In summary – find a cheap term life insurance policy. Make sure it’s renewable and convertible. Then evaluate company size, reputation, service, underwriting, and a few other policy features in order to finalize your decision.