Term life insurance provides for temporary coverage for a defined period of time.

There are two basic types of term life insurance policies. These are "Level Face Amount" and "Reducing Face Amount". Level Face Amount policies provide for life insurance coverage that remains constant during the term of the policy contract. Some "Level" face amount policies also offer valuable options wherein the coverage may be increased at certain points in time. In contrast, "Reducing Face Amount" policies decreases over the term of the policy. "Reducing Face Amount" policies are also sometimes referred to as "Mortgage Term".

Term life insurance policies may be "renewable" or "convertible" or both "renewable and convertible". These provisions, if they are provided for, are stipulated in the policy contract wording.

Renewable
"Renewable" means that the life insurance policy may be renewed at the option of the policyholder without requiring the person whose life is insured to submit renewed proof of eligibility for the policy. Renewable term life insurance policies normally have a "final expiry date" or "final expiry age" beyond which the coverage cannot be renewed. When a term life insurance policy is renewable, it means that the insurance company cannot refuse to renew the coverage regardless of insurability of the person whose life is to be insured.

For term life insurance value comparisons, it is of utmost importance to consider the renewal costs that would be charged upon renewal. Policies that appear competitive on the basis of the premiums charged at inception (at commencement), may or may not be as attractive once the renewal costs are taken into consideration. It is also of utmost importance to check the frequency of renewal rate increases for renewable term life insurance policies. For example, US-style renewable term life insurance policies often renew as Yearly Increasing Premium policies - sometimes with prohibitive and punishing yearly skyrocketing renewal costs. Canadians are more fortunate as most Canadian renewable term life insurance policies feature "Level" renewal terms.

If the term life insurance policy is "renewable", check for the following items:


WinQuote(tm) provides you with the ability to view both the "final expiry" year, beyond which you will not be able to renew the coverage, as well as the guaranteed renewal costs. To view the year by year renewal detail for any policy quoted by WinQuote(tm), click on the premium amount displayed in the WinQuote(tm) comparsion survey.

Convertible
"Convertible" The option to convert a term life insurance policy to a permanent one is a very important and valuable contractual provision. Term life insurance contracts that are non-convertible should only be considered if the policyholder and life insured are confident and certain that the life insurance coverage will not be required beyond a known date during the affordable duration of the term life insurance policy (Note: Some life insurance policies, particularly those of the US style "Level to YRT" design, can become prohibitively expensive shortly after the expiry of the initial term!)

Convertible means that the term life insurance policy may be converted at the option of the policyholder to a "Permanent" life insurance policy with coverage "for life", without requiring the person whose life is insured to submit new proof of eligibility for life insurance.

Convertible term life insurance policies normally have a "final conversion option expiry date" or "final conversion option expiry age" beyond which the term life insurance policy is no longer convertible. Some convertible term life insurance policies also have an exclusion period in the early years of the term life insurance policy during which the convertible policy is Non-Covertible.

If the term life insurance policy is advertised as "convertible" check at least for the following items:


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