||$250,000 death benefit
||$500,000 death benefit
||$16/month on average
||$23/month on average
||$22/month on average
||$35/month on average
||$37/month on average
||$67/month on average
Estimates based on a 30-year-old female in good health paying annual premiums.
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What your health has to do with it
Mitchell says if you have underlying disabilities or conditions, you should discuss it with your insurance broker, who can then inform you about how that may impact their premium or eligibility to obtain a policy.
Does term life insurance cover disability? It doesn’t, as term disability insurance is a separate policy. “Some policies may offer a small amount of disability coverage as a rider on the policy, but this is not included in the base premium,” says Mitchell. (A rider is an additional benefit added to a policy.)
When it comes to existing health conditions, some may ask, for instance, what is the best term life insurance is for those with diabetes. “There is no such thing,” says Mitchell, as the answer depends on your individual goals, debts and more. “Your broker should be informed about any existing medical conditions, like diabetes, during the discovery process. There are products that guarantee eligibility regardless of pre-existing conditions, but these would likely carry a higher premium.”
What happens after term life insurance expires?
The policy will either be renewed or it will expire at the end of the term depending on the policy. With a term insurance policy, unlike with a whole life policy, Mitchell says, “there is nothing to be paid out at the end of the term.”
Get it straight: Myths and misconceptions about term insurance
“One of the biggest myths is that [term life insurance] is extremely expensive,” says Mitchell. “For a person under 40, in perfect health, the cost of term insurance can be negligible.”
As well, people often underestimate the amount of coverage they need. “It is not just for covering your funeral,” says Mitchell. In order to determine how much coverage you require, your broker should complete a life-needs analysis. This evaluates all of your liabilities against your assets and income, and also takes into account other factors that you may wish to cover should they pass away unexpectedly. For example, you may want to allow your spouse to receive a certain income, such as five times what you earn currently, to make up for the loss of a second income and allow your family to continue the same lifestyle.
People also commonly seek to cover the cost of their children’s future post-secondary education, cover some or all of their mortgage and increased child-care costs due to only one spouse being home should the second parent pass away. “The coverage suggested for the insured should lie somewhere between the optimal amount of coverage, and what the client can comfortably afford,” says Mitchell.