What is 20 Year Term Insurance?
by Chris Funnell
20 Year Term Life Insurance offers coverage with locked-in rates that are guaranteed level during the 20 year period.
After the 20 year term, the policy can often be renewed for another 20 years at a higher premium (also guaranteed), without a medical or any health questions asked.
Most Canadian Life Insurance Companies also guarantee that their 20 Year Term plans can be converted into a Term-to-100 or Universal Life Insurance plan, without a medical or any health questions asked.
If a major health change occurs such as cancer, stroke, or heart attack, this conversion feature can be quite attractive.
20 Year Term second most popular in Canada
20 Year Term Life policies are the second most popular term plans sold in Canada (after 10 Year Term plans), and are ideal for those who want to make sure their loved ones will receive a replacement income, or not be encumbered with a large mortgage or debts during a 20 year period.
20 Year Term until children finish post-secondary
The most popular reason people buy 20 Year Term Life Insurance is to take care of dependent children in the event they pass away unexpectedly. Once a child grows up, finishes their post-secondary education in their early 20 s, and becomes financially independent, the parent’s need to take care of their child financially is hopefully over.
For example, if a child is currently 2 years old, in 20 years the child will be 22 and finishing College or University. A 20 Year Life Insurance Policy would match the time the child is still in school and dependant on parents for financial support.
20 Year Term until a mortgage is paid
The other popular reason people buy life insurance is to provide for a financially dependent spouse.
For example, if a husband and wife have 20 years left on their mortgage and would like mortgage insurance, or have 20 years left until retirement, a 20 Year Term plan would ensure a surviving spouse’s standard of living should a loved one pass away.