Term 10, Term 20, Term 30, and Term 100 at a Glance

With temporary term life insurance, the number normally represents the initial period during which the premium is guaranteed not to change.

A Term 20 policy, for example, generally maintains its initial premium for 20 years. What happens afterward depends on the contract. The policy might expire, renew at a higher premium, or provide options to convert or change the coverage.

Term 100 works differently. It is generally a permanent policy designed to provide lifetime protection. Depending on the contract, premiums may be payable until age 100 or for a shorter guaranteed period.

Canadian insurers do not all use the same term options. For example, Canada Life currently offers customizable initial terms from five to 50 years through Canada Life My Term, while Sun Life Evolve offers terms from five to 40 years, subject to eligibility and product rules.

This means you should compare the actual contracts, not assume that Term 10, 20, and 30 are your only choices.

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How Term Length Affects Your Premium

When the applicant, coverage amount and underwriting class are otherwise the same, a longer guaranteed term usually has a higher initial premium.

Term 10 will generally start at a lower cost than Term 20, and Term 20 will usually start below Term 30. Term 100 normally costs considerably more because it is designed for a permanent rather than temporary need.

However, the lowest starting premium is not always the least expensive long-term strategy.

Suppose someone purchases Term 10 because it is initially affordable but still needs insurance after 10 years. The person may be able to renew without new medical evidence, but the renewal premium can be considerably higher. Applying for a replacement policy may offer a better price, but the new application will usually be assessed using the person’s older age and current health.

A longer initial term can therefore provide valuable price stability and reduce dependence on qualifying for replacement coverage later.

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When Term 10 May Be Appropriate

Term 10 is most useful when the financial need is expected to last approximately 10 years or less.

It may fit situations such as:

• A loan expected to be repaid within 10 years
• A temporary business loan or partnership obligation
• Children who are approaching financial independence
• A person who expects to retire within 10 years
• Additional short-term coverage layered over an existing policy
• Temporary protection while a longer-term plan is being developed

Example

A 55-year-old plans to retire at 65. The children are financially independent, and the mortgage should become manageable within the next decade. Term 10 may match the remaining period during which the household depends heavily on employment income.

Term 10 is less suitable when the family already knows it will require protection for 20 or 30 years. Choosing it solely for the lower initial premium may postpone the cost rather than address the need.

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When Term 20 May Be Appropriate

Term 20 often works for families whose most significant obligations should decline within approximately 15 to 20 years.

Possible uses include:

• Replacing income while children remain dependent
• Helping fund future education costs
• Protecting a spouse during important saving years
• Covering a mortgage expected to become manageable within 20 years
• Meeting a medium-term business obligation

Example

A couple has children aged eight and eleven. They expect the children to become financially independent within approximately 15 years, and their mortgage should be substantially lower by then. Term 20 could provide additional time beyond the expected dependency period.

Do not base the decision only on mortgage amortization. Consider income replacement, childcare, education and the time the surviving family may need to adjust financially.

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When Term 30 May Be Appropriate

Term 30 is commonly considered by younger adults with responsibilities likely to continue for several decades.

It may be appropriate when someone:

• Recently started a 25- or 30-year mortgage
• Has young children or plans to have children
• Wants to protect employment income through most working years
• Does not want to depend on qualifying for replacement coverage in 10 or 20 years
• Values a longer period of predictable premiums

Example

A 32-year-old parent has a toddler, a new mortgage and approximately 30 years remaining until retirement. Term 30 may align more closely with the complete financial-protection period than Term 10 or Term 20.

The premium must still remain manageable. A policy that does not fit the household budget may not provide dependable long-term protection.

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When Term 100 May Be Appropriate

Term 100 is generally a form of permanent life insurance. It may be considered when the financial need is not expected to disappear.

Possible permanent needs include:

• Final expenses
• Providing for a lifelong dependant
• Leaving a defined inheritance
• Creating estate liquidity
• Funding certain permanent business obligations
• Supporting charitable giving

Product details must be reviewed carefully. Empire Life, for example, describes its Term to 100 product as permanent non-participating whole life insurance with guaranteed premiums and lifetime coverage. It currently offers Life Pay and 20 Pay premium-payment options.

Those features belong to that particular product and should not be assumed to apply to every policy called Term 100.

If the need ends when the mortgage is repaid or the children become independent, Term 100 may extend well beyond the required period. If the need is genuinely permanent, relying only on Term 20 or Term 30 could allow the coverage to end too soon.

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Is Term 100 the Same as Whole Life?

Term 100 and Whole Life may both provide permanent coverage, but they should not automatically be treated as identical products.

Term 100 typically emphasizes:

• Lifetime insurance protection
• A guaranteed death benefit
• Guaranteed premiums
• Lower initial cost than some cash-value permanent policies
• Limited or no cash value under some contracts

Whole Life may include:

• Lifetime coverage
• Guaranteed cash values
• Limited-pay options
• Potential dividends in participating policies

Dividends are not guaranteed. Cash values, premium-payment periods and surrender options depend on the contract.

If building accessible policy value is important, compare Term 100 with Whole Life and universal life rather than looking only at the monthly premium.

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The Risk of Choosing a Shorter Term

A common strategy is to buy Term 10 now and assume that another affordable policy will be available later.

That outcome is not guaranteed.

Ten years later, the insured person will be older. A change in health, occupation, travel, lifestyle or other underwriting factors may affect the price or availability of replacement coverage.

Renewing the existing contract may avoid new health questions, but the renewal premium may be much higher. Keeping the original policy may still be valuable when the insured person can no longer qualify for favourable replacement coverage.

Before choosing a short term, review:

• Guaranteed renewal premiums
• Renewal frequency
• Coverage-expiry age
• Conversion deadline
• Term-exchange provisions
• Products available for conversion

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Renewal and Conversion

Renewal and conversion solve different problems.

Renewal allows temporary coverage to continue according to the policy’s renewal schedule, usually without new medical evidence. The premium normally increases.

Not every insurer uses the same renewal method. Canada Life My Term currently renews annually after the initial term, while other products may renew for another defined period. Sun Life Evolve automatically renews at an increased cost and ends at age 85 under its current product provisions.

Conversion generally allows some or all of the temporary coverage to be changed into an eligible permanent policy without new evidence of insurability.

Conversion does not preserve the original term premium. The new premium depends on factors such as age at conversion, coverage amount and the permanent product selected.

The conversion deadline may occur before the policy’s final expiry age. These dates should not be confused.

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Combining Different Coverage Periods

One policy does not have to cover every financial obligation.

A layered strategy might use:

• A larger Term 30 amount for a young family’s mortgage and income needs
• A smaller Term 20 amount for education and childcare
• A permanent Term 100 amount for final expenses or a legacy

As individual obligations end, the related layer may no longer be required.

Layering can avoid purchasing one large permanent policy or locking every dollar of coverage into the longest temporary term. However, multiple policies may have different renewal schedules, conversion deadlines and administrative requirements.

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How to Choose the Right Term

1. Give each financial obligation an end date

List the mortgage, loans, business obligations and other debts another person might need to manage.

The family may not need enough insurance to eliminate every debt. In some cases, reducing the mortgage to an affordable balance may be sufficient.

2. Estimate the income-replacement period

Consider how long the household would depend on the insured person’s income. Account for the children’s ages, the spouse’s income, childcare responsibilities and expected retirement.

3. Separate permanent needs

Final expenses, support for a lifelong dependant, estate liquidity and a planned inheritance do not necessarily disappear after 10, 20 or 30 years.

Evaluate these separately from temporary mortgage and income needs.

4. Review existing resources

Consider savings, investments, workplace life insurance and existing individual policies.

Workplace coverage deserves special attention because it may change or end when employment ends.

5. Compare contracts—not just quotations

For comparable coverage, examine:

• Initial guaranteed premium
• Renewal premiums and schedule
• Expiry age
• Conversion deadline
• Eligible conversion products
• Partial-conversion options
• Term-exchange provisions
• Optional benefits
• Underwriting requirements

A quotation shows a price based on the submitted information. It does not show every contractual difference or guarantee approval.

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Common Mistakes

Choosing Term 10 only because it starts cheaper

A shorter guaranteed period can create an expensive decision while the original financial need remains.

Matching the coverage only to the mortgage

Families may also need income replacement, childcare, education funding and support for other dependants.

Assuming Term 100 is temporary insurance

Term 100 is generally positioned as permanent insurance and should be compared with other permanent products.

Assuming all policies renew in the same way

Renewal frequency, rates, expiry ages and conversion rights differ between contracts.

Ignoring the conversion deadline

A policy may remain renewable after the right to convert has ended.

Buying permanent coverage that the budget cannot maintain

Permanent coverage can address lifelong needs, but affordability matters. A combination of temporary and permanent insurance may be more sustainable.

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Frequently Asked Questions

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Key Takeaways

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