Are Your Life Insurance Premiums Fixed?

You might think your life insurance premiums stay the same throughout your policy. Most people do. But the reality about how much you pay for life insurance coverage can be more complicated than you expect.

Life insurance premiums are what you pay monthly or annually to keep your policy active. When you pass away, your beneficiaries receive a one-time, tax-free death benefit. With term life insurance, your premiums typically don’t change during your chosen term. If you have a fixed term plan, you’ll make the same payment throughout that coverage period.

Here’s where it gets interesting. Once your original term ends, your premiums will start to climb because you’ve gotten older.

Several things affect what you pay for life insurance. Age matters most – life insurance costs less when you’re younger. The amount of coverage you want also impacts your premiums directly. Want more life insurance coverage? You’ll pay more.

Understanding how premiums work helps you make better decisions about your insurance needs. You won’t face unexpected surprises down the road if you know what to expect.

Understanding term life insurance in Canada

Term life insurance is the go-to choice for most Canadians who want affordable protection. This type of insurance covers you for a set period – anywhere from 5 to 50 years – and your premiums stay the same throughout that chosen term.

Think of term insurance as straightforward protection. It doesn’t build cash value like permanent insurance. When your initial term ends, most Canadian insurers will automatically renew your policy each year. You won’t be left without coverage. But those renewed premiums will cost more as you get older.

What happens when your term is up? You have choices. You can stick with the automatic renewal, buy a new policy if you qualify health-wise, or convert to permanent insurance. Most policies let you convert to permanent coverage after your first policy anniversary. The benefit? You won’t need to answer health questions again.

How long should your term be? Consider what’s happening in your life. Shorter terms of 5-10 years work well if you need flexibility or aren’t sure what the future holds. Mid-length terms match up nicely with shorter mortgages or the years until your children finish school. Longer terms give you stable coverage through big life events – getting married, buying a home, or raising your family.

Are your term life insurance premiums really fixed?

The word “fixed” can be misleading when it comes to term life insurance premiums in Canada. Yes, term life policies advertise guaranteed rates, but this applies only for your selected term period.

You have two main options for how your premiums work. Level term policies keep the same premium throughout your chosen term – whether that’s 10, 20, or 30 years. Annual renewable term policies start cheaper but go up every year as you age.

Here’s what catches many Canadians off guard. Once your initial term ends, your premiums can jump dramatically when you renew. Consider this when choosing your term length. A 10-year plan costs less upfront than a 20-year plan, which costs less than lifetime coverage.

Your premiums stay put during your term, but they’ll adjust based on your age when you renew. This is something to think about when picking how long you want your coverage to last. Insurance companies use this structure to keep initial rates affordable while accounting for higher risk as you get older.

Smart ways to keep your premiums low

Keeping your life insurance premiums low starts with understanding what drives the costs up. Getting coverage early in life is one of the best strategies you can use. Premiums increase significantly as you age.

Term insurance will save you money compared to whole life insurance. Whole life insurance can cost significantly more.

Your health rating has a big impact on what you pay. Quit smoking, maintain a healthy weight, and exercise regularly – these changes can meaningfully reduce your premiums. Smokers typically face premiums more than double those of non-smokers.

Here are other ways to keep your costs down:

• Pay annually instead of monthly to avoid administrative fees

• Select a term length that matches your financial obligations, like your mortgage duration

• Choose decreasing term insurance if you’re covering a repayment mortgage

• Avoid high-risk activities or hobbies such as skydiving or motorsport

• Reassess your coverage needs after major life events like paying off your mortgage or when your children become independent

If you’re buying life insurance for the first time, compare quotes from multiple providers. Different insurers evaluate risk differently, so shopping around can save you money.

Why Maple Bay?

Term life insurance premiums offer predictability during your chosen term, but they will increase when you renew. This structure helps Canadian families budget effectively while maintaining protection during their most vulnerable years financially.

Term insurance remains the most cost-effective choice for most Canadian households. You can lock in longer terms initially to avoid premium increases for extended periods. Some people convert to permanent policies after their term expires, particularly if they develop health conditions that make qualifying for new coverage challenging.

Canadian term life insurance provides flexibility that permanent policies cannot match. You can adjust your coverage as your financial obligations change – perhaps reducing protection after your mortgage is paid off or when your children become independent. This flexibility means you maintain appropriate coverage without paying for protection you don’t need.

At Maple Bay, we understand your desire to provide for your family while keeping costs manageable. We are insurance brokers, which means we aren’t here to push any particular insurance product. Instead, we’ll help you understand your premium options and find the right term life insurance for your situation.

When you’re ready to explore life insurance options that fit your budget, contact the team at Maple Bay Insurance. Let us help you find the best policy that matches your needs and circumstances.