What is Term Life Insurance?
Quite simply, when you buy term life insurance, you are entering into an agreement with your insurance company.
In exchange for you making regular payments (called premiums), the insurance company will pay a benefit to the person you choose (called a beneficiary) if you should die while your policy is in effect. The death benefit payment is made tax-free under current Canadian law to a named beneficiary resident in Canada. In other words, if your term life insurance coverage amount were $475,000, your named beneficiary would receive that total amount.
Most people buy life insurance to help ensure that their unexpected death would not negatively impact the financial security of those they love. By buying life insurance, they make sure that money is available for funeral expenses and mortgage and loan payments, and that living expenses (such as groceries, utilities and their children's education) can be met even though they are not there to help any more.
Term life insurance simply means that the contract is for a defined period of time — 10 years in the case of the Term Life insurance plan. Premiums remain the same for the first 10 years. 10-Year Term Life insurance renewal premiums are not guaranteed. If your policy remains in effect, unless you advise us otherwise, we will renew your policy automatically at the then applicable premiums at each 10-year anniversary without a medical examination and without asking any medical questions. Your premiums will then remain the same for the next 10-year term. If you are 71 or older on the renewal date, your policy will renew for the number of years remaining until the policy anniversary date immediately following your 85th birthday.
10-Year Term Life insurance has no cash value and pays no dividends.
What's a Death Benefit?
The Death Benefit is the main feature of any life insurance policy. Manulife Financial will pay a Death Benefit to your named beneficiary if you die while your policy is in effect.
The benefit amount paid is equal to the insurance coverage amount you have at the time of your death. For Term Life, coverage amounts are available from $25,000 to $1,000,000, in multiples of $25,000.
The Death Benefit is paid tax-free, under current Canadian law, to a named beneficiary resident in Canada.
What's a Living Benefit?
We know that things could get very difficult financially for you and your family if you were to become terminally ill. For example, your illness might force you to stop working, or you might want to focus your energy on things other than your job. You might also have increased costs associated with your illness that would be difficult to pay.
That's why the Term Life plan includes a Living Benefit, available after your policy has been in effect for two years. Half of your term life insurance coverage amount (to a maximum of $100,000) can be advanced to you if you're diagnosed as terminally ill with 12 months or less to live, provided the diagnosis occurs before your 83rd birthday. No further premiums need to be paid once you receive the Living Benefit.
At time of death, the amount paid to your beneficiary will be your coverage amount less the amount advanced to you as a Living Benefit.