There are two basic types of term life insurance policies.  These are "Level Face Amount" and "Reducing Face Amount".  Level Face Amount policies provide for life insurance coverage that remains constant during the term of the policy contract.  Some "Level" face amount policies also offer valuable options wherein the coverage may be increased at certain points in time.  In contrast, "Reducing Face Amount" policies decreases over the term of the policy.  "Reducing Face Amount" policies are also sometimes referred to as "Mortgage Term".

Term life insurance policies may be "renewable" or "convertible" or both "renewable and convertible".  These provisions, if they are provided for, are stipulated in the policy contract wording.

"Renewable"
"Renewable" means that the life insurance policy may be renewed at the option of the policyholder without requiring the person whose life is insured to submit renewed proof of eligibility for the policy.  Renewable term life insurance policies normally have a "final expiry date" or "final expiry age" beyond which the coverage cannot be renewed.  When a term life insurance policy is renewable, it means that the insurance company cannot refuse to renew the coverage regardless of insurability of the person whose life is to be insured.

For term life insurance value comparisons, it is of utmost importance to consider the renewal costs that would be charged upon renewal.  Policies that appear competitive on the basis of the premiums charged at inception (at commencement), may or may not be as attractive once the renewal costs are taken into consideration.   It is also of utmost importance to check the frequency of renewal rate increases for renewable term life insurance policies.  For example, US-style renewable term life insurance policies often renew as Yearly Increasing Premium policies - sometimes with prohibitive and punishing yearly skyrocketing renewal costs.  Canadians are more fortunate as most Canadian renewable term life insurance policies feature "Level" renewal terms.

If the term life insurance policy is "renewable", check for the following items:

a.  What is the "final expiry age" beyond which you will not be able to renew the coverage?
b.  What are the guaranteed renewal costs and how often and to what extent do the renewal costs increase? (Be particularly careful if the renewals are structured on a Yearly Increasing Cost basis!)

WinQuote(tm) provides you with the ability to view both the "final expiry" year, beyond which you will not be able to renew the coverage, as well as the guaranteed renewal costs.  To view the year by year renewal detail for any policy quoted by WinQuote(tm), click on the premium amount displayed in the WinQuote(tm) comparsion survey.

"Convertible"
The option to convert a term life insurance policy to a permanent one is a very important and valuable contractual provision.  Term life insurance contracts that are non-convertible should only be considered if the policyholder and life insured are confident and certain that the life insurance coverage will not be required beyond a known date during the affordable duration of the term life insurance policy (Note: Some life insurance policies, particularly those of the US style "Level to YRT" design, can become prohibitively expensive shortly after the expiry of the initial term!)

Convertible means that the term life insurance policy may be converted at the option of the policyholder to a "Permanent" life insurance policy with coverage "for life", without requiring the person whose life is insured to submit new proof of eligibility for life insurance.

Convertible term life insurance policies normally have a "final conversion option expiry date" or "final conversion option expiry age" beyond which the term life insurance policy is no longer convertible.  Some convertible term life insurance policies also have an exclusion period in the early years of the term life insurance policy during which the convertible policy is Non-Covertible.

If the term life insurance policy is advertised as "convertible" check at least for the following items:

a.  Does the contract stipulate an exclusion period in the early years of the term life insurance policy during which the convertible policy is non-convertible?
b.  What is the "final conversion option expiry date" or "age" of the policy being offered?
c.  Is the policy offered for conversion known and guaranteed with respect to coverage and rates?  If not, does the Company freely disclose the nature and rates for the conversion option policy?
 

b.  Catch life insurance sales phrases such as "preferred", "super-preferred", "preferred plus", etc. have made their way into life insurance sales ads.  These words and phrases should not be considered generic - they are not - but should be recognized as merely sales terms.

c.  Tobacco and related substance use (including marijuana) is a foremost aspect of underwriting qualification and of contractual wording and interpretation thereof.  The only definition of a "non-smoker" that is applicable to all underwriting category-classifications by all insurers is "never ever smoked or used tobacco or related substances".  The only definition of a "smoker" that is applicable to all underwriting category-classifications by all insurers is "currently smoking cigarettes".  All other situations and cases differ widely among insurers and their respective underwriting category-classifications.  Intentional or accidental mis-statement of your exact present or past use or consumption of tobacco or related substances may lead to forfeiture of the coverage under the policy, even beyond the two-year initial contestability period.

Cost comparisons that fail to provide for accurate and detailed consideration of your present and/or past consumption of tobacco or related substances may be seriously deficient, may lead to overly optimistic expectations or to missed opportunities or both.  Beware of so called "comparisons" that, with respect to tobacco and related substance consumption,  rely merely on a "Yes" or "No" answer to an inadequate question such as "Do you smoke" or "Are you a smoker"!

The crucially important factor of present and past tobacco and related substance consumption is recognized in the design and working of WinQuote(tm) and WinQuote(tm) therefore does provide for accurate data entry and consideration of past and present consumption or use of tobacco and related products.

d.  Term insurance is an affordable means to commence life insurance coverage and to purchase larger face amounts of life insurance coverage.  The considerations required to achieve the best value in term life insurance can be quite complex, with long-term consequences.  It is in your best interest to consult with a qualified Canadian financial services broker or agent who uses the LifeGuide Professional multiple company life insurance comparison and evaluation software.

e.  The above is a general overview of some of the aspects of term life insurance and is not meant or represented to be complete or comprehensive.  For your individual needs and for your benefit we strongly recommend that you contact a Canadian financial services broker or agent who subscribes to the LifeGuide Professional software.

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