Term life insurance over 10 years or 20 years: how to decide?

Term life insurance over 10 years or 20 years: how to decide?


As the name suggests, term life insurance offers protection over a limited period of time that is generally between 5 and 20 years and comes with premiums that increase with age. Suitable for paying off a mortgage or helping children in the event of parental death, it is inexpensive protection when you are young, but it becomes more expensive as you get older. Once the decision to purchase this type of life insurance has been made, the length of the contract remains to be determined. Is it better to go with 10-year or 20-year term life insurance?

What is the purpose of the term life insurance policy?

Like any protection, term life insurance should be tailored to the needs of the household. So we have to ask ourselves what the contract will be used for in the event of death, for example:

    ensure that the mortgage loan for real estate is paid off so that the family can stay in the house
    bequeath an education fund to children
    pay off credit cards, car loans, student loans, lines of credit and other personal loans
    replace their income so that the family can pay for usual expenses, in particular the rent for housing
    pay spousal or child support
    cover inheritance tax and all costs generated by death and funeral
    ensure the continuity of a business in the event of death
    finance a repurchase agreement in the context of commercial interests

Choosing 10-year term life insurance

10-year term life insurance is particularly suitable for people who need short-term protection. These are in particular:

    couples in their forties with little debt and whose mortgage is almost paid off
    people with short-term debts who want to pay them off with the premium and thus protect their heirs in the event of death
    households with grown-up children who will soon no longer depend on their parents financially
    business owners who need protection and want to ensure business continuity in the event of death without placing an additional burden on the shoulders of their heirs
    people who want to buy life insurance, but can only pay a low premium.

For people who are sure to renew their contract at the end of 10 years, it is more interesting to take out life insurance from the outset for a period of 20 years, because even if the premiums are higher, they remain much lower than in the case of a renewal.

Opt for 20-year protection

The 20-year life insurance contract offers ideal protection for people with longer-term commitments or young children, for example:

    families who own a house, with small children
    single or newlyweds who have just bought a home
    and more generally people with a large mortgage amount still to pay, or children who will still be in school in more than ten years.

Whether you choose to insure for 10 or 20 years, it may be worth taking out term life insurance as you can insure yourself at a low price and then reassess your needs at the end of the contract. Because even though premiums increase with age, needs decrease, the mortgage is paid and the children grow, while on the other hand wages and amounts invested in RRSPs increase.