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10 Year Term Life Insurance

What is 10 year term life insurance?

10 year term life insurance is a type of life insurance policy that is defined by it’s premium structure. 10 year term has premiums that are guaranteed level for 10 years, with level death benefit for the duration of the policy. (i.e. premiums are level for 10 years, then the premiums change. But the life insurance coverage or death benefit doesn’t change after 10 years).

Renewable Term - What happens after 10 years?

If a term policy is not renewable and convertible, then after 10 years your policy expires – you’re out of life insurance coverage. If you expect to need insurance past that point you’ll need to apply for a new policy and take a medical exam when you’re 10 years older. Since we can’t guarantee that you can qualify in 10 years, if you need life insurance longer than 10 years you should either purchase a 20 year term life insurance policy, or make sure that your 10 year term policy is renewable and convertible.

If your 10 year term policy is renewable, then by default the policy will ‘renew’. That means that in year 11 the coverage remains level but the premiums increase. This is known as a ‘renewal’. 

Renewal premiums are not necessarily level for another 10 years. Companies have different structures for premiums after the end of the first 10 years. Some may have premiums that increase every year. Others may have premiums that increase every 10 years to age 85, and then become level for life after that. Here’s an example of premiums for a 10 year term showing renewal premiums that increase every year:

Year Monthly Premiums
1-10 $28.22
11 $89.78
12 $131.99
13 $157.50
... ...
30 $918.00
40 $2771.00

and so on. You can see that premiums increase substantially in year 11, to the point where we would not expect someone to keep that policy. Or to put it another way, you should expect to keep a 10 year term policy for 10 years and no longer – you should expect to cancel the policy in year 11 and not continue with the policy paying renewal premiums.

Another important option – Conversion

Many (but not all) term life insurance policies are ‘convertible’. This option, included in your premiums at no additional cost, guarantees you the ability to exchange your term policy to a permanent, lifetime life insurance policy. But – not just exchange it, but do so at the same health class as when you received the original term life insurance policy, and with no medical questions. The impact of this option is that if you have a convertible term life insurance policy and become completely uninsurable during the term (up to a maximum age that varies by company, but generally around age 70), you can simply swap your term policy for permanent, no questions asked – and get healthy premiums on the new policy. It’s not an option most people are considering when they first obtain a 10 year term policy, but if they become uninsurable it immediately becomes the most important feature of the insurance. That’s why you should ensure that any term policy you obtain is both renewable and convertible – it’s your guarantee of being able to purchase life insurance in the future no matter what happens to your health.

When should I consider a 10 year term life insurance policy?
  1.  You need life insurance for 10 years. 10 year term will be the least expensive option for life insurance over 10 years. So if you need insurance for about that timeframe, 10 year term is appropriate. 
    By contrast, if you need insurance longer than 10 years, you should be considering a term 20 or term 30. If you need insurance for longer than 10 years, in year 11 you’ll be facing those high renewal premiums we posted above – making term 10 a very expensive choice. Or you’ll be applying for life insurance in 10 years, at premiums that are higher because you’re 10 years older AND you have no guarantee of being able to qualify medically. A term 20 or term 30 on the other hand locks in premiums level for those longer timeframes, ensuring there’s no change in premiums and no future requirement of passing a medical exam.
    10 year term is commonly chosen by people in their late 40’s through early 60’s who need coverage for a short period of time, often to cover the tail end of a mortgage.
  2. Smokers who are going to quit. More details here on our article on Life Insurance for Smokers, but here’s the short version. If you’re seeking term 20 or term 30, you can go with a term 10 initially (to save premiums while you’re still qualified at smoking premiums). Then once you qualify at nonsmoking premiums you can use the exchange option available in some policies to jump to a term 20 or term 30 at that point.
  3. Temporary ratings. If you’ve received a temporary rating or extra premium, or have a rating that can be reconsidered in the future (i.e. if you’re rated for build, and you lose weight, you can request that the additional premium be removed), then similiar to the smokers strategy, you would purchase a term 10 policy initially to keep premiums low. Then once the additional premium is removed, use the exchange option to switch to a term 20 or term 30.

Where to start? With term life insurance the first step is comparing premiums from various companies with a term life insurance quote, which you can do at the top of this page – instantly view premiums from Canada’s top life insurance companies.