Life insurance helps secure your family’s financial future and allows you to leave them a non-taxable payout at the time of death. The death benefit can help them cover living expenses, pay off debts, and meet end-of-life expenses.
If you want a life insurance policy that does not come with an expiry date but is cheaper than whole life insurance, term to 100 life insurance might be a good option.
What is term to 100 life insurance?
Term to 100 life insurance is long-term coverage that combines the best features of term life and permanent life insurance: affordability and lifelong coverage. Despite its name, term to 100 insurance provides coverage without an expiry date. However, unlike permanent life plans, term to 100 life policies do not accumulate cash value, nor do they earn dividends. Absence of these features help keep the cost low.
Term 100 insurance is also unique in another sense. While the coverage lasts the entirety of your life, the premiums stop when you turn 100.
Like most permanent life and term life insurance plans, term to 100 offers guaranteed level premiums and death benefit. That simply means the proceeds (the amount of money your beneficiary receives upon your death) and the monthly premiums remain the same throughout.
With a term to 100 plan, you will not have to worry about renewing it again and again, which is often the case with term life plans. As such, it is the closest thing to buy-it-forget-it life insurance. You buy once and are covered for the rest of your life, although you must pay premiums on time until the age of 100 to maintain coverage.
Term to 100 is cheaper than whole life insurance but costs more than term life insurance. The cost of coverage depends on many factors. Some of these are in your control (like lifestyle choices), while others are not (like your age and gender). You will likely have to undergo a medical exam and answer several health questions to prove eligibility, though some providers may allow you to omit it. But keep in mind that no-medical life insurance plans usually come with a higher price tag.
Coverage options can vary from as little as $50,000 to a few millions of dollars, depending on the insurance carrier. Some insurers may also give you the option to add various riders — add-ons that help you customize the policy according to your specific needs. Some of the most common riders available with term to 100 insurance plans include accidental death benefit rider, critical illness benefit rider, and accelerated death benefit rider. In most cases, riders come with additional costs, so choose only those that you really need.
How much does term to 100 cost?
Term 100 life insurance is cheaper than whole life insurance and costlier than term life insurance plans. How much such a policy will cost you, however, depends on various factors. These include:
Your age, health, and gender
Healthier, younger applicants usually receive the best rates. Compared to men, women get a better deal because women’s life span is 8% longer than men’s, on average.
Family medical history
Certain illnesses tend to run in families. Examples include arthritis, Alzheimer’s, certain types of cancer, diabetes, and high blood pressure, among others. If you have a family history of certain illnesses, including all those listed above, you may have to pay higher premiums.
Smoking and affordable premiums do not go hand in hand. If you smoke, you may pay twice as much as a non-smoker. The good part? Abstain from smoking for a year, and insurance companies may consider you for lower rates. If you manage to remain without smoking for three to five years, most will offer you non-smoking premium rates.
The policy amount and other add-ons
The greater the coverage amount, the higher the monthly premium, other things being equal. Likewise, the more riders you add to the base policy, the greater the cost.
Your occupation and hobbies
Your job duties and hobbies also impact your insurance premium rate. If you have an occupation that increases your risk of injury or love an adrenalin-rush activity, brace yourself for higher premiums.
To give you an idea about how much term to 100 insurance costs, we have shared the monthly premium rates for non-smoking men and women at different ages for a $50,000 proceeds.
Term to 100 life insurance advantages
Some of the main advantages of term to 100 include:
Permanent life plans offer lifetime coverage and include a built-in savings account. Part of each premium payment goes into this account and money in this account — called your policy’s cash value — grows tax-deferred at a fixed rate. For some people, this investment feature can be a great addition, allowing them to cancel their policy a few decades down the line for its cash surrender value.
However, the downside is that permanent insurance policies cost a pretty penny, largely due to its cash-value feature. Because term to 100 does accumulate cash value, it is much cheaper.
Level Death Benefit
The insurer cannot reduce (or increase) the death benefit. Upon your death, your beneficiary will receive the exact amount that you started with.
With term to 100 insurance, your premiums do not ever change. Term insurance also has level premiums, but the monthly premiums remain the same only as long as the policy term lasts. For example, if you take out a 10-year term life plan, the premiums will not change for the first 10 years. If you renew the plan at the expiry of its term, the premium rate will increase, often substantially.
Premiums stop at age 100 but not the coverage
With term life insurance products, your coverage ceases with the premiums. But that is not the case with term to 100. While your premium payments stop when you reach age 100, the coverage continues for as long as you live. Term to 100 will meet all your life insurance needs since you get lifetime coverage.
Term to 100 life insurance disadvantages
Like any financial product, term 100 life insurance has some disadvantages.
Less Affordable Than Term Life Insurance
The premiums paid for term to 100 are more expensive than a comparable term insurance plan. If you want best coverage at the lowest-possible price, consider term life insurance.
No Cash Value
Term 100 life insurance does not build cash value and as such is not the best option for those who want to use life insurance as an investment.
Is a term to 100 policy right for you?
If you need lifelong coverage but do not want all the bells and whistles that whole life insurance products includes, term to 100 may be perfect for you.
Lifelong insurance protection is often recommended for individuals who:
- have lifelong dependants (like a special needs child)
- plan to leave their heirs a legacy
- wish to donate money to a charitable institution upon death
- want to use life insurance for estate planning purposes.
Since term 100 life insurance is considerably more affordable than whole life insurance plans, it may be more suitable for such buyers, especially if they have no need for its cash-value feature.
Term to 100 life insurance is a pared down version of permanent life insurance. You get lifelong protection, minus the cash value, at a more affordable price. Your premium and death benefit remain the same throughout. The premium payments stop once you reach the age 100, but the coverage continues as long as you live.
Term to 100 may be the right option for all those who are looking for an affordable policy that lasts longer than term life insurance. Dundas Life works with top Canadian life insurers and can help you buy maximum coverage at the most affordable rate.