Term 100 life insurance is a common type of life insurance policy that provides a tax-free death benefit and long-term security for your beneficiaries. While it is generally considered less expensive than whole life insurance, it does not offer many of the features of a whole life policy, especially a participating one.
Listed below are some benefits of term 100 life insurance and the factors that should be considered before choosing this option. Read on to learn more.
Term 100 Life Insurance is Permanent life Insurance
There are some differences between term and permanent life insurance. While term insurance has a pre-determined end date, a permanent life insurance policy aim to cover the life insured for a lifetime. In addition, term life insurance does not offer a cash value or surrender value, which is common to both whole life and. Hence, a cash-value accumulating permanent policy may be more affordable in the long term.
Term to age 100 life insurance is a high-breed policy of term and permanent insurance, well, it’s technically a stripped-down version of whole life insurance where it offers coverage up to age 100 but it does not earn any cash values whatsoever.
Despite this, term 100 offers a range of benefits, including level premium contribution over the life of the policy.
It is available through a number of Canadian life insurance carriers, including Industrial Alliance, Manulife, SSQ Insurance, and RBC Insurance (conversion only).
When choosing a T100 life insurance plan, make sure to check eligibility and minimum age requirements. You should also check the minimum and maximum amounts required for the plan. Some providers have higher minimum amounts than others.
What Is Permanent Life Insurance?
Normally, a permanent policy has two major benefits: the death benefit and the cash value component. A death benefit is the amount of money payable upon death. The cash value is a savings (or investment) portion of the policy and can build up wealth, tax-deferred. The death benefit is the amount of money the policyholder’s beneficiaries will receive upon death, with whole life and universal life insurance, this can increase compounded over time. Term 100 life insurance is a streamed-down version of permanent life insurance, while it covers the insured permanently (up to age 100), it does not have the corresponding cash value or investment component that a universal life insurance and whole life insurance does. As a result, you can not miss any premium payments as your policy may lapse after the 30-day period if your premiums are not up to date.
Term to 100 life insurance is a popular option for final expense insurance, together with non-participating whole life insurance as both can offer lower monthly contributions as compared to participating whole life and universal life insurances, so if you’re looking to implement affordable final expense insurance, Term to 100 may be an option.
Benefits of Term to 100 Life Insurance
There are several benefits of Term 100 life insurance:
It is less expensive than whole life insurance
A lot of people compare whole life and term to age 100 life insurance and are confused about which is better. While they both offer the same long-term coverage, whole life insurance tends to cost more initially because it aims to build cash values or at least provide permanent coverage with a bit of equity. Besides, it combines both insurance and savings or wealth-building account features. Term to 100 life insurance has its own benefits. For example, it will pay out when the policyholder dies during the term of the policy, which in this case is the life insured’s 100th age and since you’re not building any sort of equity into the policy, it is usually less expensive.
It provides long-term security for beneficiaries
Term 100 life insurance offers long-term security for your beneficiaries. Despite being named “term”, this type of insurance policy need not be renewed like shorter-term life insurance policies like 10 or 20-year term insurance, whose premiums increase at each term renewal.
A death benefit that is paid out tax-free to your beneficiaries
Like any other life insurance policy in Canada, when you purchase a Term to age 100 life insurance, the policy will pay out a death benefit to your beneficiaries that is tax-free. This means that your beneficiaries will not have to pay any taxes on your policy’s proceeds, leaving more to your loved ones. T100 life insurance can be an excellent way to provide for your family after you’re gone.
Your family will not have to worry about funeral expenses
Most Canadians who implement a Term to age 100 life insurance policy, use such a policy to cover longer-term financial obligations such as final expenses like funeral costs in lieu of whole life insurance due to its affordability. This means that your loved ones will not have to worry about how to come up with the money to pay for your final expenses like funeral costs and other debts you may have left behind, as the life insurance policy’s death benefit will take care of it.
A Term 100 life insurance policy can complement an existing life insurance coverage
If you have an existing life insurance policy, a Term to age 100 life insurance policy can serve as a supplement to your existing coverage. For example, if you have a 10 or 20-year term life insurance and you’re nearing the end of your term, you may want to consider getting a Term to 100 life insurance policy to supplement your coverage at a more affordable monthly contribution so you don’t run the risk of running out of life insurance coverage, specially at old age.
The death benefit is guaranteed as long as you continue to pay premiums
The tax-free death benefit is a key part of life insurance policies in Canada. It is the amount of money that is paid out to the beneficiary when the life insured dies. This benefit is guaranteed as long as the policyholder continues to pay premiums. This means that the beneficiary will receive the death benefit regardless of how long the policy has been in force.
Your Premium Contributions Does Not Change
Unlike most term insurance policies, with a Term to age 100 life insurance, you only have one term, which need not be renewed because your contract ends at age 100.
When you purchase a Term 100 life insurance policy, your premiums are locked in and will not increase over time. This means that you can rest assured that your premium payments will remain the same for the length of your coverage, regardless of any changes in the market. This is a great feature of Term 100 life insurance policies, as it guarantees that you will not have to worry about your premiums increasing unexpectedly or every time your policy’s term date ends.
This is a great benefit for those who want to budget their life insurance payments ahead of time. You can be sure that your monthly payments will not increase regardless of how old you become.
Disadvantages of Term to 100 Life Insurance
While Term 100 life insurance offers many benefits, there are also some disadvantages to consider:
No Cash Value Accumulation
The very obvious flaw of Term 100 life insurance is that it does not allow for any cash value accumulation. This is because T-100 policies are an intersection of term and permanent life insurance. The term insurance characteristics do not allow cash value accumulation but permanent life insurance allows you to keep your policy technically for the rest of your life because it expires at age 100.
No 20-Pay or Limited Pay Options
Compared to Whole Life and Universal Life where you can either pay off your policy for 10, 20 years or at age 65 or have a planned premium contribution that covers your lifetime cost of insurance while you only pay for a limited time, you will have to keep on paying your monthly contributions as long as you’re alive with a Term to age 100 policy.
You Can't Miss a Premium with Term 100 Life Insurance
While you obviously can as an insurance company can’t force you to make your monthly premiums, missing a premium may result in a loss of coverage as there won’t be any reserve in your policy were to charge the costs from. This is something to watch out for so as not to run the risk of losing coverage when you need it the most.
Risk of Outliving Your Policy
Most Canadians will not live up to age 100 but some do and may outlive their T-100 life insurance policies. Obviously, your life insurance contract ends at age 100, this means that your coverage ends as well.
If this is something that concerns you or your loved ones, a better option for you may either be whole life or universal life insurance because both have cash-value build-up and will continue to cover you even if you go beyond 100 years.
Evaluating Your Life Insurance Options
As you may already know, there are a couple of life insurance types that are available. Term 100 life insurance is considered permanent life insurance. Think of it as a stripped-down version of a whole life insurance policy. It offers permanent protection but it doesn’t allow you to build wealth or equity in your policy.
For many Canadians, their most basic need for permanent life insurance is to cover permanent financial obligations such as funeral costs and final taxes. Depending on your financial situation, you may have more permanent obligations than these final expenses. This means that you’re going to need more permanent coverage to cover things like capital gains at death, or to leave tax-free legacies to your heirs.
A term to age 100 life insurance is an option for Canadians who are looking to implement permanent life insurance, usually to cover basic final expense costs such as funeral and interment expenses at a more affordable rate than a full-pledge, cash-value earning life insurance policy such as whole life insurance or universal life insurance.
Implementing Term to 100 life insurance at a younger age may be an expensive route to take. There are far better options that will help you build wealth inside a life insurance policy while giving your loved ones the coverage that they need.
In essence, a term to age 100 life insurance is usually a budget-friendly alternative to cash-value permanent life insurance.
If you need help or guidance in evaluating the right policy for your needs and budget, please don’t hesitate to book an initial consultation with us and we’ll help you sort it out!