What is term life insurance?
Regardless of your budget, the most important step is understanding exactly how life insurance works. One of the most popular and affordable types is term life insurance. But what exactly is term life insurance?
As the name suggests, term life insurance provides coverage for a specific policy term, usually between 10 and 30 years. If you pass away during the policy term, your beneficiaries can receive a tax-free lump sum payment to ease the financial burden for loved ones if you were to pass away. With term life insurance, you get the flexibility to choose your coverage amount and term length based on your financial situation.
Term life insurance focuses on one of the most important parts of life insurance: providing a financial safety net for your loved ones. There’s no savings or investment component, so it’s not only the least complicated type of life insurance, but it’s also one of the most affordable options for Canadians.
Once you lock in your monthly premium and coverage terms, everything stays the same throughout the policy, so there are no surprises along the way. Learn more about how term life insurance works.
Why even a small life insurance policy makes a difference
We’ve all heard the saying “something is better than nothing,” and it certainly applies to life insurance.
When planning life insurance and determining how much coverage you need, you’ll find most experts recommend that your policy should cover at least 7 to 10 times your annual salary. But with rising costs of living and unpredictable labour markets, that number may not always be realistic.
Rather than holding off on purchasing a policy until you can afford that amount, use it as a benchmark to work towards. Most providers offer a range of coverage amounts so you can find something that works for you and your budget right now. With Blue Cross Life, you can choose coverage anywhere from $100,000 to $5 million.
Even the smallest policy can go a long way. For example, a $100,000 policy could be enough to cover final expenses, pay off outstanding debts, and give a surviving partner crucial financial support. It also takes away the emotional and financial impact of leaving your loved ones with no coverage at all. As your life and income levels continue to evolve, you can purchase additional policies to help you reach the coverage amount fits your needs, as your budget allows.
Any coverage you lock in at a lower rate when you’re younger and healthier stays the same for the entire term. So it can reduce your overall life insurance costs down the line, even if you end up needing to purchase more coverage in the future.
How much term life insurance coverage can you get on a budget?
There are life insurance options available for everyone. But how much coverage you can get will depend on a few different factors, such as your age, health, term length, and coverage amount. The good news is that it’s often more coverage than you think.
For example, here’s a look at the estimated monthly premiums for non-smoking adults on a 20-year term from Blue Cross Life.
If you’re looking for term life insurance on a tight budget, one of the best things you can do is shop around for quotes. Every insurance provider has different underwriting policies, benefits, coverage amounts, and rates.
Blue Cross Life makes it easy to get term life insurance you can trust. With some of the lowest rates on the market, Blue Cross Life is helping more Canadians secure coverage that fits their life. You can get a quote online in just a few seconds, so you can understand exactly how much coverage you can afford.
Get your personalized rate in 20 seconds.
Can I start with a small policy and increase my coverage later?
Yes. Many Canadians start with an amount of coverage that fits their current budget and needs, then adjust their protection as their circumstances change.
Life insurance needs often evolve over time. As your income grows, debts change, or your family expands, you may decide that you need more protection than before. Term life insurance is designed with that flexibility in mind, so you don’t necessarily need to purchase all of your coverage at once.
Here are a few ways to build your coverage over time:
- Coverage reviews: Reassess your insurance needs when major life events occur, such as getting married, buying a home, or welcoming a child. This can help ensure your coverage continues to align with your financial responsibilities.
- Additional policies: You can add another life insurance policy later to increase your total coverage, instead of buying a single, larger policy at the start. This approach, sometimes called laddering, can help keep coverage more affordable while your needs are still growing.
Securing coverage for your loved ones, even at a smaller amount, is worth it and should be a top priority. With life insurance costs generally being more affordable when you’re younger and healthier, it’s a smart move to lock in as much coverage as you can afford, as early as possible. You can then apply for additional coverage in the future as your financial situation requires and permits.
How to save on premiums when planning for life insurance
Like anything, finding the right life insurance policy for your financial situation requires a bit of planning. Here are a few tips to maximize coverage while minimizing your spending:
- Lock in coverage while you are young and healthy, as premiums tend to rise as you age and your health changes.
- Choose a term length that matches your biggest financial obligation, such as the length of your mortgage, or until your children are financially independent, instead of going for the longest (or shortest) option.
- Start with the minimum coverage you need, and reassess annually as your budget changes.
- Avoid add-ons and riders that increase premiums if you are working with a tight budget. Basic coverage is what will make the biggest impact.
- Look for value-adds and benefits. For example, Blue Cross Life offers a 10% discount on first-year premiums for couples and $10,000 in free life insurance coverage for every dependent child.
- Compare quotes from multiple providers before making your purchase. Look at coverage and benefits, not just prices, to make sure you’re getting the coverage you need.
How To Get Started With Blue Cross Life
We make getting affordable life insurance in Canada simple. With coverage amounts starting at $100,000 and term lengths starting at 10 years, Blue Cross Life offers competitive pricing designed to make life insurance more accessible for Canadians.
With a 100% digital process, you can explore all your options online and get a personalized quote from the comfort of your home in under a minute. The full application takes 20 minutes to complete, and licensed advisor support is available if and when you need it. Many eligible applicants receive a same-day decision, often without a medical exam. Plus, when you apply as a couple, you can save 10% on first-year premiums.
Get your free quote or speak with a licensed advisor today.
FAQs: How to make term life insurance work with your budget
Term life insurance is considered the most affordable type of life insurance. Since term life insurance focuses on financial protection for a set period of time, premiums are often lower, and coverage comes with more flexibility.
Yes, you often can get life insurance in Canada, even if you’re on a tight budget. Term life insurance rates are often much more affordable than you think, starting as low as $15 depending on your unique situation.
Term life insurance is a type of life insurance that offers coverage for a set period of time. It works by providing your beneficiaries with a lump-sum, tax-free payment if you pass away during the policy term. This financial safety net can help loved ones pay outstanding debt and end-of-life costs, or cover other expenses f you’re no longer around.
A major life change is often a good time to reassess your life insurance needs. Depending on your policy and circumstances, there may be options available to increase your overall coverage, including applying for additional life insurance coverage. A licensed advisor can help you understand the options available to you.
A common starting point is coverage equal to 7 to 10 times your annual income. Your ideal amount may depend on factors like:
- Number of dependents
- Daily living expenses
- Your mortgage or rent payments
- Future costs, like education
- Existing savings or coverage
For a more personalized estimate, explore the Financial Consumer Agency of Canada’s guide to life insurance needs.
