Life Insurance Policy in Alberta: Term vs. Permanent explained!

Life insurance gives financial protection to our loved ones. It ensures that dependents are not burdened with debts, funeral expenses, and living expenses after we pass away.

With so many financial obligations to think about, it is easy to brush aside the importance of life insurance. What many people fail to realize is that life insurance coverage is most critical during periods of financial difficulty.

It is understandable to prioritize paying one’s mortgage, credit cards, or car loan. But what will happen if you die suddenly or suffer a disability and can no longer work?

Think about it; life insurance protection is a necessity that none of us can do without. Life is so uncertain, and our dependents need to be financially secure if something unexpected happens.

If you don’t have life insurance in Alberta yet, now is the right time to explore your options!

Fill out the short online form on this page to receive FREE and NO OBLIGATION quotes to compare.

Life Insurance Products in Alberta to Consider

In Alberta, life insurance policies primarily fall under 2 types: term life insurance and permanent life insurance.

Term life insurance provides coverage for a specific period (5, 10, 20, or 30 years). If the insured dies within the term, his beneficiaries receive the death benefits.

Permanent life insurance, in contrast, offers lifetime coverage and builds cash value over time. It is more expensive, but offers more benefits.

Choosing between the two must be based on the person’s financial goals and budget.

Let’s delve further into these 2 types of life insurance.

Understanding Term Life Insurance & how it works

Term life insurance is the cheapest type of life insurance but it does not accumulate cash value. In other words, if you decide to cancel or surrender the policy, you and your beneficiaries will get nothing.

It is very simple coverage; your premiums are locked in during the term. However, if you choose to renew your policy at the end of its term, your premiums will increase.

You can also choose to convert a term life insurance policy to a permanent life insurance policy at renewal time.

Who can benefit from term life insurance coverage?

Term life insurance is especially ideal for people with specific and short-term financial obligations such as:

Homeowners with mortgages;
Dependents such as elderly parents or children;
Business loans;
Credit card and other debts.

Periods in life where you carry significant financial responsibilities need adequate financial protection in case of an untimely death.

The insurance cash benefits will be paid to the named beneficiaries if the insured dies while the insurance policy is still active.

The insurance proceeds can be used by the beneficiaries to pay off existing debts, living expenses, funeral expenses, education, and other needs.

The cash benefits are tax-free.

The Pros & Cons of Term Life Insurance

For Albertans looking to buy life insurance, the following pros and cons of term life insurance can point you in the right direction.

Advantages of Term Life Insurance:

Affordability: Term life insurance is typically cheaper than permanent life insurance, offering higher insured amounts at a lower cost.
Fixed Premiums: Premiums stay level so you can easily manage your budget.
Simplicity: Term life policies are simple and don’t have investment components or cash value to consider.
Flexibility: You can customize your coverage in terms of desired amount, length of term, and beneficiaries.
Tax Benefits: Premiums and death benefits have tax benefits.

The numerous benefits of term life insurance policies can provide financial security to you loved ones in case of your untimely passing.

Disadvantages of Term Life Insurance:

Term life insurance is not perfect, mind you. It is best to understand its key disadvantages before you make a decision.

No Cash Value: Term life insurance policies don’t have cash value; they don’t build savings or loan options. You can’t refund premiums paid if you cancel your policy or if it expires.
Limited Coverage: Your protection will end when the term expires. If your health deteriorates, you can become ineligible or have higher premiums to pay.

Increase in Premiums: The premiums will increase if you need to renew the policy upon expiry.

Lower Coverage Limits: Term life insurance policies may have lower coverage limits.

Is term life insurance right for you?

Whether term life insurance is right for you depends on your financial needs, obligations, and goals.

Term life insurance is perfect for protecting a mortgage and other temporary obligations. It can also be a good strategy for setting aside funds for final expenses in case of sudden death.

If you need affordable coverage to secure the finances of your dependents for a specific period, term life insurance policies may be the answer.

However, if its lifetime coverage you seek, compare with permanent life insurance to see which type of policy meets your short and long-term goals.

Compare free and no commitment quotes from reputable insurers to find the right insurance policy for your needs.

What is Permanent Life Insurance?

Permanent life insurance offers lifetime coverage with cash value and investment options.

Unlike term life insurance, it never expires. Thus, your insurability is guaranteed, even if your health declines over time.

It is long-term protection that benefits your dependents, regardless of when death occurs.

They are more expensive than term life insurance policies as they don’t expire. But the policies build cash value – savings accumulated over time. You can borrow against cash value if you have an emergency.

Whole Life, Universal Life, and Participating Life Insurance policies are permanent life insurance.

Each type of policy offers distinct features for specific needs. Below is a brief overview of these 3 types of permanent life insurance.

	Whole life insurance	Universal Life Insurance	Participating Life Insurance
Lifetime protection	Yes	Yes	Yes
Tax-free death benefits	Yes	Yes	Yes
Cash Value Growth	Yes	Yes	Yes
Premiums	Fixed	Very Flexible	Somewhat Flexible
Tax-Deferred Savings Option	Yes	Yes	Yes
Choice of Investment according to risk tolerance	No	Yes	No
Earns dividends	No	Yes	No

Other Permanent Life Insurance Types

Aside from the 3 main types of permanent life insurance mentioned above, there are other options for lifetime coverage, depending on your situation.

Guaranteed Issue: This type of permanent life insurance does not require a medical exam or health questions. Coverage is guaranteed, regardless of the applicant’s health status.

The insured amount is limited, typically ranging from $10,000 to $50,000. Age requirement by insurers is usually up to age 75.

This type of life insurance is often used for estate planning or final expenses. Many people who learn that their existing coverage may be inadequate or want to set aside additional funds for funeral expenses turn to guaranteed life insurance coverage.

Note that the premiums for this type of insurance is significantly higher than standard term life or permanent life insurance policies.

Term 100 life insurance: This permanent life insurance policy provides coverage until the insured turns 100 years of age. The insured pays premiums until age 100 with guaranteed death benefits.

Unlike regular term life insurance with limited coverage, Term 100 provides permanent coverage until age 100. Upon the death of the insured, a lump sum benefit is paid to his beneficiaries, tax-free.

Term 100 insurance does not have cash value. If you cancel your policy, you don’t receive any return of premiums.

This type of policy is more affordable compared to other permanent life insurance policies.

Is permanent life insurance right for you?

If you are seeking financial security for your dependents that will last a lifetime, then permanent life insurance is the answer.

Milestones like starting a business, buying a house, getting married, or having children necessitates planning ahead. Permanent life insurance coverage is an important financial tool that can give a helping hand to realizing your financial goals.

Based on the latest statistics from the Canadian Life & Health Insurance Association (CLHIA), about 25% of life insurance of Canadians is permanent life insurance. Many average Canadians also own a combination of term, group, and permanent life insurance.

Do you need help in finding the best life insurance coverage for your needs? Fill out the short online form on this page to receive FREE QUOTES from top insurers near you.

Compare the cost of Term Life & Permanent Life Insurance

Cost is a significant factor in choosing between term life and permanent life insurance.

It is important to pay premiums on time to keep your life insurance policy active. Thus, you need to buy life insurance with premiums you can pay regularly.

Let’s compare the cost of term life and permanent life insurance in Alberta.

Term Life Insurance Prices
Age	Gender	10-Year Term	20-Year Term	30-Year Term
20	Male	$25/month	$30/month	$35/month
20	Female	$15/month	$20/month	$25/month
30	Male	$23/month	$30/month	$44/month
30	Female	$15/month	$23/month	$34/month
40	Male	$30/month	$45/month	$85/month
40	Female	$22/month	$35/month	$65/month
50	Male	$63/month	$118/month	$240/month
50	Female	$44/month	$84/month	$165/month

*For $500,000 in coverage for non-smokers
*Prices are not actual quotes and are for illustration purposes only. To compare actual quotes, please fill out the online request form on this page.

Now that you have an idea how much term life insurance may cost you, take a look at example prices for whole life insurance.

Whole Life Insurance Prices
Age	Gender	Non-Participating	Participating
20	Male	$47/month	$55/month
20	Female	$41/month	$45/month
30	Male	$63/month	$74/month
30	Female	$58/month	$63/month
40	Male	$91/month	$108/month
40	Female	$84/month	$93/month
50	Male	$147/month	$163/month
50	Female	$125/month	$137/month

*For $100,000 coverage

*These prices are not actual quotes but for illustration purposes only. To compare actual quotes from insurers, please fill out the online request form on this page.

No-medical life insurance & its cost

Is it challenging for you to get life insurance coverage due to health conditions? You can still get coverage with no-medical insurance.

People with poor health but need life insurance coverage quickly can apply for this type of life insurance. However, it has many disadvantages such as:

Significantly higher premiums;
Low or limited coverage

Avoid resorting to expensive life insurance options by buying coverage while you are younger and still in relatively good health.

You can buy term life insurance now and consider converting to whole life insurance later on when your finances allow it.

It is important to have life insurance coverage as soon as possible for your financial protection.

How do life insurance companies calculate your premium?

Insurers in Alberta calculate premiums based on a person’s risk profile (the risk involved in providing you with coverage).

All insurers want to avoid as much risk as possible. Factors that could shorten your life expectancy impact your risk profile – smoking, alcohol, medical history, lifestyle, job, etc.

Their assessment of your personal information and risk profile will help them decide how much it will cost to cover you or if they should cover you at all.

It is quite common for individuals in high-risk occupations or with existing medical conditions to be denied coverage.

The cost of life insurance in Alberta depends on factors like age, gender, health, lifestyle, and smoking status. Your desired amount of coverage, type of policy, and choice of insurer also impact the cost of premiums.

To get the best life insurance rates, make sure to compare multiple quotes using our online comparison form!

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Determine the right amount of coverage you need in Alberta when buying life insurance. It is important to have enough to cover debts, living expenses of your dependents, and final expenses.

Consider your debts and aim to have insurance benefits of 8 to 10 times of your annual salary or income.
Assess existing savings and investments in determining the amount of coverage needed.
Assess your current life insurance coverage, including mortgage life insurance and group life insurance

You can ask for help from our reputable insurance partners to find the right insurance policy and coverage that suits you.

Fill out the short online form on this page to receive the best life insurance quotes to compare today!

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