Here’s what you need to know if you’re considering 20 year term life insurance.

20 year term life insurance by definition has premiums that are level for 20 years. With every 20 year term policy currently being issued in Canada at the time of writing this, those premiums would also be guaranteed to be level for the 20 years. Thus, it’s an excellent policy for someone looking to purchase coverage for about 20 years.   

It’s often considered by those with young families, as 20 years is roughly the duration that kids are dependent on their parents’ income to maintain their standard of living.   

20 year term polices technically last longer than 20 years. These policies will have a ‘renewable to’ age, often 75 or 80. that means the policy will stay in effect unitl that age, unless cancelled.

However as I noted above, premiums are level for 20 years. After that time, premiums rise substantially. That increase is large enough that you should assume that you will cancel the policy at the end of the 20 years. This is the primary reason why you would consider 20 year term if you need the coverage only for 20 years and then no longer need coverage. If you need coverage longer than 20 years and purchase a 20 year term policy, at the end of 20 years you’ve got yourself a problem – higher, unaffordable premiums, or taking a new medical exam for a new policy when you’re 20 years older. So if you need coverage longer than the 20 years, you should be considering a longer policy – either a 30 year term or a permanent policy.   

There are some common options (riders) available with most policies.

•  Convertible term allows you to exchange your term coverage for lifetime coverage, without taking a medical exam. This means that if you become uninsurable up to the end of the conversion age, you can simply swap your policy for lifetime coverage – no questions asked. You should only purchase a 20 year term policy if it has conversion.
• The Exchange Option allows you to switch your 20 year term for a longer (typically 30 year) term. This option is generally only available in the first 5 years of your policy and is typically more important on 10 year term life insurance.
• Spousal riders allow you to add coverage for your spouse on to your policy, at a discounted price. It’s an inexpensive way to get more coverage.
• Children’s protection rider allows you to insure your children for a small amount of insurance, at an inexpensive price. These riders can be complex and vary substantially by company so if this rider is important make sure you’ve compared different companies.   

Want to see prices for 20 year term? You can do so using the online life insurance quoting calculator at the top of the page.