Should You Buy 20-Year Term Life Insurance? Here's the Scoop!

Life insurance is all about protecting the people you love. If you have a partner, kids, or aging parents who depend on you for financial support, it’s smart to buy life insurance to protect them. 20-year-life insurance term happens to be PolicyMe's most popular term length (we offer 10 to 30-year terms)

What is a 20-year term life insurance policy?

Term life insurance pays out only if you die within a specified timeframe.

A 20-year term life insurance policy will pay out only if you pass in the next 20 years, as long as you keep paying your premiums.

Both term and whole life insurance benefits are paid in one full lump sum when you die. But with term life insurance being more affordable, it is better relative to the cost of life insurance in Canada.

If your term policy provides $500,000 of coverage, your beneficiaries will receive $500,000 all at once, and it’ll be tax-free.

This gives your family the option to use the money however they want to. Some people use it to pay off a mortgage. Others use it to continue making rent payments.

And in many cases, people use their term life policies to care for children, fund educational expenses, and cover day-to-day living costs.

Who needs a 20-year term life insurance policy?

1. Parents with young kids

Most parents plan to financially support their kids until independence. If your youngest child is a toddler, you’ve got to cover their expenses for about 20 years until he or she graduates from university (seems like forever, doesn’t it?). A 20-year policy is likely to make a lot of sense in this case. Having this temporary coverage ensures you an your family are financially covered for a period of time.

So in the case your family has to claim you death benefit amount, they will have the long-term coverage for any financial needs they might have in your absence.

New parents are also more financially vulnerable, especially early on, when infants require a lot of support that can be a financial burden (think daycares, regular doctor-check-ups, babysitters). Getting a term length of 20 years when your child is born ensures your little loved one will have your financial security until they turn 20! Comparing term life quotes to permanent policies, you would find that term is one of the most affordable options for coverage too.

2. People with less than 20 years to go on their mortgage

It may seem counterintuitive to spend on life insurance when you have debts to pay off. But it’s even more important to have life insurance while you have that debt. And often, term life policy is a suitable choice for those seeking to reach other major financial goals like paying off a mortgage due to its low premium rates.

Protecting your family with life insurance until your mortgage is paid off is a good way to ensure they won’t be left with any crippling debt or mortgage payments if anything happens to you. And the good news is that once your mortgage is paid off, you may not need life insurance anymore. That's one of the advantages of going with term life insurance.

3. Those who are 15 or 20 years away from retirement

We strongly believe that having life insurance is much less important once you’re no longer earning an income. At this point, your kids will probably be financially independent (fingers crossed!) and your spouse may be able to live comfortably off your joint savings, so why purchase an extra lump sum for them? In this case, a 20-year term life insurance policy may be a good fit. Temporary coverage like a 20-year term will ensure low premiums that are at a fixed rate so you can use the rest of your hard-earned money on bigger, more important finances.

4. Canadians who are cash strapped

Balancing the cost of life insurance can be challenging for families on a tight budget. A term-to-65 term life insurance policy offers more protection, but the costs can be significantly higher. This also includes other permanent policies like whole life insurance. You may have access to some kind of cash value component in your policy, but at a much higher premium rate. For most Canadians it's just not worth it.

For a lot of people, especially the average Canadian, a term life policy can be an affordable option, it may even be the best choice based on what they can afford. Some term life policies like PolicyMe's offers additional features and benefits. We offer 1$0,000 in additional coverage for you child when you sign up for a term policy!

Bottom line: 20-year term life insurance is a popular choice in Canada

Wondering if a 20-year term life insurance policy is right for you? Use our life insurance calculator to figure out how much life insurance you need to protect the ones you love. In just 5 short minutes, we’ll assess your needs. The result? You get the protection that’s just right for your family.

You can also use our life insurance quote tool to get your price now.