How to Choose the Right Life Insurance Term Length (2026)
How to pick the best life insurance term length
Term life insurance is designed to cover your loved ones during the period they depend on you for financial support, typically from your early twenties to your age of retirement. Your policy’s “term” refers to the number of years your coverage will last; when your term ends, your beneficiaries will no longer be eligible for a payout.
Here’s a quick reference table for term length based on life stage:
The right term length for your life insurance policy is the one that lasts until your children are grown and you have no significant debts.
Because financial needs and goals can vary so much from household to household, there’s no “one-size-fits-all” term life insurance policy length. To estimate how long your family might need the financial protection of a term life policy, take the following steps:
- Take stock of your financial obligations. Do you have dependents, a mortgage, or other major debts and expenses? If you have children, do you want your life insurance policy to cover only their essential needs up to age 18, or do you also want to plan for post-secondary education costs?
- Estimate how long your financial obligations will last. How many years from now will your children likely be financially independent? When do you expect to pay off your mortgage?
- Ensure that you don’t need permanent life insurance. Most Canadians don’t need permanent or whole life insurance, but you may want to consider a lifelong policy if you have children who will always be dependent or if you’re in need of complex estate planning options.
You can get a better understanding of the term length that best aligns with your financial responsibilities and long-term goals by using PolicyMe’s term life insurance calculator. There are no sign-up requirements and you’ll receive multiple quotes with term and coverage suggestions.
Term life insurance by life stage
The life insurance term you need generally depends on the stage of life you and your family are in. While every family follows a different trajectory, we’ve mapped out some common life events and stages, and the unique insurance needs they carry.
Example: Arlo and Camille, married with a 25-year amortization mortgage
This two-income couple just committed to a 25-year mortgage. Each person will purchase a 20–25 year term policy to help cover the other spouse until the mortgage is paid off. This approach ensures the surviving partner will avoid a serious financial burden if one income is suddenly lost.
Example: Danika is a new parent planning RESP contributions for her child
Danika’s son is one year old. She is worried about her child’s financial future if she passes away prematurely and can no longer make RESP contributions. A 20–25 year term ensures that Danika’s son is financially protected as he grows up, as well as when he enters higher education as a young adult.
Life insurance costs by term length
Keep your age and budget in mind when selecting a life insurance term. Young applicants get the best rates for term life insurance because they’re less likely to die during their policy term. So if you’re able to lock in a low rate when you’re young, you’ll benefit from the savings over the course of the entire term.
Term life insurance rates may reflect the age, smoking status, gender, and occupation of the applicant, along with other key factors such as the amount of coverage purchased.
Compare life insurance rates for women
* Average monthly PolicyMe rates for non-smoking female applicants with $500,000 in term life insurance coverage.
Compare life insurance rates for men
* Average monthly PolicyMe rates for non-smoking male applicants with $500,000 in term life insurance coverage.
These average rates are meant to be illustrative only. The cost of term life insurance generally varies by carrier, coverage amount, health/smoking status, province, and more.
But you could still save money by selecting a longer term length. If you choose a shorter term and decide to renew your coverage when the term expires, your coverage will be underwritten at an older age, meaning higher premiums for the renewed term.
Life insurance term lengths, explained
There’s a life insurance term for everybody—let’s find yours.
PolicyMe offers term lengths of 10, 15, 20, 25, and 30 years, as well as a term to 100 (T100) option to convert your term life insurance policy to a permanent plan. Other Canadian life insurance providers may offer different term lengths, so do your research before requesting life insurance quotes.
5-year term life insurance
- Who it’s for: People nearing retirement, anyone with short-term financial obligations
- Pro: Cheap coverage
- Con: Rates locked for a short period
- Alternatives: Life insurance may not be needed for short-term financial obligations
Less common than other term lengths, 5-year term life insurance may be a good insurance solution for people nearing retirement or others who only need cover for a short period of time. Not all Canadian life insurance companies offer this term length, however, so you may want to consider if you have other ways to ensure financial security for your loved ones.
10-year term life insurance
- Who it’s for: Families seeking affordable coverage for short mortgages or older children
- Pro: Low premium payments
- Con: Insufficient coverage for many families
- Alternatives: Some families need a longer term length to fund their children’s education
If you expect to pay off your mortgage within the next decade, 10-year term life insurance might be right for you. It may also be a good choice if your children are in their teens and need a coverage bridge to shelter them into adulthood.
15-year term life insurance
- Who it’s for: Anyone stuck in between 10- and 20-year term lengths
- Pro: Inexpensive middle ground
- Con: May be unavailable from some insurers
- Alternatives: If you can’t find a 15-year term from your chosen insurer, opt for the closest term that will meet your family’s financial needs
While it’s not always offered among Canadian insurers’ life insurance plans, 15-year term life insurance is the sweet spot for some families. There’s a big gap between 10- and 20-year terms; if you find yourself in that gap, choosing a 15-year term can help you avoid overpaying for coverage you don’t need.
20-year term life insurance
- Who it’s for: Most Canadian families with a typical financial plan
- Pro: Most cost-effective option to cover children’s education and mortgage expenses
- Con: May not cover the full length of a mortgage
- Alternatives: 30-year coverage could help families starting their financial planning early to lock in lower life insurance premiums
A 20-year policy term is the most popular option for Canadian life insurance shoppers, especially for parents in their mid-twenties and thirties. If your youngest child is under age 5 and you have less than two decades left on your mortgage, a 20-year term policy should be enough to secure your family’s financial future until the kids graduate college. It’s also significantly more affordable than more long-term coverage options like whole or universal life insurance.
25-year term life insurance
- Who it’s for: People with more than 20 years of mortgage payments left
- Pro: May bridge the gap between 20- and 30-year terms
- Con: Not always available from Canadian insurers
- Alternatives: A 30-year term may cover the full length of your mortgage if you can’t find an insurer offering 25-year term insurance
Like 15-year term life, a 25-year term life insurance policy fills a gap between more common coverage lengths. In particular, this term length may be a good fit for people whose kids will be financially independent in 20 years or less but whose mortgage has more than 20 years of payments left to go. According to Statistics Canada, a significant percentage of Canadians carry mortgage debt through their working years.
30-year term life insurance
- Who it’s for: New parents, homeowners with long mortgages
- Pro: Low fixed premiums for three decades
- Con: Financial needs can change significantly during the policy term
- Alternatives: If you’re not sure you want to lock in 30 years of life insurance at once, consider buying a shorter term and renewing or extending your coverage down the road
If you’re getting started early, a 30-year life insurance term comes with big advantages: peace of mind for three whole decades, with low premiums locked in at a young age. The Financial Consumer Agency of Canada says that 25- and 30-years are the maximum amortization terms. But a 30-year term may not be the right choice for everyone: a 30-year term comes with higher premiums, and you run the risk of overpaying for coverage you don’t need if your financial future doesn’t play out as expected.
40-year term life insurance
- Who it’s for: Young adults with long-term goals, such as financing future children’s college education.
- Pro: Longest coverage length for non-permanent life insurance
- Con: Higher premiums, hard to find
- Alternatives: A 30-year term may meet your insurance needs if you’re unable to find or afford a 40-year term
A 40-year term is for big dreamers; young adults with ambitious financial plans that extend past the 30 years. It’s the longest term available from many Canadian life insurers. For most people, a 30-year term is enough to cover even long-term goals, but locking in low payments for 40 years has its advantages, especially if you’re buying life insurance before age 21. The caveat: even young applicants will pay a higher premium because the odds of death during the policy period rise with such an extended term.
Term 100 life insurance
- Who it’s for: People in search of a guaranteed death benefit with straightforward coverage
- Pro: Lifelong coverage if you die before 100, cheaper than permanent life insurance
- Con: No cash value, more expensive than true term policies
- Alternatives: Compare T100 with term life insurance and whole life insurance to find the right balance of cost, coverage, and long-term needs
Term-to-100 (T100) life insurance is a more specialized type of permanent life insurance. It provides lifelong coverage with fixed premiums, but unlike whole life insurance, it doesn't build cash value or offer an investment component.
For people who want a guaranteed death benefit and prefer to keep costs lower than whole life insurance, T100 can be a practical option. But if you only need coverage for a specific period, like while paying off a mortgage or raising children, traditional term life insurance will usually cost less. And if building cash value is important to you, whole life insurance may be a better fit.
“Most people only need term life insurance, not permanent coverage. It’s cost-effective and provides essential financial protection during key earning years.” —Christelle Arouko, Licensed Insurance Advisor
How to lower your life insurance costs
Affordability is a key concern when buying life insurance. After all, most term life insurance policies don’t pay out, meaning that it’s best to find the most cost-effective way to meet your insurance needs without overpaying for coverage you hope not to use. Here are a few strategies that can help:
Laddering
We’ve talked about a range of term lengths in this article, but you don’t have to choose just one—with the laddering strategy, you can buy multiple life insurance policies with different term lengths and coverage amounts so that your life insurance adapts over time to meet your changing finances.
For example, let’s say that your kids are in their teens, but you recently bought a home and the mortgage won’t be paid off for 20 more years. Laddering a 10-year term policy with a 20-year policy could help you maintain a high level of coverage while you’re still managing the kids and mortgage together, with a reduced coverage amount once your kids are out of the house.
A big plus of the laddering strategy is that it allows you to avoid the underwriting process, including medical exams, involved in purchasing a new policy or renewing existing coverage, thus saving money.
Separate policies for two-income households
If you’re shopping for life insurance as a couple, you’ll have the option to buy a joint policy that pays out a single death benefit (either when the first insured person dies or when both die). While a joint policy offers some convenience, you could end up overpaying if you don’t earn the same amount.
Instead, consider buying separate policies tailored to your individual finances. If one member of your household makes $70,000 per year while the other makes $200,000, splitting policies to cover each earner proportionally could save a considerable amount of money.
Don’t buy insurance you don’t need
Term life insurance is a good investment for most Canadians, but not all.
If you have no dependents, no significant debts, and no loved ones whose financial future would be in jeopardy if you died, you might not need life insurance at all. If you’re not sure whether you really need life insurance, you may want to speak with a licensed insurance advisor for their insight.
What happens when your term life insurance ends
Canadians have several options when term coverage ends, from letting the policy stop naturally to renewing or purchasing new coverage.
- Let the policy lapse: It’s okay to let your coverage end if your debts are paid and dependents no longer rely on your income.
- Renew annually: If you still need coverage in the short term, you can often renew your existing policy at a higher premium.
- Buy a new term policy: You can shop around for a fresh policy at current rates, but underwriting is usually required.
- Convert to permanent: If you need lifelong coverage, you may be able to convert to whole life coverage without a medical exam.
PolicyMe’s term life insurance policies are renewable and convertible, giving you affordability now and flexibility later.
FAQs: Term life insurance lengths
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.