Guide to 30-Year Term Life Insurance

Is a 30-year life insurance term right for me? 

A 30-year term life insurance plan might be the right term length for you if you:

• Have 30 years remaining on your mortgage
• Are worried about your future health risks
• Want to cover your kids until they become financially independent
• Have long-term debt or business partners
• Expect to retire in 30 years

A 30-year policy in Canada could cover you for many of your future financial obligations. To decide if 30 years is right for you, carefully estimate how long you’ll have mortgage payments, dependents, and other serious financial burdens.

If you’re more concerned about the deaths of your dependents, you should see if your workplace benefits include dependent life insurance for peace of mind.

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Our take

A 30-year term is a comprehensive life insurance option that covers most people’s biggest financial vulnerabilities in mid-life: kids, mortgages, and other personal debts.

Who should choose a 30-year life insurance term?

You should consider a 30-year life insurance term if you fit any of these categories:

A 30-year term might not be the right choice if…

• You only have short-term debts and obligations
• You’re over 45 and only need coverage until retirement
• You already have significant assets and savings to support your family
• You prefer permanent coverage or whole life insurance

30-year term life insurance rates in Canada

The cost of a 30-year life insurance term will depend on factors like your age, health, gender, and which provider you choose. Expect premiums to be higher for a 30-year term than a 10 or 20-year term.

Age has a big impact on your rates. Buying a policy in your 20s or 30s can help you lock in low rates to enjoy affordable life insurance in Canada for longer.

^{* Average monthly rates for a non-smoking applicant with $500,000 of coverage.} 

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Now is the cheapest it will ever be

34% of Canadians without coverage say life insurance is “too expensive,” but prices increase about 8% every year as you age. So today is a great day to lock in low rates while you’re still young.

How affordable is 30-year term life insurance? 

Term life insurance rates also vary by the amount of coverage you carry. And the higher the coverage amount, the higher your premiums will be. The inverse is also true, the lower your coverage amount, the more affordable your 30-year term life insurance will be.

The average life insurance amount for a Canadian household is just below $500,000, but you might need more or less to achieve financial security.

Take a look at these average rates from some popular life insurance companies in Canada.

30-year term life insurance rates: $750k in coverage

^{* Average monthly rates for a 30-year-old applicant with $750,000 of coverage.}

30-year term life insurance rates: $500k in coverage

^{* Average monthly rates for a 30-year-old applicant with $500,000 of coverage.}

30-year term life insurance rates: $250k in coverage

^{* Average monthly rates for a 30-year-old applicant with $250,000 of coverage.}

30-year term life insurance rates: $100k in coverage

^{* Average monthly rates for a 30-year-old applicant with $100,000 of coverage.}

Unsure how much term coverage would be too much? Use a simple life insurance calculator to compare your insurance needs with coverage amounts and estimate the term length that works for you.

How to choose a term length: 30 vs. 10 or 20 years

When buying term life insurance in Canada, pick a term length that aligns with how long you and your family have financial obligations. 

Too short: For most families, shorter terms like 5-year or 10-year terms will not provide enough protection to raise kids, pay for children’s education, and completely pay off mortgages (although they do offer lower premiums).

Too long: You can get 40-year term policies, but that might be overkill if you have a 20- or 30-year mortgage and your kids will be grown by then.

Just right: A 20- or 30-year term length is a good fit for most families’ financial dependencies. If you have substantial savings and investments and you’re within 20 to 25 years of retirement, then you may not need a 30-year term (unless you have a dependent spouse or major financial responsibilities like business debts) to secure your family’s financial future.

Here’s a step-by-step guide to finding the right term length:

1. If you have kids, think about their future. Do the math to figure out when your youngest will graduate college — and then add five years. To protect your children’s future, your policy should last until that date.
2. Consider your mortgage timeline. How many years are left? What’s the amortization? Might you refinance or take out equity? Choose a term that best matches your remaining payments.
3. Decide what your current and future budget can handle. You lock in a premium when you choose your term. Lengthy terms mean higher premiums, but prices will also go up if you choose a shorter term and then have to buy a new policy once the initial one ends. Consider affordability now and financial planning for your future.

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Laddering: Another option is to take out multiple, overlapping life insurance policies, like a 10 year + a 30 year policy at the same time. This is perfectly legal, and it gives you a lot of coverage when your obligations are highest and then coverage naturally decreases over time as your financial needs shrink.

Besides term life insurance, there’s also permanent life insurance and term 100 life insurance. But most Canadian families don’t require a permanent life insurance policy. Premium payments are high and it can inhibit additional savings and investments.

How much coverage do I need for a 30-year term?

Everyone needs a different amount of coverage based on their income, debts, and financial goals. 

A good starting point for life insurance coverage is 10-15x your annual income.

Use a free online life insurance calculator to estimate your ideal coverage level for a 30-year term, or try to estimate your family’s future expenses:

• Mortgage: What’s your outstanding balance?
• Childcare and education: What’s the total future cost of childcare and education for the next 30 years of your kids’ lives?
• Debts: What car loans, credit card payments, and personal loans might you still owe?
• Final costs: What might your funeral expenses and medical bills add up to?
• Income replacement: Do your dependents rely on a certain income to maintain their lifestyle and living expenses?

Remember to adjust each number if the expenses will end at different times. For instance, kids may rely on you for a 20 year period of time but your mortgage may take 30 years to pay off. 

The DIME method is another way you can short-hand calculate your life insurance needs (Debt + (Income x years of coverage) + Mortgage + Education).

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Account for inflation

Your coverage amount is easy to reduce later but harder to increase, so go higher if you can. The dollar may be worth less 30 years in the future! The increase in your monthly premium may only be a few dollars to buy thousands more in coverage.

Riders and options (and when they’re worth it)

Riders are optional add-ons that can expand the policyholder’s term life insurance coverage. Here are some common riders on a 30-year term policy in Canada:

• Accidental death benefit: Pays a lump sum to your beneficiaries (in addition to the death benefit) if you die in an accident
• Disability income: Pays a monthly income if you become disabled and can’t work
• Waiver of premium: Waives your premium if you become disabled and can’t work, but you retain coverage
• Critical illness: Pays a lump sum if you are diagnosed with a covered illness like cancer or stroke (though you can also buy critical illness insurance separately)
• Guaranteed insurability: Allows you to buy more coverage while the policy is still active without a medical exam
• Child term: Covers current and future children at a low cost (note that PolicyMe includes $10,000 of child coverage as a no-cost benefit)

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Our take

Riders increase your premiums, but some (like guaranteed insurability) may be worth the cost—especially on a 30-year term policy. Most Canadians will be best served by a straightforward policy with no riders to cut costs and get the coverage they need.

What happens when the 30-year term ends?

At the end of your set period, this type of policy will expire and your coverage will end. Then, you have a few options:

• Let it expire: Your fixed premiums will stop and so will your coverage. Your family will no longer be protected, but that might be alright if your debts are paid and your savings are sufficient.
• Renew: Continue your coverage in 5- or 10- year increments if you’re still paying off debts. Expect your premiums to increase based on your age.
• Convert: Switch to a permanent plan like whole life or universal life insurance. If you want lifelong coverage because your health has declined, this might be a good option.

If your 30-year term policy doesn’t have a conversion option and you want to continue your coverage, you’ll have to buy a new term policy. This means a new medical exam. 

FAQ: 30-year term life insurance