Term 100 Life Insurance: The Misunderstood Insurance

Term 100 life insurance is a very misunderstood product. The name is partially a misnomer. "Term" normally implies that this is a term policy, but Term 100 means they are actually permanent policies because they have a term of 100 years and best of all, the premiums never increase.

The policies are technically paid up at age 100, so the premiums cease at that point, but the coverage continues. Some Term 100 policies in Canada do offer a cash value, but most of them are offered on a stripped-down basis. This means that the owner does not get any return of premium if the policy is cancelled prior to death.

Term 100 means they are actually permanent policies because they have a term of 100 years and best of all, the premiums never increase.

Of course, one of the drawbacks of Term 100 policies is that they're payable to age 100 (your entire life) and if the policyholder misses a payment at any point prior to death, the policy will lapse after a 30-day grace period. This can create a problem for policyholders who switch banks, but forget to tell their broker or insurance carrier.

Also, Universal Life policies are often sold with an underlying Term 100 cost-of-insurance. These Universal Life policies can act as a Term 100 policy with an optional savings component. The only variable fluctuation in these T-100 Universal life policies is the premium tax, which is built into the policy, but may rise over time. Still, the insurance company bares the entire risk when it comes to a Term 100 policy, so your premiums will always stay the same.

One big advantage of the Universal Life Term 100 is the policy holder has the option to pick up an additional savings component that can be used to offset future premiums. If the cash value is not used, it is paid out on top of the death benefit, tax free.

Universal Life Term 100 and straight Term 100 policies have gone up as interest rates increase. Insurance companies use long term fixed-rate investments in their reserves primarily to offset future claims. Declining interest rates have made these plans less profitable for insurance carriers and many companies have pulled them from their product shelves.

These plans aren't available in most countries anymore, so if you want a Term 100 or Universal Life Term 100 plan, you better act soon. Get a free quote at our Online Quote Page.

Below is a summary of the plans offered by the top three Universal Life Term 100 and straight Term 100 carriers in Canada. The example is $250,000 of coverage for a 40-year-old, male, non-smoker:

Straight Term 100

Manulife: $117.50/month

Unity Life: $126/month

Empire Life: $132.53/month

Universal Life Term 100

Assumption Life: $120/month*

Manulife: $122.83/month

Empire Life: $125/month

*The Assumption Life policy has a built-in guaranteed cash value, which can be used via a policy loan to offset premiums in later years.