Level Term Insurance vs. Decreasing Term Insurance

Posted on November 12, 2009 and updated November 2, 2010 in Life Insurance Canada News 2 min read

Term insurance comes with a variety of terms from 5 years to age 100. One variable that is often overlooked is, whether the insured should go for a level term policy or a decreasing term life plan.

Below is a summary of the differences between the two coverages:

Level Term Insurance

  1. Fixed premiums for a stated term.

  2. Level tax-free death benefit.

  3. Generally, convertible to a term policy without a medical. Some companies, such as Primerica, do not offer a conversion feature in their level term line-up.

Decreasing Term Insurance

  1. Fixed premiums for a stated term.

  2. Death benefit decreases over the life of the term.

  3. Not convertible to a permanent policy when sold through lending institutions.

A few life insurance companies in Canada do offer level term and decreasing term policies. Most notably, La Capitale offers a very competitive level and decreasing term line-up.

The following looks at the pricing for a 35-year-old, male non-smoker applying for $500,000 of level Term 30 coverage and decreasing Term 30 coverage:

La Capitale $500,000-Level Term 30: $80/month

Death benefit at the end of 10 years: $500,000

Death benefit at the end of 20 years: $500,000

La Capitale $500,000 Decreasing Term 30: $58.33/month

Death benefit at the end of 10 years: $437,500

Death benefit at the end of 20 years: $300,000

You can get more detailed quotes on level term life or decreasing term life by visiting our Term Life Instant Quote Page, or by contacting us at 1-866-899-4849.

avatar