A Multi-Layered Term Policy

A Multi-Layered Term Policy

Term Life Insurance is a cost effective way to insure oneself. You are insured for a specific period of time (say 20 years) and your cost of insurance is low and guaranteed for that 20 year term. However, term insurance rates at renewal could really sky rocket making the insurance

A few insurance companies in Canada offer an opportunity to have several term plans in one policy. So you could have a term 10 years along with a term 20 and can also have several other plans clubbed together.

Let say you take a 40 year old male, non-smoker takes a plan like this. He takes

Term 30 years 100,000 + Term 20 years 200,000 + Term 10 years 100,000.

So he has for the first 10 years $500,000 (Term 30 years 100,000 + Term 20 years 200,000 + Term 10 years  100,000) and he pays 68.04 per month.

From 10 to 20 years he would have $300,000 (Term 30 years 100,000 + Term 20 years 200,000) and he pays  52.92 per month

From 20 to 30 years he would have $100,000 (Term 30 years 100,000) and he pays 29.70

Assuming that he does not renew any term after the duration of the term is over, he will have the following advantages in the policy:

  1. He will never be a victim of incremental renewal costs of terms which can be very high ( almost 4 times for a 10 year term and about 9 times for a 20 year term).
  2. Since he is buying all the terms at once, his premiums are at a current age. Therefore he can prevent the costs from climbing in the future.
  3. Generally speaking, one needs lesser insurance after a few years. Therefore, since longer terms cover you, you can avoid renewals and premiums to increase.
  4. Your term can be customised to meet your needs better and in a manner which is cheaper.



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