Guide to 40-Year Term Life Insurance

Is a 40-year life insurance term right for me? 

A 40-year term life insurance policy might be the right term length for you if:

• You’re young and planning ahead for old age
• You have long-term financial commitments 
• You’re thinking about estate planning and generational financial protection

Your Canadian insurance should last for as long as your financial obligations do. A 40-year term is somewhat rare, with 20- and 30-year life insurance products being more common as they better reflect the duration of mortgages and care requirements for dependents. There is no cash value accrual with a term policy.

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Our take

A 40-year term life insurance policy is a great way to lock in low premiums for a long time, but consider your financial obligations and ensure you’re not putting money into coverage you don’t need.

40-year term life insurance rates in Canada

The cost of life insurance in Canada depends on your lifestyle factors and the provider you choose, as well as the duration of your term.

The age of the policyholder at the time of purchase affects the rate. Younger people tend to pay less for coverage, even for longer-term policies. In your 20s and 30s, you’re healthier and face fewer health risks, so you can lock in a lower rate.

The coverage level also affects your premium payment. If you want a higher level of coverage (like up to $5 million), expect your monthly premiums to be higher. The same is true of Term 100 policies.

Below, you can compare life insurance options for a 40-year policy from some of Canada’s top-rated life insurance companies. Be aware that not all companies offer 40-year term life insurance.

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What’s too much coverage when it comes to life insurance?

Good question! Explore coverage options with an online life insurance calculator to review term lengths, coverage amounts, and life insurance costs.

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

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

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

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

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

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

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

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

Who should choose a 40-year life insurance term?

If you’re a Canadian who fits one of the descriptions below, then 40-year life insurance may be worth considering:

A 40-year term might not be the right choice if…

• You’re over 45 years old
• Your financial obligations will be met in under 40 years
• You’re still struggling to save and invest for your future

A 40-year term policy is typically an expensive option for term life insurance. Paying such high premiums could prevent you from meeting other financial goals. For instance, investing in a higher-yield vehicle like a TFSA could return more cash, on average, in 40 years. 

How to choose a term length: 40 vs. 10, 20, or 30 years

When getting term life insurance quotes in Canada, you’ll pick a term length that best fits your needs. To do this, you need to understand your financial debts and how long your dependents will rely on you.

1. How long will your kids and dependents need support? Consider support for children’s education costs and other expenses in early adulthood. Spouses may need support until retirement if your income suddenly disappears. A 40-year term could also cover future kids.
2. How long do you expect to be paying off your mortgage? Refinances or mortgages with long amortization can be a huge burden on the loved ones you leave behind if you pass away. 
3. When do you expect to retire? Life insurance acts as income replacement, so it makes sense to pick a term that aligns with your retirement date. A 40-year period of time may be unnecessary, since 65 is the median retirement age in Canada.
4. How likely is it that your health will change, and when? People with a family history of health issues may benefit from locking in a low rate before the condition rears its head and you can’t find coverage. For heart disease or stroke, this could be in your 50s.

Ultimately, 40-year term policies are pretty rare in Canada. Insurers see them as a big commitment with higher risk. Five-year and 10-year term policies exist, but 20 is the most common life insurance plan.

You should consider a 30-year term policy even if you have long term financial obligations. This gives you protection for your most important income-generating years while avoiding overpaying for unnecessary coverage.

How to choose a coverage amount

Life insurance coverage amounts in Canada are somewhat customizable, and you should choose a coverage amount that will cover your final expenses and make a meaningful difference in your beneficiaries’ lives.

DIME = Debt + (Income x years of coverage) + Mortgage + Education for kids

Use this formula to estimate the term life insurance coverage that would cover your debts, your family’s future costs, and income replacement if you pass away unexpectedly. For instance, will your children attend university abroad? Do you plan to refinance your property?

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

Riders are optional additions to a base policy which expand your coverage in specific areas. They can be worth it in some situations but totally unnecessary in others.

Here are some common riders in Canada:

• Critical illness: Get a lump sum payout if you’re diagnosed with a covered serious illness
• Accidental death: Your beneficiaries get an additional lump sum on top of the death benefit if you pass away due to an accident
• Waiver of premium: You’re off the hook for premiums if you become disabled and can’t work (especially valuable on a long-term policy)
• Disability income: Get monthly income if you become disabled and can’t work (aka income protection)
• Child term: Covers current and future children up until a certain age, like 21 or 25 (but there are better options for parents in Canada, and PolicyMe’s term policies include $10,000 of child coverage)
• Guaranteed insurability: You can purchase additional coverage while your policy is still active with no additional medical exam

Our take

Some riders are worthwhile, especially on a longer-term policy like a 40-year term. However, riders add cost and 40-year term policies are already very expensive. Most Canadians are better served by buying a more affordable coverage shorter-term policy (like 20 or 30 years) and investing the rest.

What happens when the 40-year term ends?

At the end of your 40–year life insurance policy, your coverage stops. You have a few options:

• Renew your coverage: While you can’t get another 40-year policy, you may have the option to renew for 5 or 10 years at a time. Expect your insurance premiums to increase significantly due to your age.
• Convert it to permanent coverage: Many companies allow you to convert a term life insurance plan to a permanent life insurance policy up to a certain age. This might be a good option if you still want life insurance coverage. 
• Let it expire: If you no longer need life insurance, you can let your policy lapse. You will stop paying premiums and your loved ones will no longer receive a payout if you die.

Your financial future may look very different in 40 years, and you should expect your insurance needs to change. Speak with a Canadian insurance advisor to make the decision that’s right for you and your family.

FAQ: 40 year term life insurance