Term to 100 life insurance is a permanent type of life insurance that insures the life insured for up 100 years of age.
Yes, a term 100 life insurance is actually permanent life insurance despite having the word “term” in it; it is comparable to a “life-pay” whole life insurance, less any cash surrender values that are built-in within the policy.
Term 100 or term to 100 life insurance is pretty straight-forward, which in this sense is similar to a term life insurance policy but with a longer insurance coverage term.
Unlike pure term life policies that have shorter end dates like 10-year, 20-year, 30-year or up to age 65, after which the premiums are expected to increase at each renewal.
Term 100 policies are guaranteed to protect the insured lifetime and the premium rates are guaranteed to stay the same.
You get a fixed amount of life insurance death benefit and a fixed amount of premiums that will never increase throughout your lifetime.
The only drawback is that you’ll have to keep on making your premiums to keep the policy in force and that no cash surrender values are ever built into the policy.
Term to 100 Life Insurance Advantages
Some people may think that a term to 100 life insurance doesn’t make sense as a permanent life insurance solution simply because it doesn’t build up cash surrender values but this is actually one of the major advantages that a term to 100 life insurance offers.
Lower Premiums
A term 100 life insurance is a stripped-down version of permanent life insurances like Universal life and whole life insurance both of which have cash surrender values. A term to 100 life policy, on the other hand, doesn’t have all these bells and whistles which makes it a more affordable option for those who are looking to implement permanent life insurance that’s within their budget.
In short, a term 100 life insurance is generally the cheaper choice among other types of permanent life insurances.
Level Death Benefit
As I mentioned above, a term to 100 life policy is a pretty straightforward life insurance plan wherein you get a set death benefit that will remain level throughout your lifetime.
This means, that your death benefit will not increase over time and of course, is also not expected to decrease. Whatever amount you start with, that will be the amount that your beneficiaries will receive at the time of claim.
Level Premiums
One of the disadvantages of term life insurance policies is that their premiums are never level as they are designed to increase over-time.
You start at the lowest premium amount possible for a pure term life insurance but it’s only good throughout the initial term of the policy.
A lot of clients who aren’t aware that they were sold a 10-year term life insurance policy are surprised to receive a letter of premium increase on the 10th anniversary year of their policies.
This exact scenario is also applicable to 20-year and any other term life policies that’s why it’s advisable to convert your term life insurance policies or at least a portion of it into a permanent life insurance so as not to risk losing your coverage at old age just because you can no longer afford it or simply because you don’t find that it still makes sense making the high premium payments at old age.
A term to 100 life insurance will have slightly-higher premiums compared to most term life insurance policies but it is guaranteed to stay the same for the rest of your life which gives you more control over the cost of your family’s protection against the costs of death.
Term to 100 Life Insurance Disadvantages
Listing only the advantages of term to 100 life insurance and not talking about the disadvantages is one-sided and pretty much a disservice to anyone looking to implement a life insurance protection.
To address that, I’ve decided to talk about its share of disadvantages as well!
Lifetime Premiums
As a simple, straightforward life insurance solution, term to 100 life insurance policies doesn’t offer limited contribution options like a 20-year pay period.
All term 100 life policies have a lifetime contribution period which means that as long as the life insured lives, she or the person paying the premiums should make those payments so as to keep the policy in effect.
Sometimes, it makes more sense to pay a higher premium contribution amount for policies with limited contribution periods if it’s within your affordability because if you’re going to sum it up; you usually would have paid a higher total amount of premiums with lifetime contribution plans as compared to whole life and universal life policies with 20-year (or shorter) contribution periods.
No Cash Values
For some people, cash surrender values aren’t really a big deal when implementing life insurance policies but if you look at it at a long term perspective. Cash surrender values tend to give you more options at old age.
It’s like having an “equity” inside your insurance policy.
Term and term to 100 life insurance don’t offer cash values within the policies; it’s much like renting a home, where you make your monthly (or yearly) payments in exchange for the accommodation.
Term to 100 life insurance (and term life insurances) is pretty much the same, you make your monthly or annual premium contributions in exchange for the financial protection and peace of mind but you don’t really own it and therefore, no cash values or equity are ever built within the policy no matter how long you hold onto it.
Less Flexible
Term 100 life insurance is just that, a straightforward life insurance coverage up to age 100.
You can top it off with riders like critical illness, accidental death & dismember, fracture, child rider, and disability waiver of premiums but you can’t add term life insurance (10 or 20 years) as riders to protect your temporary obligations much as you can do with structured whole life and universal life policies.
This means that if you need a high amount of coverage, you will have to get the whole thing as a term to 100 life insurance or implement a separate stand-alone policy to top off your term 100 policy.
Term 100 Best Use Case
A term to 100 life insurance is usually implemented by those who are looking for simple and affordable permanent life insurance solutions to protect their loved ones from the costs of final taxes, funeral expenses, charitable giving, business insurance, or to leave a tax-free legacy to their next generation.
It is available to all Canadian residents aged 18 to 80 years old but based on my experience, most people who implement term to 100 life insurance policies are those who are in their senior years, mostly to have permanent life insurance in place to cover taxes at death and funeral costs whose premiums are manageable and guaranteed not to increase over time.
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