What is Term 100 Life Insurance and How Does It Work?
Most Canadians know getting life insurance is a good thing, especially as they age, but knowing where to start can be daunting. You may know that term insurance is inexpensive, but premiums increase once the term is up. Conversely, while permanent life insurance offers lifelong coverage, the costs are higher. Enter Term 100 (T100) life insurance: a hybrid (of sorts) that provides guaranteed lifetime protection at a more affordable cost.
Here’s how Term 100 life insurance works, the pros and cons compared to other insurance products, and who might benefit from T100 coverage.
Key takeaways
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Term 100 life insurance offers permanent, lifelong coverage.
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Premiums are guaranteed to stay the same and will not increase as you age.
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Term 100 is simpler and less expensive compared to other types of permanent coverage.
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With Term 100, there’s no cash surrender value or an accumulated savings component.
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Once you reach age 100, your premium payments cease but your coverage stays in effect for the rest of your life.
What is Term 100 life insurance?
Term 100 life insurance offers permanent, lifetime coverage, meaning your premiums never increase and your policy never expires. At age 100, your policy stays in effect, but you no longer have to pay premiums. Similar to other types of life insurance, your beneficiaries receive the full death benefit tax-free, but the policy carries no accumulated cash value or accumulated savings.
Read more: What is permanent life insurance and how does it work?
How does Term 100 life insurance work?
Put simply, Term 100 life insurance combines the lifetime coverage of permanent life insurance with the simplicity of term insurance. To understand the differences, here are the key features of Term 100 life insurance:
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Lifetime coverage: Term 100 coverage remains in force until your death, unless you cancel the policy or stop payments. You’ll pay premiums only until age 100; at that point, the policy is “paid-up,” meaning coverage continues for life without further cost.
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Guaranteed premiums: Unlike standard term insurance, your premiums are guaranteed to remain the same for life. Generally, rates only change if you adjust your coverage amount or if you qualify for a rate reduction. For example, if you were a smoker when the policy was issued but have been a non-smoker for at least 12 months, you may apply for lower non-smoker rates.
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Tax-free death benefit: Upon your death, your beneficiaries receive a lump-sum, tax-free benefit equal to your policy’s total coverage amount.
Riders are also available with T100 life insurance. A rider is an addition to a base insurance policy that allows you to customize your coverage to suit your specific needs. Common riders include:
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Joint first-to-die: Covers up to two family members and the benefit is payable upon the first death. Coverage then ends, or the surviving person can apply for a new policy without providing evidence of insurability (subject to conditions). This rider is the opposite of joint last-to-die that pays upon the second death and is typically used for estate planning purposes.
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Children’s term rider: Provides coverage for your biological or legally adopted child(ren). If an insured child dies, the beneficiary of this rider receives the stipulated death benefit. If the primary insured person dies, each insured child will receive a paid-up insurance policy for rider’s coverage amount that remains in effect until age 25.
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Accidental death benefit: Pays an additional death benefit if the insured person dies due to an accident, defined as a violent, unforeseen, and sudden incident. This payment is in addition to the standard death benefit payable under the base policy.
Read more: What does life insurance cover? A complete guide.
Pros and cons of Term 100 life insurance
Like any insurance product, Term 100 insurance has specific benefits and drawbacks to consider before deciding if it is the right fit for your needs.
Pros
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Guaranteed death benefit: Upon your death, your beneficiaries receive a tax-free, lump-sum payment quickly and efficiently. Because this benefit bypasses probate, it saves your estate time and money while ensuring your legacy gets to the people who need it most.
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Premiums won’t increase with age: Once your premium is set, it remains the same for the duration of coverage, unlike term insurance, where premiums increase with age once the term ends and you reapply for insurance.
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Permanent protection: You can be assured that your coverage is in effect for the rest of your life, as long as the premiums are paid. At age 100, your premium payments cease, but your full coverage remains.
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Straightforward product: Unlike other permanent insurance products that require ongoing management, Term 100 has no cash value component, so you can “set it and forget it.”
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No medical re-exam: Once your insurance is in effect, you are not required to undergo a medical re-exam to maintain coverage or re-evaluate your premium. Your rate remains the same regardless of future health changes.
Cons
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More expensive than term life insurance: Your premiums for Term 100 insurance are more expensive than standard term insurance that renews after a set term is up, such as 10 or 20 years.
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No cash surrender value: Unlike other permanent policies, there is no accumulated value beyond the death benefit and if you cancel the policy, you will not receive any proceeds. The value of your insurance does not increase either, so there’s no opportunity to build wealth.
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Long-term commitment: As there is no cash surrender value, a Term 100 insurance policy requires a lifelong commitment to paying premiums to ensure the benefit remains in effect until death.
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Limited flexibility compared: While simpler than other permanent insurance products, Term 100 insurance is also less flexible, offering few options for customization beyond selecting any relevant rider(s).
Read more: What are the benefits of life insurance?
Who should consider Term 100 life insurance?
When it comes to life insurance, there is no “one-size-fits-all” solution. In fact, Term 100 insurance can be part of a wider insurance portfolio. However, Term 100 insurance might be worth considering if you fall into any of these categories:
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Individuals seeking permanent coverage: Term 100 offers lifelong coverage and security without the higher premiums of other permanent insurance products as there is no cash value component.
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Those who value simplicity: Once your premium is set, it remains the same for life. There is no need to actively manage investments or adjust premiums, like you do with universal life insurance.
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People interested in tax-advantaged estate planning: Because the death benefit is paid directly to your beneficiaries tax-free, Term 100 is an effective tool for maximizing the value of your legacy.
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Providers for lifelong dependents: If you have lifelong dependents, such as a family member with special support needs or a disability, Term 100 ensures a guaranteed bequest is available for their care, regardless of when you pass away.
Term 100 life vs other types of life insurance
To see if Term 100 is right for you, it is important to understand how it compares to other life insurance products on the market. Here is a breakdown:
Term 100 |
Whole Life |
Universal Life |
Term Life |
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Coverage amount |
$50,000 to $25 million |
$25,000 to $25 million |
$25,000 to $25 million |
$50,000 to $25 million |
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Coverage timeframe |
For life |
For life |
For life |
Varies: 10 to 40 years |
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Premium increase |
No |
No |
Flexible premiums |
Yes, at term renewal |
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Eligible ages |
Ages 18 to 85 |
Ages 0 to 80 |
Ages 0 to 85 |
Ages 18 to 85 |
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Medical exam |
Typically required |
Typically required |
Typically required |
May be required depending on type of product |
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Cash value accumulation |
None |
Yes |
Yes |
None |
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Premium cost comparison |
Mid-range, fixed for life |
Highest, fixed for life |
Variable premiums, costs fluctuate |
Lowest premiums, fixed for term |
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Complexity |
Low, permanent but straightforward |
Moderate, includes cash value component |
High, requires active management |
Very low, simple coverage |
Get permanent coverage with Term 100 life insurance
Term 100 might be the right choice if you value lifelong coverage, stable premiums, and a “set-it-and-forget-it” approach to providing for your loved ones. An licensed insurance advisor can help you evaluate your unique needs and offer personalized solutions to protect your family’s future.
FAQs about Term 100 life insurance
Is Term 100 life insurance worth it?
Time 100 insurance may be worth it if you want affordable, permanent life insurance coverage. It offers the security of knowing your premiums will never increase and that you have coverage for life. Because there is no accumulated cash value component, the premiums are lower than those of other permanent policies.
How much Term 100 life insurance coverage do I need?
The amount of insurance you need is a personal decision based on your needs, but also your budget. However, when choosing a coverage amount, a good rule of thumb is to have at least five to seven times your yearly net (after tax) income. Beyond that, consider key factors such as:
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Debt obligations: How much debt do you have and how would it take for your spouse or partner to pay it off? Aim to align any amortization schedules with your insurance coverage.
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Dependents: Evaluate the number and ages of your dependents and the years of support they will require, including post-secondary education.
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Existing benefits: Do you have supplemental coverage through work benefits?
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Other assets: What additional savings do you have (cash, investments, RRSPs) and what are the tax ramifications of these becoming part of your estate?
Use this RBC life insurance calculator to estimate your financial needs based on variables such as your age, relationship status, income and debt, or request a call from an RBC insurance advisor to discuss your options further.
What is the difference between Term 100 and Term to 100?
While the terms may be used interchangeably, it’s important to check your policy to understand if and when coverage ends. With Term 100 life insurance, you will pay premiums up until age 100, at which point coverage continues but payments stop. With Term to 100 coverage, both your payments and your coverage cease at age 100.
*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
