Term 10 life insurance is generally the most popular form of life insurance in Canada. It provides low initial premiums, but the cost can rise substantially as the insured gets older. For example, RBC’s $500,000 Term 10 insurance for a 35-year-old, male non-smoker with premiums starting at $26.37/month. However, at the end of the 10th year, the renewal premium becomes $146.70/month.
The reason life insurance companies use a buffer is to cover for any health changes over those ten years, thus charging a much higher premium than if the insured were to apply for a new plan at the end of the ten policy years and was still in good health.