Once your contract with Telus is over you can keep and continue to use that iphone (along with the current plan). Or you have the option to purchase a newer phone, or sell it yourself (you will recoup the most money this way) to put towards the newer device.
If you're wanting the newest iPhone that will be coming out. Most likely you can expect to pay a minimum $400+ down on the device. This will be Apples most expensive iPhone to date. You will start a new 2 year contract that will pay down the subsidized phone also possibly a higher rate plan.
Once your contract ends you go month to month with your current phone. Your rate plan cost does not automatically reduce and they do not automatically send out a phone. You are more than welcome to sign a new contract and they prefer you too. Depending on what device you choose you may be able to keep your current plan or may need to pay more monthly. Telus offers premium plus pricing and smartphone pricing. So you have the option to have a big discount on the phone upfront and pay less monthly or have a big discount upfront and pay more monthly. The choice is yours.
Your sister probably went in with a device issue and was upsold a new contract. There are a lot of sales right now and were a lot of sales a couple months ago too. I believe the iphone 7 was "free" which means instead of paying the normal $200 upfront cost, you would not have to pay anything upfront but, are locked into a 24 month contract and paying at least $65 for the 300 local minutes daytime and unlimited local after 6pm and promotional data add on at the time was 3gb for $25 = the plan to be $90 + tax monthly. So the phone was not a free and not covered applecare. It was a signing of a contract in order to walk away with a new device and spend more monthly with Telus. You have that option too depending on your credit history, current sales and current device balance of the current contract you are in. It's not the same as getting a replacement from applecare which is a replacement device of the same model and is not another contract.