Life Insurance is a private contract between an insurance policyholder and an insurance company. The insurance company promises to pay a sum of money upon the death of the insured person, in exchange for a set premium. Only the policy owner can break the contract - you own and control the policy - the insurance company works for you.
Life insurance is financial protection for your family in case of your death. The payment is 100% tax-free, which makes it one of the most efficient and effective financial tools available to Canadians - the real return on your money cannot be matched. You are paying pennies on the dollar! The amount and type of coverage you choose will depend on your circumstances and your needs. The cost of life insurance depends on factors such as age, gender, smoking status, health, medical history and lifestyle.
What if something happened to you? Nothing will ever replace you in your family’s life. But with life insurance, you can ensure they fulfill their dreams and live the life you’ve always dreamed for them. Your family is the greatest thing you'll ever create. That's why we get life insurance, to protect the most precious things in the world. To protect the ones we love.
1. Term Life Insurance: Term life insurance provides a fixed benefit at a set rate of payments for a limited period of time, the relevant term. Term life provides temporary protection you can customize to meet your changing needs. It is similar to renting your home - you pay a determined amount for a period of time. When the term expires you may renew for another term or convert to a permanent solution - both at a significantly increased premium. All term insurance will expire at a certain age (from age 75 to 85, depending on the terms and conditions of the policy). Universal Life Insurance: Universal life insurance is a flexible type of permanent life insurance. It combines protection and an investment where the payments you make above the cost of insurance are invested into a fund(s) of your choosing. The results are dependent on the performance of those funds.
2. Permanent Life Insurance: Permanent life insurance covers you for your whole life. Permanent insurance costs are usually guaranteed not to increase from the time you first buy the policy. Permanent life insurance may also combine a death benefit with a savings or investment component. There are two types of permanent insurance - Whole Life and Universal Life. Each of these has variations in products and characteristics. Whole Life Insurance: Whole life insurance is a flexible type of permanent life insurance coverage that includes a guaranteed level premium, a guaranteed life long death benefit, and guaranteed cash savings. Participating whole life can be eligible to earn non-taxable dividends that can be used to compound the growth of the cash value and the death benefit. If set up correctly, you will get uninterrupted compounding growth of your cash value and your death benefit, even if you put the cash to other uses.
It is important that Canadians understand about traditional mortgage insurance, usually provided by your financial institution when you get your mortgage. If you have a mortgage it makes good sense to insure it. Owning a debt free home is an objective of any sound financial plan. In addition, making sure your mortgage is paid off in the event of your death will benefit your family greatly. The question is, should you purchase this coverage through your lending institution or from a life insurance company? A good rule of thumb to follow when searching for advice? Ask an expert! So, while it might be convenient when completing the paper work for your new mortgage to just sign one more form, be aware that it might be a costly decision.
