There are many reasons why people choose to buy life insurance protection. It is extremely important to have adequate coverage based on your own individual needs and desires. One of the most common reasons to purchase life insurance is to provide tax-free dollars to your loved ones. There are other financially important reasons for buying life insurance such as corporate needs: life insurance proceeds can be used to buy out a partner or to help bring in a “key” individual to continue and run/operate the company.
It is important that your insurance consultant (broker) be extremely knowledgeable about today’s market and the different programs that are available.
Life insurance can be used for:
- Ongoing Family Income
- Bequest to your favourite charity
- Starter financial plan for your child
- Mortgage protection
- Offsetting capital gains at death
- Tax shelter retirement income
Term life insurance provides protection for a limited period of time and pays benefits only if the policyholder dies during the specified time. The major benefit is the reduced cost compared to permanent insurance.
Designed to meet your short-term needs. We will shop the insurance market for the most competitive and affordable term insurance products. These products will address your individual short-term goals while offering you the flexibility to expand your coverage as your needs change. Term Insurance is less expensive when you first purchase the plan, and becomes much more costly as the years go by. Term insurance is generally purchased for a short term need such as a 20-year mortgage, or in a partnership buy-out situation.It can be purchased usually on a 10, 20 year renewable and convertible basis
Whole Life Insurance
Provides guaranteed level premiums and guaranteed insurance coverage for life. There is a guaranteed cash value as well Whole Life, often called Ordinary life or PAR is the original permanent life insurance contract. These plans have level premiums over the life of the contract and on death pay the sum insured to the beneficiary. Premiums are higher than term assurance and this difference in mortality costs builds cash values used to fund higher mortality costs at older ages. Cash values are guaranteed and increase over the life of the contract.
Whole Life policyowners share in the risk and profits of the company’s participating policy funds. These funds are conservatively invested in bonds, mortgages, property and stocks to provide steady returns. PAR policyholders share in profits through dividends, which reflect investment experience after allowing for expenses, mortality and profits. Declared dividends are guaranteed and can be used to return or reduce premiums, or increase the sum insured and cash values.
PAR policies are suitable for policyholders who are: more risk averse; want balanced, stable steady returns; want the insurance company to control their investments; have stable cash flow to fund premiums; and are satisfied with less flexibility.
Universal Life (UL) is the second type of permanent insurance. It has become very popular as it allows the policy holder considerable flexibility in the amount and timing of premium payments. It has become very popular as it allows the policyholder considerable flexibility in the amount and timing of premium payments and the nature of the investments.
A permanent insurance plan with a possible investment component at the end, Universal Life Insurance coverage meets your life insurance needs, while providing you with the potential for tax-free growth.
In a Universal Life policy the cost of insurance and expense charges are guaranteed. These policies offer numerous investment options in fixed income and equity linked indexes, and managed accounts where the policyholder can choose where his funds are invested. Certain fixed income investment accounts offer minimum guarantees.
Universal life policies are suitable for those who: want to exercise choice and control of their asset mix; are comfortable with normal investment risk; want to monitor and track their investment performance; want apolicy with guaranteed costs and want ongoing flexibility to change their policy as needed.
A key advantage of permanent policies is that cash values accumulate within a tax-exempt life insurance contract free of annual accrual taxation. On death, proceeds pass tax-free to one’s beneficiaries. However it is also possible to deposit amounts in excess of the normal mortality and expense costs and invest these extra amounts in the contract on a tax-deferred basis and provide future favorable income options.
Mortgage Insurance offered through a bank or mortgage lender may be convenient, but if you are in reasonable health, an Individual Insurance Plan can provide you with superior coverage and value over the term of your coverage.
Critical Illness&Disability Insurance can also be purchased through a mortgage lender, but it must be noted, insurance through these venues are often limited in several ways.
An Insurance Advisor can explain the difference between coverages offered through a mortgage lender, and insurance coverage provided through an Insurance company.
- Bank owns the policy
- Provides same rates for smokers and non-smokers
- Bank can cancel the policy at any time
- Amount of coverage equals amount of Mortgage
- Mortgage lender is the beneficiary
- Premiums stay the same while coverage decreases according to mortgage amount
- Mortgage insurance can be cancelled if change of address or change of lenders or other circumstances
- Coverage ends when mortgage is paid
- Coverage cannot be converted to a Permanent Policy
- Historically less costly
- Premiums are calculated on a group basis and can therefore be increased at lenders’ discretion
- The insured or designated policy owner owns the policy
- Non-smokers pay lower rates than smokers
- Only the policy holder can cancel the policy
- Policy holder decides on amount of coverage
- Policy holder decides who the beneficiary is
- Premiums stay the same and coverage is guaranteed to remain the same over the term period selected
- Coverage stays in place even when there is a change of address or mortgage or othercircumstances
- Coverage lasts as long as term selected
- Coverage can be converted to a Permanent Life Insurance Policy
- Often now more affordable than bank or mortgage lender insurance rates
- Guaranteed level premiums for term selected