Life Insurance

Imagine empowering your loved ones to not have to worry about paying off debt, creating income, or lowering their standard of living should you die prematurely.  Life insurance can be used to:


  • Pay off debts and final expenses

  • Create a steady stream of income for your family

  • Allow your loved ones to maintain their current standard of living

  • Leave a legacy to a charity of your choice


Certain types of life insurance can also be used to:


  • Build a cash value allowing you to draw upon this during retirement

  • Create a tax-deferred savings vehicle


Life insurance can be categorized into two main types:


Term Insurance


This type of insurance is suitable for young families starting out that have a need to protect their family, and would prefer to invest as little as possible in an insurance policy.  It is well-suited to meet high, but short term needs.  It is inexpensive in the earlier years of the life insured and gets prohibitively expensive when an individual is in their 60’s.  Because of the high cost of renewing the policy, most individuals allow their policy to expire.  Unfortunately, when a term insurance policy expires, the individual is left with nothing despite having paid premiums for many years. 


Term insurance are typically provided in 5, 10, or 20 year terms and do not require evidence of insurability when renewing.  Term insurance is also convertible to permanent insurance without providing evidence of insurability.  


Permanent Insurance


As its name implies, permanent insurance will not expire, thereby allowing lifetime coverage.  The rates are guaranteed for the duration of the policy if structured correctly by a knowledgeable advisor.  Permanent policies can also be structured so that the policy can be paid up in a certain number of years, such as 10, 15, or 20 years.  Permanent insurance has a cash value that can potentially grow over time, providing a supplement to retirement income or to fund a large purchase.


Permanent insurance offers better value than term insurance in the long term.  However, the premium required is higher than that of term insurance.  The larger premiums charged in the early part of the policy goes into investments that will grow in value over time.


To complicate matters a bit more, permanent life insurance is also divided into two flavours: universal life and whole life.  The main difference between the two is how the money is invested.  In universal life, the policy holder and advisor determines where the money is invested, such as in equities, bonds, or money market instruments.  In whole life, the insurance company determines how the money is invested.  The returns in a whole life policy are much more stable and predictable, whereas the equity returns in a universal life policy can be significantly more volatile.


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