LIFE INSURANCE

---

Life Insurance Protection

Whether you are buying your first home and need mortgage insurance or you are having a baby, most major life events trigger the need to review your life insurance needs as your financial obligations & responsibilities are evolving!
With over 20 years experience as a trusted life insurance advisor, i can build you a plan that is specifically tailored to your needs and budget..AND I can offer this through a wide range of major insurance carriers in canada.
My job is to provide you with honest advice of your options at the best prices available – your job is to enjoy your life!
Whether it is term, whole life, universal life or a combination – let me take the stress out of purchasing life insurance!

---

Term 10 and 20 Life Insurance

Term insurance is used to cover temporary needs such as debt and the dependency period of your children. When you are younger, your debts are usually higher and your children have many years before they become independent. Term insurance is the perfect solution as it is used to cover temporary needs and you are able to purchase a significant amount of coverage for a low cost.

Term insurance should not used for lifetime protection since the policy expires by age 80 or 85 depending on the insurance company, and premiums increase at the end of every term. The increase in premium is usually quite substantial, so it becomes very unaffordable as you age. The most common terms of coverage are term 10 and term 20 which will increase in cost every 10 and 20 years respectively.

Term insurance is very basic and does not contain bells or whistles like some permanent policies. There is no cash value, dividends or premium flexibility. However, term policies do have a conversion option. This conversion option will allow you to convert all or a portion of the term policy to permanent life insurance without medical evidence, protecting your insurability. For details on these permanent insurance options, please see Term 100, Universal Life and/or Whole Life below.

Term 100

Permanent life insurance is initially more expensive than term insurance, but the premiums do not increase and the coverage does not expire.

Term 100 is basic permanent insurance. The coverage remains in force for life and the premiums never increase. Term 100 will often have 2 options, Term 100 and Term 100 with values. The Term 100 with values is more expensive; however, the premium is only payable for a set number of years (often 20). After you complete the payment period, the policy remains in force for life with no further premiums owed, whereas Term 100 without values requires premium payments for life.

Universal Life Insurance

Universal Life insurance is a permanent life insurance policy, where the premiums remain level and the policy does not expire. Universal Life has many options and a lot of flexibility allowing you to tailor a policy to suit your individual needs. The policy has 2 components, an insurance component and an investment component. When you make a premium payment, the deposit goes into the investment account and the monthly cost of the insurance is withdrawn from that investment account. You can choose the amount of your premium payment up to a maximum, as long as the minimum premium to cover the cost of the insurance remains funded, either through monthly contributions or a lump sum payment. Should you deposit more than the minimum premium you begin accumulating funds in your investment account, and all investment income earned is tax free. Each insurance company has several investment options available, and you make all investment decisions. Upon death your investment account becomes part of your death benefit and is paid tax free to your beneficiaries. If you require the funds in the future, there are various strategies available to access your investment account in a tax effective manner. You can also choose to overfund your policy in order to pay your premium during retirement.

If your RRSP and tax free saving account is maxed out, this is the only other place to shelter investment growth from taxation.

Participating Whole Life Insurance

Participating Whole Life insurance is a permanent life insurance policy, where the premiums remain level and the policy does not expire. The premiums to participating whole life policies are more expensive than the other alternatives since the insurance company uses very conservative projections on death claims, interest rates and administration charges. Every year they tabulate the actual expenses incurred and refund the difference in the form of a dividend. This dividend is not taxable as it is considered a “refund of premium.” These dividends are used to purchase additional insurance increasing the death benefit over time. This policy is very hands off compared to the Universal Life as there are no premium or investment decisions to be made. All funds are invested by the insurer’s team of professional investment managers. The dividend payments are not guaranteed and are subject to fluctuation; however, once they are paid out they are automatically vested in the policy. It also contains a guaranteed cash value which would be paid out to you should you cancel the contract.

Mortgage Insurance

Having your mortgage paid off in the event that you or your spouse dies, relieves a lot of the financial burden faced by the survivor. Banks make the process easy by allowing you to purchase coverage simply by signing a one page application. But are you really protected by this coverage? For more information about the differences between mortgage insurance and individual life insurance, please call me or fill out our email quote form on the website.