Life insurance is used to protect the financial security of the people you love most.
A life insurance policy pays a cash benefit, tax free, to your beneficiaries when you die. The amount of money for which you are insured and the type of insurance you buy depends on your needs.
People can get life insurance through work (some employers offer it through group benefits plans. This type usually ends when you leave the employer.) or they buy it on their own (usually from an insurance advisor like Faiella Financial Group.
There are three types of Life Insurance:
- Term Life Insurance
- Permanent Life Insurance
- Universal Life Insurance
Term life insurance
Flexible, temporary, protection with options for your future
What is term life insurance?
Term life insurance provides temporary protection for temporary needs. It also has some flexibility, so you can adjust your insurance, as your needs change.
It provides several guarantees
You can choose between:
- Term life insurance – provides coverage for one person
- Joint term life insurance – one policy that covers 2 people who share a joint risk (e.g. a mortgage)
Who is it for?
We find that term life insurance is a popular choice for:
- Individuals focused on affordability and flexibility
- Small business owners facing debts or significant start-up costs
- Business owners with complex needs like key person protection or buy/sell agreements
- People with mortgages or other temporary debt
Permanent life insurance
Lifetime insurance protection – guaranteed!
Permanent life insurance is an excellent choice if you want lifelong coverage and equity in the form of a cash value over time.
Key advantages of permanent insurance over term insurance
- Permanent insurance costs are usually guaranteed when you first purchase the policy.
- Some permanent insurance plans allow you to pay for a limited number of years, then never again. Imagine …you could buy insurance when you’re 40, finish paying the premiums when you’re 50, and be fully covered for the rest of your life. In contrast, term insurance is virtually always “pay as you go” and you’ll be paying premiums while you have the coverage.
- Permanent life insurance premiums can be guaranteed level for life (they don’t increase as you age, even if your health changes), or they can vary depending on the permanent insurance plan you choose.
Universal life insurance
An all-in-one way to protect and build your money
Universal Life insurance is one solution that combines 2 important aspects of financial planning:
- Permanent insurance protection for lifelong peace of mind, plus
- Investment account options that can grow your savings, tax-deferred
How does it work?
- You choose a guaranteed death benefit amount that will be paid to your beneficiaries when you die.
- Your payments are deposited to a “policy fund”
- Any money you deposit over and above what is required for the cost of the insurance can either be:
- placed into investment accounts to grow-deferred, or
- used to increase the value of your death benefit
Who is it for?
We find that universal life insurance is a popular choice for:
- People who have maximized their RRSP contributions
- Parents and grandparents who want to maximize their estate for their children and grandchildren
- Business owners looking for a tax-efficient way to protect the value of their business