Personal Life Insurance

What isLife Insurance?

Life insurance is money that you will receive in the future, that you are able to buy at a discount today.

That statement applies to all forms of life insurance; life, critical illness, disability, and travel coverage Life insurance is a way of creating a future income that can be used for many different things depending on the type of policy.

It can be used to;
Replace income
Offset taxes
Create a retirement income
Diversify a person’s wealth
Inheritance
Charitable donations
Create cash flow
Loan security
Tax shelter
Use the cash growth in the policy
for any number of things

In Canada

There are only three types of life insurance;

Term
Universal
Whole (or Permanent) Life

Each has a unique use. Compare each to a house;

  • Term

    Term; is like a rental. You rent the coverage for a period of time, however it doesn’t grow in equity. Once your rental time is up, you move out, and get nothing for your rental. You can renew, yet the rates will have increased substantially. Term is suitable for a short term coverage of a debt. Over 99% of all term policies in Canada never pay out. Either the term ends, or the person stops paying the plan.

  • Universal

    Universal is rent to own. Once again, you rent a block of insurance for a period of time, and when you reach 100 years of age, you own it! After you have paid for the cost of insurance, any additional you put into the plan goes towards an investment account. Universal was originally designed to be used in a business scenario as a way of owners of businesses insuring each other, and key people in their organization. It became very popular in the 80’s & 90’s when interest rates and investment returns, especially in mutual funds made it an attractive option.

  • Whole Life

    Whole Life is like a mortgage. Once the mortgage is paid, you own it completely, and it does grow in equity over time, just like your home does. It is more expensive, however you do own the plan, and the options for how to use the equity in the plan make it a useful piece of an overall investment strategy. There are two types of Whole Life; Non-participating means that the insurance company will pay interest into your account and it will grow in equity over time. Participating whole life means that the insurance company considers you a share holder, and will pay an annual dividend (tax free) into the account. Those dividends go to buy more units of insurance, so a Participating Whole Life plan grows in terms of the amount of insurance coverage, and the cash value (equity) within. Whole Life is also known as Permanent Insurance, and it was very common term in the past. It has been available in Canada since the mid 1800’s, and it makes up the vast majority of all premiums that are paid each year in Canada. Whole Life originated in Britain and is very popular around the world where Britain has had a role in developing the financial structure of a country. Hence, it’s not available in the same form in the U.S.A.

Which type of insurance is right for you and your family?

There are a number of factors to take into account;
The purpose of the insurance
The age of the person to be insured
Budget

How do you know what’s right for you?

That’s where you need the help of a life insurance professional.
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Have you ever thought “I wish I could do something more than toys for my grandchildren?” We talked with Rob after hearing him at a networking event mention that one of the things that he did was children’s insurance. After getting educated by Rob in a very non-threatening, informal and professional manner about this program. We decided to try it out for our grandchildren. We are so glad we did. It is amazing what a little pre-planning in the early years can do to ensure that they will be okay by the time college or university or maybe even starting their own business happens. The great part about this program they get to choose and not be mandated by the government.

Darryl Campbell

Start planning for your children's future today.

Let’s have a conversation. Decide what’s important. Look at how to get the most value from the plan. Then monitor it, update it, and stay on top of how the plan is performing for you, and prevent any ‘surprises’ at renewal time.