Life insurance is the gift you give your loved ones during times of grief. With the right policy, you are better able to ease the financial pressures of your children, spouse or extended loved ones. Some benefits may include ensuring your children’s post-secondary education is paid or alleviating the tax burdens that may arise when assets are transferred to your loved ones. Ask me about the differences between term, whole life, participating life and universal life insurance products and why you would choose one over the other.
Life Insurance Statistics
- 40% of Canadians do not own Life Insurance
- Approximately 4 million Canadians under 35 are looking for individual life insurance
- 38% of Canadians only have life insurance through their employer
- 49% of Canadians with dependants have never purchased life insurance
Whole Life, Participating and Non-participating
Also known as permanent insurance is more expensive than term insurance, however, it is often used as a vehicle to transfer wealth to the next generation while preserving their estate value. This type of policy is also used to cover final expenses and taxes when a person dies. Sometimes a business owner can use this type of insurance to transfer a business to a family member while minimizing the tax burden that may be possible when the asset is transferred. Participating whole life policies have a savings component to it that will grow over time and are intended to have a cash value at the end of the insured’s life.
If you think of life insurance as renting a house vs. buying a house. You would “rent” term insurance when you need it for a short term obligation such as covering a mortgage. Sometimes people will purchase term insurance to cover their lives while their children are young and still attending school, but once they have finished school, the parents may no longer see the need to continue with the insurance policy. Once the term has finished the policy simply ends. There is no saving component in this type of policy.
Universal Life Insurance
This type of policy is a hybrid policy that has a cash surrender value, but has flexible premium amounts. However, these premium payments will determine the speed at which your cash value in the policy will grow and is impacted by market volatility.
The unfortunate truth is that many Canadians do not purchase life insurance. This leaves their families to come up with creative ways to pay for final expenses. Time and time again I see Go-Fund-Me pages from families who have lost loved ones and cannot afford the final expenses, or they are collecting funds so the surviving parent can continue to raise their young families. Don’t let this be you or your family members. There are affordable options that can provide you peace of mind.