I am confused - What’s the best insurance for me?
TERM
- Temporary need
- Lower initial cost
- Increasing premium
- Pay as you go
- Fixed expiry date
- Fixed value over a limited time period
- Benefit paid at death
Permanent
- Permanent need
- Higher initial cost
- Level premium with built in flexibility
- Buy and own
- Coverage for life*
- Benefit paid at death
- Increasing value over your lifetime*
- Level or increasing death benefit
- Access to tax-advantaged accumulated cash value
- Receive benefits during life and at death
- Access to cash value while living
- Life insurance proceeds at death
You May Ask Yourself - Who needs Life Insurance?
What about this situation "What would my family do if I died yesterday?" – What challenges would they face? What Difficulties?
- How would they cover funeral expenses?
- Pay off outstanding debts?
- Pay outstanding Taxes?
- Maintain a comfortable quality of life without your income?
- Protect your estate from creditors, taxation, and probate?
- Transfer your wealth smoothly and efficiently to your heirs?
Maybe you fit into these categories:
- People with dependants
- Single Parents
- Divorcees – some divorce contracts make Life Insurance mandatory
- If a single parent, your children rely on you for everything financial – protect them with Life Insurance
- People supporting aging parents
- Help them take care of the immediate challenges and expenses if you die unexpectedly
- Ensure their quality of life
- New families
- People with no family ties
- Estate owners that need protection
- Business owners
- Debt protection
- Liquidity
- Business succession
- Retirees
So I fit into a category, but how does life insurance work?
Think of it as a contract. This contract is set out as follows:
- How much money the insurance company will pay to your loved ones if you die
- How much you will pay each month to get the insurance. This is called your premium. The more insurance money your loved ones get, the higher your premium will be
- How long the insurance will cover you. Sometimes it’s for life. Sometimes it’s only for 10 years, or to a certain age. The more years you want your insurance to cover you, the higher your premiums will be
Can anyone be the beneficiary of my life insurance policy?
Absolutely, you can name anyone or any organization, even a charity, to be the beneficiary of your life insurance policy.
What does the beneficiary get when I die?
Providing the Death is in the boundaries of the contract, the beneficiary will receive the contracted amount of the policy that you are paying for.
Can my life insurance policy be deemed void?
Each contract has different stipulations. Some have a suicide clause, while others have non-payment clauses. Be sure to read your contract carefully to understand all possible clauses, and ask your Broker any questions you may have.
Are there other insured events other than death?
Of course, life insurance events can include diagnosis of a terminal or critical illness, disability due to health, permanent disability, accidental death or the need for long term care, to name a few.
What are the two different types of life insurance categories?
Protection policies that provide a benefit for a specific event, usually in a lump sum payment, and investment policies where the objective is to grow capital on regular or single premiums.
Can the insured and the policy holder be different people?
Yes, although most often the insured and the policy holder are the same people. However, some may choose to purchase a policy for their significant other. When this occurs, the purchaser would be the policy holder, and the significant other is the insured.
Can I change the beneficiary on my life insurance?
You are more than welcome. You can easily change the beneficiary on your life insurance at any time by contacting the insuring company and letting them know. However in certain circumstances the policy has an irrevocable beneficiary designation, so double check to make sure.
What are the basic classes of life insurance?
There are two classes of life insurance, temporary(or term) and permanent(or whole).
What is term/temporary life insurance?
Term life insurance is insurance for a specific period of time and a specific premium.
What is permanent/whole life insurance?
This policy remains in force until the policy pays out, unless it is voided, such as when the owner fails to pay the premium.
What is universal life insurance?
Universal life insurance is a policy that provides permanent life insurance with flexible premium payments and a higher rate of return, which includes a cash account that you can draw from.