Life Insurance

Some reasons to consider life insurance:

To cover mortgage and other credit balances after one’s death
To cover final expenses such as funeral expenses
To cover taxes and probate fees upon death
To make a charitable donation
To fund children’s education or life events e.g. wedding
To help with estate planning – one of the ways that life insurance can help has to do with potential capital gain taxes which will have to be paid out after one has passed
To create an additional source of cash using life insurance as a type of savings
To help with retirement planning (certain insurance products and programs can generate tax free retirement income)

This is the least expensive way to purchase life insurance and can offer the purchaser a higher death benefit for a much lower monthly premium.
This is the preferred option for younger families as their family debt often includes mortgages, loans, expenses for children and future education costs.
The payment amount is guaranteed to stay the same for the preferred period during which the insurance will be active, which can be between 5 and 35 years. Following this initial term period, the insurance costs will increase commensurate with the age of the client at that time, which might make the insurance too expensive for one to keep.
This should always be considered as an alternative to bank sold lenders mortgage insurance because it is a far better insurance product offering better protection over the same period of time.

A. universal life

This life insurance offers tax advantaged growth over time.

There are 2 parts to consider with this type of investment insurance:

1. Cost, which is based on the gender and age of the individual at the time they purchase the policy.

2. Portion of the premium which can go into an investment fund or funds.

The investment part of the insurance premium grows on a tax-free basis while contained within an active insurance policy, making this an RRSP type of investment.
The investment selection or choice can be allocated to any one of many investment funds which could grow with interest rates of between 1 and 15% depending on the funds selected.
The death benefit can grow along with the increased investment account value. This type of coverage offers guaranteed cost of insurance options as well, which means that the cost of insurance fees will not increase over time, unlike a term life insurance contract.
The investment growth might not be guaranteed within the policy but is tax advantaged and sheltered growth.
This type of insurance policy can be funded over a person’s lifetime or over a limited time period such as 5,10,15 or 20 years instead.

b. whole life

This life insurance also provides for tax free growth which comes with a guaranteed cash value accumulation as the policy matures over time.
This type of insurance is eligible to earn dividends and can be funded over a person’s lifetime or over an accelerated time frame such as a 10,15, or 20-year time period.
This type of life insurance is also an excellent instrument to consider as an alternate to RESPs as this policy will have consistent and reliable growth over a 15 or 20-year period and there are no restrictions on how the money is used when the time comes to fund your child’s education.
So, the money which accumulates over time within the policy can be taken out in its entirety as a withdrawal to fund education, or a wedding, renovation, or holiday, for example. Or a portion of the money can be advanced as a policy loan with no obligation to repay the loan balance at any time.