LIFE INSURANCE

What is Life Insurance?

Life Insurance is a way to protect your survivors and dependants against financial hardship. A life insurance contract or policy is a legal agreement between you and an insurance company that guarantees payment of cash, the face value of the policy, upon death.
A valuable feature of life insurance is that the benefit paid to your beneficiary is almost always tax free.

How much do you need?

How do you figure out how much life insurance you need? A ballpark measure sometimes used is between five and seven times current net income. But to work out the specifics of your own situation, you'll want a financial need analysis. It gives you a picture of the capital your survivors need when you die. It looks at assets that would be available to them, liabilities they would have to deal with, and continuing family needs for income.

TYPES OF LIFE INSURANCE

Though it seems there is a bewildering array of policy types and names, they all boil down to two basic form of life insurance: permanent and term.
As a rule, permanent needs should be covered with permanent insurance, temporary needs with term insurance. Often, a combination of policy types does the best job for you.
So, what is a temporary need? A mortgage; high needs for continuing income when your children are young; some business obligations; and so on.
Permanent needs? Funeral expenses; supplementing survivor's income; covering capital gains taxes at death, especially if family property is to be passed on to the next generation; children who remain dependent for their lifetimes, often due to a disability.

Permanent life insurance has several variations: whole life, universal life, variable life. All are designated to provide insurance protection for you entire lifetime, as long as you keep the policy in force.

Term life policies provide insurance coverage for a specified period (e.g. fixed number of years, or to a set age) and then expire. A death benefit is paid only if you die during the term of the policy.
Renewable means that you can renew your policy at the end of its term, for a higher premium, without submitting medical or other evidence of insurability. (Once you have reached age of 70 or so, the policy may not be renewable).
Convertible means that you have the option of exchanging your policy for a permanent insurance policy, without submitting evidence of insurability.

Types of Life Insurance

 
Permanent
Term to 100
Term
Policy Type
Whole Life
Universal Life
Term to 100
Term
Period of Coverage Life Life To age 100 or life, depending on contract Depends on term in contract. Often renewable for additional terms but usually not past age 70 or 75.
 
Whole Life
Universal Life
Term to 100
Term
Premiums Guaranteed. Usually remain level Flexible. Can be increased or decreased by policyholder within certain limits. Guaranteed. Usually remain level Guaranteed and remain level for term of policy (e.g. 1 year, 5 years, 10 years, etc.) Increase with each new term.
 
Whole Life
Universal Life
Term to 100
Term
Death Benefits Guaranteed in contract. Remain level. Dividends may be used to enhance death benefits in participating policies. Flexible. May increase or decrease according to fluctuations in cash value fund. Guaranteed in contract. Remain level. Guaranteed in contract.
 
Whole Life
Universal Life
Term to 100
Term

Cash Values

Guaranteed in contract. Flexible. May increase or decrease according to investment returns and level of policyholder deposits. Usually none. (Some long-term policies have a small cash value or other non-forfeiture value, after a long period, say, 20 years.) Usually none. (Some long-term policies have a small cash value or other non-forfeiture value.)
Other Non-forfeiture Options Guaranteed in contract Guaranteed in contract See above See above
 
Whole Life
Universal Life
Term to 100
Term
Dividents Payable on "participating" policies. Not guaranteed. Most policies are "non-participating" and do not pay dividends. Most policies are "non-participating" and do not pay dividends. Most policies are "non-participating" and do not pay dividends.
 
Whole Life and Universal Life
Term to 100
Term
Advantages

•Provides protection for your entire lifetime - if kept in force.

•Premium cost usually stays level, regardless of age or health problems.

•Has cash values that can be borrowed, used to continue protection if premiums are missed, or withdrawn if the policy is no longer required.

•Other non-forfeiture options allow the policyholder various possibilities of continuing coverage if premiums are missed or discontinued.

•If the policy is participating, it receives dividends that can be taken in cash, left to accumulate at interest, or used to purchase additional insurance.

•Provides protection to age 100 - if kept in force.

•Premium cost usually stays level regardless of age or health problems.

•Premium cost is lower relative to traditional permanent policies.

•Suitable for short term insurance needs, or specific liabilities like a mortgage.

•Provides more immediate protection because, initially, it is less expensive than permanent insurance.

•Can be converted to permanent insurance without medical evidence (if it has a convertibility option), often up to ages 65 or 70

 
Whole Life and Universal Life
Term to 100
Term
Disadvantages

•Initial cost may be too high for a sufficient amount of protection for your current needs.

•May not be an efficient means of covering short-term needs.

•Cash values tend to be small in the early years. You have to hold policy for a long time, say over 10 years, before the cash values become sizable.

•Usually no cash values and no or limited non-forfeiture values.

•If renewed, premiums increase with age and at some point higher premium costs may make it difficult or impossible to continue coverage.

•Renewability of coverage will terminate at some point, commonly age 65 or age 75.

•If premium is not paid, the policy terminates after 30 days and may not be reinstated if health is poor.

•Usually no cash values and no non-forfeiture options.

 

PAYMENT OF THE CLAIM

What Documentation Is Needed?

In most cases, a claimant's statement on a form provided by the insurance company, and proof of death, doctor's statement or death certificate are all that's required.

Life insurance companies are dedicated to considerate and prompt payment of death claims. Efforts are continually made to speed up the process. Payment can usually be expected within a week to 10 days of presenting the insurance company with full documentation.

Will a Clam Be Paid If Death Is Due to Suicide?

Individual policies normally contain a two-year suicide clause. If death is due to suicide and occurs within two years of taking out the policy, the claim is not paid. If a suicide occurs after the two-year period, the claim is paid.

Are the Benefits Taxable or Available to Creditors?

As a rule, the death benefit of a life insurance policy is not taxable.
Where the designated beneficiary of the policy is a spouse, parent, child, or grandchild of the life insured, provincial insurance laws provide that the policy and its benefits are not accessible to the creditors of a policyholder either during his or her lifetime, or upon hi or her death.

FOR A FREE QUOTE SUBMIT THE FOLLOWING INFORMATION

First Name:

Last Name:

E-mail:

Phone:

(area code)

Date of Birth:

DD MM YY
Gender:
Male: Female:
Are you a smoker:
Yes: No:
Type of coverage:
Term 5:
Term 10:
Term 15:
Term 20:
Term to age 100:
Whole Life:
Universal Life:
Amount of insurance you require:
$
($15,000 up to 10,000,000)