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Life Insurance

Life insurance is a policy or contract between you and a life insurance company that can last for the rest of your life or for a specific time period. This contract guarantees that your beneficiaries will get a tax-free cash payment (also called the death benefit ) when you die.

 

The exact amount they’ll get depends on how much insurance you purchase and the type of policy you select. It’s important to note that the death benefit is guaranteed only if you pay the required premiums  and meet all the policy requirements.

Term Insurance

Term life insurance provides temporary coverage for a specific term or period, typically 10, 20, or 30 years. If the insured person dies during the term, the policy pays out a death benefit to the beneficiaries. It is often more affordable than other types of life insurance but does not build cash value. The beneficiary receives the payout tax-free.

Benefits of Term Insurance:

  • Your fees (premiums ) are fixed. They won’t change during your term.

  • Most term plans offer instant temporary coverage. (TIA) Temporary Coverage after you have submitted an application and paid the premium while you wait to hear back from the insurance company if it is approved or denied.

  • Option to convert to permanent life insurance at any time.

  • Guaranteed tax-free payment or death benefit that stays the same.

For homeowners with a mortgage:

The key factor to remember here is that the term insurance payout can be used for anything by the policyholder’s beneficiaries. The payout from a mortgage life insurance policy typically goes directly to the lender; no money is paid to the policyholder’s family or loved ones.

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Permanent Life Insurance

It’s guaranteed lifelong coverage that protects the people you care about. But it’s more than just insurance. Over time your policy can build value you can access for cash during your life, with certain tax implications.  

You can access money in your policy through a loan or a withdrawal. And when you die, the people you’ve chosen receive a tax-free payment, similar to term life insurance.  

Benefits of Permanent Life Insurance:

  • You get coverage that lasts a lifetime – it’ll never expire.

  • Your premiums stay the same even if your health changes.

  • Your beneficiaries will get a tax-free payment after you die.

  • Some policies let you borrow from these funds at any time.

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Participating Life Insurance

Participating life insurance (also called par insurance) is a contract that offers three important features: lifetime insurance, cash-value growth, and a chance to earn policy dividends

Benefits of Participating Life Insurance:

  • You get coverage that lasts a lifetime – it’ll never expire.

  • Your premiums stay the same even if your health changes.

  • Your beneficiaries will get a tax-free payment after you die.

  • Some policies let you borrow from these funds at any time.

  • A chance to earn policy dividend as the investment grows over time.

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Universal Life Insurance

Universal life insurance is one of the most flexible types of permanent life insurance for Canadian residents.

It offers key financial planning features such as lifelong protection that never expires and opportunities for tax-preferred savings growth.

Benefits of Universal Life Insurance:

  • Select the amount of premiums you pay. Pay more than needed to keep your policy in good standing so that you have more flexibility in the future when you retire or have less income.​

  • Choose from a variety of diversified investment account options. Any interest you earn in your account won’t be taxed while it remains in your policy.

  • Maximize your estate and financial value for your loved ones and protect them from financial hardship after you die.

  • If your policy has cash value, you may have access to extra funds to supplement your retirement income or during a time of illness

  • Guaranteed lifetime protection – This means your coverage does not end after a certain period.

  • Offers business owners a tax-efficient way to protect the value of their business.

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