Life Insurance
The primary purpose of life insurance is to protect against the personal and financial
strain of an unexpected death. Whatever stage of life you are in, life insurance can be
used to replace the cash that you do not have. While you are young, it is important to
have life insurance in order to replace lost income, eliminate debt and support your
family. As you get older, life insurance is required in order to preserve your estate for
your loved ones. In the right situation, life insurance can also be used to supplement
retirement income.
It is important to obtain professional advice in order to determine how much coverage you
may require, as well as what type of insurance is appropriate for you. There are 2 main
forms of life insurance, Term and Permanent.
Term Insurance
Term Insurance is a temporary product that provides coverage for a fixed period of time.
The cost either increases periodically until the expiry date, such as 10 Year Renewable
Term, or can be purchased with a level cost to the expiry date.
All programs that we recommend can continue to the expiry date (usually age 80) without
having to provide further medical evidence of good health. These plans are also
convertible to lifetime insurance without any further medical evidence. Generally, Term
policies provide the maximum amount of insurance coverage for the least amount of premium.
The primary limitation is that Term plans do eventually expire.
Permanent Lifetime Insurance
These types of policies continue at a fixed cost for the entire duration of one's life.
There are essentially 2 types of permanent lifetime insurance. There are bundled products
which combine life insurance and a savings component. The insured must maintain a
continual premium in order to achieve the desired result. These are traditional Whole Life
style products which either have guarantees of cash value throughout, or where there are
variable premiums and cash value which depend on the performance of the insurer's general
investment fund.
The other type of permanent insurance is an un-bundled product where there is a separate
pure insurance cost, with the option of adding a cash value component to the plan. As with
all life insurance, the advantage of accumulating cash inside a policy is that the
investment returns are tax-sheltered while the funds remain within the policy. Universal
Life policies require that you maintain the lifetime premium for the insurance, but may
vary the additional contribution to the cash value from nothing, up to the maximum
allowable in order to keep the policy within tax-exempt limits.
The cash value may be used in several ways:
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 Personal or corporate savings on a tax-sheltered basis
Generate a supplemental retirement income
Offset future insurance premiums
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There are a number of variations to all permanent plans which allow you to limit the
payment of future premiums to a specific timeframe. You can also buy insurance on multiple
lives, with benefits payable either upon the first death, or last death.
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