All About Life Insurance

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What is Life Insurance?

This is an agreement between two parties, the policy owner and the insurer. If the insured dies, the insurer pays the benefit to the beneficiary. An insurance contract or agreement is a written agreement between two parties, where the first party or insurance company assesses the other party or the insured’s financial, health and living conditions and provides life insurance at the request of the applicant.

Highlights

• The policy starts when two parties enter an agreement or a legal contract.
• In most cases, the insurance policy remains in force until the insured dies, or the last premium, or until the insured surrenders the plan.
• As per the contract, the benefit amount may change or stay the same to the maturity.
• The insurer’s guarantor pays benefits to the insured in case the insurance company files bankruptcy.

In terms of life planning, life insurance is the most important decision. Mishaps can occur at any stage of life, including birth, marriage, childbirth, and old age. We offer plans that fits every stage of life so that you and your family are prepared.

Why it is required?​

There are many reasons for life insurance, such as

Financial protection:- This is the best and cheapest way to secure your financial security, as we mentioned earlier. If you are concerned about the financial future of your loved ones, then you should purchase life insurance to ensure that they can easily pay off your debts, final expenses, and taxes.

Legacy for family:- Buy life insurance to leave a legacy for your family and children. We offer life insurance plans with cash value and investment options.

Tax-free payments:- If you pass your house or property to your children, it will be taxable under the rules, but life insurance benefits are tax free, as long as they named the beneficiary in plan.

Creditor protection:- If they properly drafted the policy, its death benefits and cash values are protected from creditors. If a business owner wants protection against bankruptcy, creditor protection is an important feature.

Living benefit:- If an insured is diagnosed with a terminal illness, the policy can become a living benefit.
If you are worried about mortgage, bills, taxes, daily life expenses and legacy for kids, then you need it for sure.

As per BNN Bloomburg, only 38% Canadians have group or individual plans, and one third of Canadians have no coverage. The one third number is big, every life is important.

Types.

Term life insurance

As the name implies, term insurance has a defined duration, such as 10 years, 20 years, 30 years or more. Since it has a fixed duration, term plans are cheaper.
Note: We can also use term life insurance as mortgage insurance

Further, the term life insurance can be divided into:

Decreasing Term – The amount of coverage decreases overtime, and our liabilities also start decreasing after a certain age, so term plans are applicable in those cases.

Variable or Convertible Term Life Insurance – The term type allows the insured to switch to permanent insurance at the end of the term.

Renewable Term Life Insurance – The annually renewable policies, where the premium increases every year, being cheaper in the beginning and becoming more expensive as the policy grows.

Permanent life insurance​

This policy will last for as long as the policyholder continues to pay the premiums or surrenders the policy. Since it does not have a time limit, it is expensive than term life. 

We can further divide the permanent plans to: –

Whole life insurance:- The life policy with a cash value and death benefit are comes under this category. In the other words, it is called money back life insurance policy, in which the insured can access the accumulated fund and keep their policy in force as per contract terms.

Universal Life Insurance:- It is a flexible policy with the investment options and a good amount of coverage. The insurer can deposit higher premiums in the UL policy, those leads to investment and coverage. Some other features for UL plan include flexible payment plan, short-term payment options such as 10, 15, 20 year pay, and higher growth funds.
Indexed Universal and Variable Universal are two other types of permanent life plan.

Term VS Permanent Life Insurance

• It is inexpensive, comparatively one can buy more coverage with the same amounts. 
• Temporary coverage from the financial impact of death. 
• Young families, homeowners with the mortgage, and business loan owners are the buyers.
• Convertible to permanent, return of premium options are the key points.- Lifelong coverage from the financial impact of death.
• Adults with long life goals, and want to invest in the legacy, are major buyers.
• Lifetime coverage, bit more expensive, but comes with better investment and growth opportunities.
• Permanent coverage, short term pay off options are the key points.

Now, questions come up to our mind, like how much insurance do you need? How much coverage do I need? How much can I save by investing in the UL policy? 

We have answers to all questions, and work with the best life insurance companies such as sunlife, IA, rbc, manulife. 

Let’s sit together and plan a perfect solution for you. Our experts are available online and offline as per your convenience.