It is estimated that 70% of Canadians do not have life insurance, which is a big concern. Life insurance is one of the most important things you can buy to protect your family financially if something happens to you.
Most people think that life insurance is too expensive, but that is not always the case. There are many different types of life insurance policies available, and the cost will vary depending on the type of policy you choose and the amount of coverage you need.
Term life insurance
Term life insurance is the most affordable type of life insurance, and it is a good option for people who are young and healthy. This type of policy provides coverage for a set period of time, usually 10, 20, or 30 years. If you die during the term of the policy, your beneficiaries will receive a death benefit.
Term life insurance is a lower-cost product that protects you for a set period of time, like 10 or 20 years. When that time’s up, your coverage is renewed at a higher cost if you don’t cancel your coverage. You can also convert it to permanent life insurance without having to answer questions about your health.
It also has a lower initial cost than permanent life insurance, and it’s a popular way for those just starting out to protect themselves and their families. Term life insurance is usually less expensive than permanent life insurance, so you may be able to purchase more coverage.
Whole life insurance is more expensive than term life insurance, but it provides coverage for your entire life. This type of policy also has a cash value that you can borrow against if you need to.
Universal life insurance
Like participating life insurance, universal life insurance is permanent, meaning it lasts the rest of your life - as long as you pay the premiums. Universal life insurance combines the advantages of a permanent, lifelong policy with a tax-advantaged investment component.
So, what may make universal life insurance right for you today? The short answer: flexibility. This kind of insurance typically lets you to select your preferred premium schedule, the amount you want to pay (within limits) and an investment mix that matches your unique risk profile.
Universal life insurance is a type of whole life insurance, but it has more flexibility than whole life insurance. With universal life insurance, you can choose how much coverage you need and how long you want the policy to last.
Variable life insurance
Variable life insurance is similar to universal life insurance, but the death benefit and cash value can fluctuate based on the performance of the stock market.
No matter what type of life insurance policy you choose, it is important to make sure that you have enough coverage to protect your family financially if something happens to you.
Participating life insurance
Participating life insurance, sometimes called permanent life insurance, gives you lifelong insurance coverage as long as you pay your premiums.
It’s called participating life insurance because the premiums you pay for your coverage, along with premiums from other participating life insurance policyowners, go into a participating account. The insurance company’s professional investment team manages this account, investing to increase its value.
It’s from this account that your death benefit and any potential dividends are paid. While dividends are not guaranteed, any you may receive can be used to buy additional coverage, reduce your annual premium payments or be taken out as cash (though any cash values withdrawn from the policy may be taxed).
What’s right for you today?
Term life insurance is the lower cost option in the short term. But while participating and universal life insurance tend to be more expensive initially, the growth potential of the cash value of these types of policies could make them better value in the long run.