Did you know there are two main types of life insurance? Yes, it’s true! Before I joined the insurance profession, I thought all life insurance was the same. True, they all designed to pay a tax-free lump sum of money in the event of death; however, the two types are considerably different. To provide some clarification, I figured I would take a few moments to list some of the differences. I trust you will find this beneficial! Enjoy!

 

Term Insurance

• Usually the most cost effective form of life insurance. Initially.
• There is no cash that builds within a term policy.
• Common term periods are 10, 20, 30 years.
• Your premiums remain level only for the chosen time period. Once that time period ends, your policy will renew and your premiums increase.
• The majority of term policies generally expire between ages 75 – 85.
• Term coverage is often used to eliminate short-term problems, such as debt, in the event of premature death. These include mortgages, credit cards, lines of credits, vehicle loans, etc.
• Term coverage is also commonly used to replace the loss of income (loss of a pay cheque ) of a contributing spouse so that a family can maintain their lifestyle for a desired period of time.

 

Permanent Insurance

• Common types of permanent insurance include Universal Life, Whole Life and Term 100.
• Coverage is generally intended to last the lifetime of the insured person.
• Premiums remain level for the life of the policy – they will never increase. As a result, this type of insurance is more cost effective over time.
• Most permanent policies have cash that builds up within the policy, on a tax-free basis. You can access this money later on if you so desire.
• There are also options to have the policy paid off after a certain time period – you can stop paying premiums and still have the coverage remain in effect for your life! Common periods of time to pay premiums are 10, 15 and 20 years.
• Permanent insurance is often used for long-term problems such as final expenses (funeral, legal and probate fees) and estate planning purposes to pay taxes on your estate.
• Permanent insurance is also commonly used for those who want to leave a legacy to your children, grandchildren and favourite charities/ foundations/ organizations.

 

For more details on Term and Permanent life insurance, contact me today at 204-292-6585, or via email at ryan@rlsinsurance.ca

– Ryan