Whether you are getting older or have parents that are getting older, there is a good chance that you have heard talk of life insurance. Heck, you have probably seen one of the many commercials on TV. What you need to know is that life insurance can be somewhat complicated. It isn’t just as simple as choosing a provider and signing up. There will be tons of factors to consider like who do you want the money to go to? How much life insurance can you afford? What type of life insurance do you want to leave behind?
These are all things that will need to be considered before taking out a policy, but before you learn more about that, you need to really understand life insurance and what it is as a whole.
What Is Life Insurance?
Life insurance is pretty much what you would figure. It is just an insurance policy that will be paid out to your family in the event that you die. Now, there will be different payouts for different types of deaths, and there might even be different stipulations to collecting on these deaths. That doesn’t really matter right now. What matters is that you know that life insurance is a financial security blanket for your family. It could ensure that they are financially cared for when you are not there to do so.
Even if your family does not need you to financially provide for them when you are gone, they can still benefit from what you can stand to leave behind. At the very least, you don’t want to leave your family behind a debt. Of course, every situation is going to be different and every Canadian family will need different types of policies, but life insurance is always going to provide some sort of financial security blanket.
Do You Really Need Additional Life Insurance With A Work Policy?
Unfortunately, there are just too few people out there that actually plan for their deaths. Of course, no one wants to plan to die, but it is just smart business, especially if you have a family. Your family will already be devastated by their loss. You do not want to make the situation even worse by leaving them with a mountain of debt or leaving them scrambling to try to figure out how to pay for the funeral. Sometimes just a traditional work life insurance policy isn’t enough either.
At the end of the day, it doesn’t matter if your family is financially dependent on you or not, they will in some way be financially impacted by your death. Another important thing is that if you do make it to retirement age then there is a good chance that your work policy may expire. It will depend on where you are employed in Canada, but most Canadian businesses usually cut their employees off life insurance a year or two after retirement.
The Types Of Life Insurance
Insurance as a whole is complicated. Whether it be life insurance or car insurance, it can all be complicated. And, one of the major reasons for this is the policies. Each type of life insurance will come along with a variety of available policies. Not all of these policies are useful in certain situations, and in some situations, they will be essential to ensure that you are protected to the fullest. This is what makes insurance as a whole so complicated. That aside, if you want to ensure that you and your family are protected to the fullest, you are going to have to understand each unique policy and when and where it will come in handy.
When it comes to simplicity, you really can’t get much more simple than term life. Not only is this type of policy simple, but it is surprisingly affordable. The policy simply provides a fixed amount of insurance for a specific time period. For instance, you might be able to get $100,000 coverage for a period of 10 or 20 years. This means that in the event of your death, your beneficiaries will be paid $100,000 tax-free if death happens within the chosen term period. Term life is a flexible type of insurance that you can upgrade to permanent insurance any time, regardless of any changes to your health, occupation, or lifestyle.
Speaking of permanent life insurance, this is a type of policy that is sometimes referred to as whole life insurance because it provides the protection for your whole life. Not only this, if chosen some whole life policies can even build cash value over time. There are some policies which are permanent till age 100 with no cash value but at the same time some policies will provide you with the cash value which you can use as a retirement income at a later stage in your life.
Whole life policies do have an option where you can choose to pay for a shorter period of time and coverage can be provided for all life which means that you can buy a policy where you pay the premiums for 10 or 20 years and policy gets paid up for life. You can take the cash from the policy if needed or you can leave it in the policy for later use. No premiums would be needed once policy is paid for 20 years and coverage will remain in force all life.
This is another type of permanent whole life insurance where policy holders receive dividends into the policy. When you choose your coverage and premiums, they are also guaranteed for life just like in the permanent policy. The dividends that are awarded through this policy are always vested and are usually paid annually and can be used to buy more coverage, reduce annual premiums, or you can leave them to grow the cash value of the policy. Great news, you can even exchange them for cash if you want.
Universal life insurance is also a form of permanent insurance. In a simple language it is a policy which can be called as “Buy the term and Invest the difference” which means that your premiums can be as low as term insurance for buying the cost of insurance with investments saving portion where excess premium paid into the policy earns interest. However, it does offer much more flexibility with a combination of protection and savings. With this plan, you will get to choose the guaranteed death benefit that your beneficiaries will receive in the event of your death. On top of this, any of the payments that are made to this policy above the cost of the insurance will earn tax-preferred interest. For instance, if you are paying $100 a month, but your cover cost is only $50, that extra $50 could sit in an account and collect interest that can later be used for a number of useful activities.
Why Choose Sim Gakhar?
At the end of the day, there are going to be a number of life insurance brokers that you can choose from in Canada. Some of them might offer the policies mentioned above, while some of them might even offer something different. What you need to know is that Sim Gakhar specializes in providing you policies custom tailored to suit your life insurance needs today and tomorrow based off your affordability. How about making life insurance a key part of your financial plan with Sim Gakhar.
Get in touch
I am always a call away. If you are looking into life insurance coverage for the very first time or would like to discuss your existing policies, I would be glad to be your Markham life insurance advisor!
My contact information can be found here.