If you have been pursuing the life insurance market there is a good chance that you have come across a vast sea of new terminology. I’m sure permanent life insurance or whole life insurance are probably what you heard thrown around over and over again. They are practically the same thing, as they both provide lifetime coverage.
This means that if you have one of these policies your beneficiaries will receive a tax-free payment after you die. Now, the amount of the payment will depend on the insurance coverage taken. Most Canadian insurers usually have policies available that range anywhere from $10,000 to $10 million.
There are even some policies that draw interest over time, so it is more like you are making an investment than buying life insurance.
Life insurance is always something good to consider. Even if you don’t have any loved ones that you are going to leave behind, you can always utilize the policy if you find yourself in a difficult financial situation. All that aside, choosing the right insurance policy is key to ensuring that you are maximizing your coverage to the fullest.
Your loved ones are already going to be reeling from your death. You don’t want to burden them with pity financial concerns at a time like this.
If you are looking for a policy that offers lifetime coverage with guaranteed premiums, permanent life insurance is for you. If you want to know that your family is protected and the cost of your funeral is covered, permanent life insurance is for you. This is a policy that will cover you for the entirety of your life at the same monthly or yearly rate.
We all definitely do not want to leave our family with any financial burden once we are gone forever and having a proper permanent policy in place gives us the peace of mind while being alive that things will be taken care when we are not there.
Just because you know that you want a permanent policy it doesn’t mean that your search has ended there. There are also different types of permanent insurance available, not all of them are designed for every specific situation. Some of these policies might apply and work for you, while others might be suited more for someone else.
What matters the most is that you have the protection in place for your loved ones for the time when it is needed.
Whole life insurance is the type of insurance where coverage remains in force the whole life. That makes it very clear that it is a permanent life insurance. There is an option available where whole life insurance can be paid for a shorter period of time and get’s paid up and coverage remains in force all life.
There are certain whole life policies which have additional advantage of cash accumulation. Cash inside the policy grows and is available for the policyholder to withdrawal from the policy if needed. This means that policy not only provides a death benefit after death but also provides cash availability if needed while alive.
Of course, withdrawing the cash value would affect the death benefit but unlike term life insurance, this gives an extra peace of mind for additional premium dollars paid into the policy.
There are two types of whole life policies.
Participating whole life and non-participating whole life.
Participating whole life policies are the policies where policyholders receive the dividends into the policy if declared by the company. Dividends declared once vest into the policy and become part of the guarantees of the policies going forward. So regardless of the performance of funds you never see the cash value decrease unless you opt to use it.
Participating in whole life policies have great benefits. There is a guaranteed payout at the death. Premiums for the policies are fixed meaning they never change regardless of the age. Over the period of time cash value is built into the policy and policyholder can access the cash value while being alive for any emergency need or child education or retirement income. The cash value of the policy grows tax free while inside the policy subject to government limits.
Non participating whole life policies are also permanent whole life insurance polices just like the participating whole life policies. The only difference is that there is no annual dividend declared to the policy.
These policies are comparatively simpler and lower premium. They also provide life time protection, cash values, and shortened premium payment methods.
Universal life insurance is also a permanent life insurance. It is also called as “Buy the term and invest the difference”.
Universal life policies allow policyholders to invest extra money into the market. Since the cash is in the market, client can earn or lose money in their insurance policies just like the market. It is the type of policy which gives policy holders flexible protection and allows them to chose their investment and payment. Investment and wealth accumulate tax-free within the limits subject to government limits.
Universal life policies give policyholder the option to pay the premium as a level premium for a limited period where they pay for 10 or 20 years and policy gets paid up and the coverage remains in force all life.
There is another option where they can choose to pay as yearly renewable term where premiums are cheaper when they are younger and increase with age. This gives a lot of advantage to the policy holders to get extra coverage for a cheaper price to cover more protection at a younger age. There is always an option to level the premium at any time while policy is in force.
When it comes to life insurance there really is no time that is too soon to get covered. And, this is because the younger you are, the cheaper those premiums are going to be. Not only this, but you are probably healthy right now.
If you wait until something bad happens, you will not only without a doubt face higher premiums, but you might not even be able to get covered at all.
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