When you invest in whole life insurance, you invest in yourself and for your loved ones.
Whole life, a type of permanent life insurance, is one of the main life insurance options available to Canadians along with term life. You can get whole life insurance when you’re 20 or 75. It can aid in estate planning, act as a supplement to income, and establish a lasting financial legacy.
Wondering if whole life insurance is for you? Here’s a closer look at the major features of whole life and who benefits from it the most.
While term life offers insurance policies either for set periods of time — typically in 10-year increments — your initial whole life insurance policy and protection can last a lifetime. It’s permanent until you say otherwise.
Premiums are guaranteed to not increase from the amount you agree to pay monthly or yearly on that initial policy. On the other hand, if you want to extend your term life insurance past its expiration date, you will likely have to go through the underwriting process again and pay higher premiums compared to your previous policy.
For starters, you. Since premiums don’t change, signing up for whole life early and keeping it for decades saves the money you’d spend on new policies.
Whole life insurance also has what’s called a cash value. Unlike other forms of insurance, whole life does double duty as a type of savings account. When you pay a premium a portion goes into this fund, creating a cash value that accumulates over time with interest.
A cash value isn’t typically available to access right away, but you are likely to have access to the fund around the fifth year of a policy.
Cash values can be used for various purposes. If you face some sort of financial emergency during your life (and who doesn’t?), your cash value may be available to you as a loan. Additionally, some whole life policies generate a yearly dividend, which allows you to share in an insurance provider’s profitability.
Your family and other beneficiaries greatly benefit from a whole life insurance policy. While you’re working, it covers the loss of income that would result following your passing.
Such death benefits are typically tax-free and can help cover everything from funeral expenses and college educations, as well as generally protect your family’s future financial freedom. You can even purchase a whole life policy for a child or grandchild.
Every policy and insurance company is different, and there are a lot of factors that go into premium rates, including age, gender, health, family medical history, occupation, and lifestyle.
Compared to other forms of life insurance in Canada, whole life premiums can be expensive; they are often five or 10 times the premium rates of term life insurance. Estimates for whole life insurance premiums have a wide range, but a $250,000 whole life policy for a man in his 30s or 40s, often leads to a monthly premium between $150-$270.
Women usually pay less for their premiums than men, so with the same benefit amount and same age range, premiums for a woman run from $140-$220.
How Do I know if Whole Life Insurance is Right For Me?
Choosing between various forms of insurance can be challenging, but there are several characteristics of whole life that make it more tailored for certain types of people.
Whole life insurance is expensive even when you sign a policy when you’re young, but it fits well if you’re both financially secure and have developed a preferred approach to grow wealth.
For those who need to develop a detailed estate plan, whole life insurance can be bought within a trust that will cover estate taxes when you die.
Whole life policies are also wonderful ways to protect a partner or spouse who relies on you financially or if you have a special circumstance, such as a child with special needs. Whether you pick a whole life policy may also be dictated by other factors, such as beneficiary needs, your debt status, and what you have in savings.
Policies can also be further tailored to your needs in the form of riders, adding coverage that addresses a disability, child death benefit, and a life-threatening illness.
Whole life insurance falls under the general permanent insurance umbrella, so there are variations to plan available at the majority of Canadian insurance companies.
For example, some whole life insurance plans provide more flexibility in what you are allowed to invest in with your cash value. Others lead to faster cash growth and allow you to either pay your premium across many, many decades or within a set period of time, such as over 15 years.
Some policies are even more detailed. Sun Life has a whole life insurance policy that has a guaranteed qualification for a benefit between $5,000 and $25,000, and the company states that it does not ask health questions.
It can be complicated choosing the life insurance for you and developing a detailed policy reflective of your needs. However, you never have to go at it alone.
Finding a reliable and knowledgeable managing general agent (MGA) is key. MGAs are insurance agents who represent an insurance company and offer their specific insurance products. They can cover underwriting, settle claims and help you craft a policy that fits you the best.
If you live in or around Ontario, Sim Gakhar is an MGA who has developed a devoted following. For more than a decade, Canadians have entrusted Gakhar with their financial future giving Gakhar a 99% client retention rate.
If the features of a whole life insurance appeal to you, Gakhar will work closely with you to find the right policy and guide you through the policy process. All you need to do: give Gakhar a call at 647-889-7290 or send her a quick email at [email protected] today.
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