Term InsuranceAs the name implies, Term Insurance is meant to provide temporary coverage for a certain term or period of time. It is the most basic and most affordable form of life insurance and is well suited to meet high, short-term needs at a low initial cost.
The most commonly purchased policies are Term 10 or Term 20 where the premiums remain level for the first 10 or 20 years respectively. After the initial term and provided your policy is renewable, renewal is automatically guaranteed without medical evidence and the premium will increase as per the original contract.
Term policies do not contain any cash values and most have a built in conversion option which allows you to convert all or a portion of the death benefit to a permanent policy without a medical.
A variety of other terms and optional term riders exist. With our deep understanding of the various products available, we will work with you to determine the options best suited your needs.
Whole Life InsuranceWhole Life Insurance is a form of permanent insurance and is intended to provide coverage for life.
Premiums are fixed throughout the contract and are payable either for a predetermined number of years or for the life of the policy.
In the early years of the policy, the premiums paid exceed the actual costs of insurance. As time goes on, there is a break-even point where the premium paid will be much less than the insurance costs of the company on an annual basis.
If you cancel the policy after a period of time, companies will typically refund you a portion of that premium overpayment. This refund is known as a cash value or cash surrender value. Before cancelling a policy that will return the cash value, check if there are any taxes payable.
Depending on your policy, you may have the option to take a loan (interest charges apply) for the amount of the cash value.
Universal Life InsuranceUniversal Life Insurance is another form of permanent life insurance and is intended to provide coverage for your lifetime. These policies allow for flexibility as you can vary your monthly deposit (i.e. premium), choose between a level or increasing death benefit and decide on investments options within a tax sheltered environment.
There are two basic parts to a Universal Life policy; an insurance portion plus an investment component. The insurance portion can be level for life or increasing every year. The investment portion within the policy is similar to that of a traditional mutual fund and is not guaranteed.
As the annual premiums don't necessary reflect the actual insurance costs, it is important to understand how much of the premium is paying for insurance and how much is going towards the investments.
Other factors to consider, if the investments perform well, there will be excess money in the reserve to fund future premiums. However, if the investments do not perform well, you may need to increase the annual premiums to make up for the difference and keep the policy from lapsing.
Disability InsuranceFor most of us, our ability to work, earn an income and provide for ourselves and our family is our biggest financial asset. It only makes sense that we would want to protect that asset.
Should you become disabled from an accident or illness and are unable to work, Disability Insurance can provide you with financial security by replacing a portion of your monthly earnings.
Disability Insurance contracts and option riders vary widely making it very difficult to compare policies based on premiums alone.
These main factors will affect the premium; the definition of occupation (any, own or regular), your occupation, amount of monthly benefit, elimination period, duration of benefits and any additional policy riders (i.e. inflation protection)
For a summary of the differences between an individually owned disability policy and a group owned policy click here.
Critical Illness InsuranceCritical Illness Insurance is designed help pay the costs associated with a serious illness or condition. If you are diagnosed with an illness that is covered in your policy and you survive the waiting period, you will receive a lump sum payment to spend as you choose.
One of the most important things to consider when choosing a Critical Illness policy is which illnesses and conditions are covered within the policy, as they will vary with each insurance provider.
The core conditions likely to be included in your policy are; cancer, heart attack/coronary bypass surgery, kidney failure, stroke, multiple sclerosis and a major organ transplant.
Long-Term Care InsuranceLong Term Care is designed to pay for personal and medical services for a person who has suffered an illness and can no longer take of themselves. This type of policy provides coverage for an individual who is unable to perform two or more of the "Activities of Daily Living" without assistance.
These "Activities" are: walking, eating, bathing, toileting, getting in and out of bed, dressing and personal grooming.
The provisions in the contract will vary from company to company on how the individual is assessed before any benefits are received. The insured may also require a physician's approval or be hospitalized for a period of time in addition to being unable to perform two or more of the "Activities of Daily Living".
Long Term Care benefits are paid in the form of a daily benefit. The amount currently ranges from $50 to $400 per day. This type of policy reimburses the insured for expenses they acquire while receiving health care services either in their own home or in a nursing home.
Segregated FundsAlso known as variable insurance contracts, Segregated Funds are an investment product that can only be sold by life insurance companies. They are similar to mutual funds in many respects however; Segregated Funds have four main advantages over traditional mutual funds.
Usually 75% to 100% of the amount invested. Upon the maturity of the contract, you will receive the higher of the maturity guarantee or the market value of the assets. Most companies have a reset feature allowing you to lock in a higher maturity guarantee if the investment performs well.
Death Benefit Guarantee
Upon the annuitant's death, the beneficiary will receive the higher of the death benefit guarantee or the market value of the assets.
Your assets would be shielded from creditors in the event you become bankrupt. This can be beneficial for small business owners. Certain stipulations would apply.
Avoid Probate Fees
Upon your death, your assets would pass directly to your named beneficiary rather than going through your estate. By avoiding the probate process, you avoid provincial probate fees which can be quite high depending on where you live.
Fees to invest in Segregated Funds are generally 1% to 1.5% higher than traditional mutual funds. Depending on your situation, the added benefits may well outweigh the higher fees.
Life AnnuitiesA Life Annuity is a life insurance contract where an investor (the insured) makes a lump sum deposit to an insurance company and in exchange, an insurer makes guaranteed regular income payments to an investor. These regular income payments are comprised of both interest and a return of principal.
Annuity payments can continue for the lifetime(s) of one or two people, or for a chosen period of time. For non-registered funds, there may be certain tax advantages.
Annuities can be ideal for investors who are concerned about outliving their savings or who want the highest guaranteed income amount possible from their investment.