What are you interested in?
To make an informed decision, find out about the different types of insurance available in Canada.
TERM LIFE INSURANCE
Term insurance is the most affordable and easiest to understand. You pay a premium for a period of time and if you die during that time, the insurance proceeds are paid to your beneficiary. The premiums will be guaranteed to be renewable and convertible and is very effective protection until it is no longer needed (For example, your children are no longer dependents). The amount of coverage you decide on will remain constant as long as you do not choose to decrease your coverage (which you may decide to do at any point in your term.) After each period, the premiums will increase to a new amount and will remain at that level until the next renewal date.
WHOLE LIFE INSURANCE
Whole Life is a type of permanent non-participating life insurance. It offers life-long protection and is guaranteed to do so by the insurance company. You pay a fixed premium for life instead of increasing premiums found on renewable term life insurance policies. The term “non-participating” indicates that these types of policies do not receive dividends, bonuses and are not linked directly to the performance of the insurance company. Once your whole life policy is in effect, the premiums you pay are fully guaranteed and will never increase. Some policies have a guaranteed pay period which will allow your plan to become fully paid-up after a given length of time as indicated on your policy.
While some whole life plans do not have a Cash Surrender Value (CSV), other will. Plans that have a CSV as part of their features will usually begin to grow after an initial period of time has passed. Other features may include paid-up premiums, extended coverage and policy loan provisions. I can explain these to you in more detail.
UNIVERSAL LIFE INSURANCE
Universal Life (UL) insurance is a flexible permanent insurance plan that combines life insurance protection with a tax-deferred investment vehicle. This combination can be an ideal financial planning tool for those looking to:
- Maintain insurance protection
- Provide retirement income from tax-sheltered growth.
Unlike RRSP contributions, which are made with before tax dollars, insurance premiums are not deductible. In both cases, the income earned is tax-sheltered until maturity of the plan or policy. Funds withdrawn from the policy during your lifetime are taxable to the extent the amount withdrawn exceeds its cost base. However, on death, the entire amount is received tax-free as a death benefit. If you have maximized your RRSP contributions, this type of life insurance may provide another opportunity for you to shelter your savings from tax.
UL’s are designed to be very flexible. Unlike Whole Life, if you fall short of your annual premium goal one year, you can always deposit more the following year. You can increase your coverage, choose an investment portfolio that meets YOUR needs (over 400 funds to choose from) based on your risk tolerance, you may withdraw all or a portion of your Cash Value and/or apply for a policy loan against the values in your policy.
LIVING BENEFIT & CRITICAL ILLNESS
Critical Illness coverage is a form of protection that provides immediate funds to you upon diagnosis of one of 26 covered conditions (includes cancer, heart attacks, stroke and even the loss of independent existence among others). Unlike other disability plans, it will provide a lump sum benefit that can be used any way you choose with no restriction or claw-backs. For example, if something serious were to happen, you could use the benefit to take time off work, provide private home care, receive treatments outside of Canada or other medical costs not covered by our Ontario health plan, or simply retire early. In short, if something were to happen, this would prevent you from having to erode your retirement savings.
Group Benefits & RRSP
Group benefits plans and retirement plans help employers to increase employee satisfaction and productivity, create a rewarding workplace and minimize the costs of employee turnover.
WHAT IS A GROUP BENEFITS PLAN?
A group benefits plan can include:
· Health and Dental Insurance
· Disability Insurance
· Life Insurance
· Critical Illness Insurance
The plan contains many individuals, which helps spread out risk and lower premiums. The employer may also choose to pay some or all of the premiums on the employees' behalf.
WHAT IS A GROUP RRSP?
A group RRSP is a collection of individual RRSPs where plan members (employees) make contributions through payroll deductions. Key benefits:
· Contributions are voluntary and the amounts contributed are up to each employee.
· Encourages employees to contribute immediately – Pay yourself first!
· Members realize instant tax savings because contributions are deducted from earnings before taxes.
· A group RRSP is easy to set up, operate, and if necessary, modify or terminate.
· All of your investment earnings are tax-sheltered until withdrawals are made.
We advocate that business owners and companies who want to do the right thing for their employees create long-term value, and that well-designed group plans make a company very competitive in their quest to recruit and retain quality employees.