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Types of Life Insurance

Basically, there are three types of life insurance contracts that you need to know about:
Term, Permanent (often referrred to as “whole life” insurance), and Universal Life insurance.

Term life insurance

Term life insurance is the most traditional and best-known form of personal coverage, paying out to the policyholder’s dependents in the case of death. The main advantage of this insurance is that it is lower priced initially than other types of insurance, but it offers few other benefits.

This type of coverage typically operates for a fixed term of 10 to 30 years, depending upon the policy, and pays out the benefit amount if the policyholder dies.

Permanent (or “Whole Life”) Life Insurance

Permanent life insurance offers coverage for a lifetime, with a guaranteed payout upon death.

You choose the death benefit that will be paid upon death. You make payments in to the policy fund. Any amount you pay into the fund in excess of the cost of insurance (the premium) provided by the life insurance contract is invested and builds a cash sum over time. This cash investment enables the value of the death benefit to increase, or allows loans to be taken against the policy, with many people seeing this as a viable income stream for their retirement plans.

Universal Life Insurance

Universal life insurance offers an extremely flexible middle way, combining life cover with the chance to build up an investment income, at a lower cost than fixed permanent life cover.

This type of cover can be very flexible and allows payments to be varied, depending upon the current financial circumstances of the policyholder. Money paid over and above the normal premium can be used to either increase the cash value or increase the death benefit.

Summary

The three types of policies: TERM, UNIVERSAL, and PERMANENT (or “Whole Life”) insurance offer different benefits depending upon the needs of the policyholder.

The most affordable option, a simple Term policy, offers temporary coverage, but no other investment potential, and is usually a prerequisite when taking out a mortgage or a large loan.

Permanent (or “Whole Life”) and Universal Life insurance contracts are more flexible, offering tax-free investment potential alongside the lifetime coverage, allowing money to be invested into the death benefits or the investment account.

It is always important to seek independent financial advice before committing to any major financial decision and to be aware of all the long term investment opportunities available.

One of the easiest ways for you to make an informed decision before you buy life insurance is to sit down with a Financial Advisor to evaluate your situation. A Financial Advisor can help you determine the type of insurance coverage that is best for your unique situation.

Question or concern about Life Insurance?

Call Firth Bateman: (604) 591-1336
Life Insurance
Delta, BC

How Much Life Insurance Do I Need?

This question requires careful consideration. First, ask yourself:
“If I died tomorrow, how much money would my family, or business partner, need?”

Insurance reduces risk and provides security for you and for your family’s future. To know how much insurance you need, you’ll need to consider your lifestyle and the possible risks that could affect it. When calculating how much life insurance you need, consider the following:

• Estate Expenses
• Funeral Expenses
• Mortgage
• Loans and Debts
• Replacing Annual Income (number of years?)
• Children’s Education
• Resources available at death: Savings, Stocks, Mutual Funds, Retirement Funds, Life Insurance, and Other Assets

When you think of insurance, the first that comes to mind is auto and home insurance. Replacement of these assets in the event of damage can be very costly. Most people hold auto and home insurance policies.

Life insurance is essential to many families, affording extra security if the unthinkable should happen. The loss of a breadwinner is devastating enough, without having the added stress of worrying about how to cover the bills and mortgage.

Other types of insurance are equally important. Life events such as illness, accidental injury, loss of employment income, or a death in the family can affect family security. Yet these potential risks to your lifestyle can be reduced by the right insurance planning.

Changes in lifestyle also determine the types and amount of insurance you need. The amount of life insurance – and the characteristics of life insurance contracts – that you have will likely change throughout your life, depending on your life circumstances. Some of these changes might be getting married, starting a family, changing jobs or preparing for unexpected events.

Should you have Term, Universal Life or Whole Life Insurance? More information on the three types of insurance . . .

To meet modern trends, life insurance contracts can also act as investment vehicles, building up a sum of extra equity over the lifetime of the policy. This can be withdrawn or borrowed against, and usually offers a tax-free sum on retirement or death.

Deciding on an amount of life insurance you should have requires careful consideration. A Financial Advisor can help you determine just how much insurance you need, based on your age, your income, family circumstances and obligations, assets owned, and debts owed.

Question or concern about how much you insurance you need?

Call Firth Bateman: (604) 591-1336
Life Insurance Services
Delta, BC