Insurance
What is it? Do I need it? What does it cost? What options do I have for protecting my mortgage?
Life insurance is used to protect the financial security of the people you love most.
A life insurance policy pays a cash benefit, tax free, to your beneficiaries when you die. The amount of money for which you are insured and the type of insurance you buy depends on your needs.
People can get life insurance by buying it on their own (usually from an insurance advisor or in some cases over the phone).
There are 3 types of life insurance: term, permanent and universal.
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Summary |
Lower cost, temporay protection for times of high financial risk (i.e.when you have a mortgage). |
Stable lifelong protection without the protection of universal life. Over the long term, it generally offers a better financial choice than buying and renewing term insurance. |
A more flexible and intricate type of insurance that combines permanent life insurance and access to cash values that grow tax-deferred. |
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Duration |
Coverage will end at a certain age |
Guaranteed lifetime protection |
Typically lifetime protection |
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Amount of insurance |
Once chosen, doesn't change |
Once chosen, doesn't change |
Choice of level or increasing amount of insurance. |
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Cost |
Lowest cost initially, but cost may increase every 10 years. Cost can rise substantially in later years. |
Premiums do not increase for the life of the policy. Premiums may be higher than term insurance when you are younger but will be lower than term when you are older |
Cost of insurance may be: guaranteed and level, increase each year or be a combination of both. |
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Cash value |
None |
Usually accumulates and is paid to you upon cancellation. You may receive dividends which can be received as cash or used in a variety of ways. |
Payments made in excess of the required cost of insurance, can be invested and grow tax-deferred. |
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