Term Life Insurance
Term life insurance is an affordable life insurance policy that gives you financial protection for a certain period of time. You get to choose how long you want your term policy to last – 10, 15, 20, 30, or 40 years, or to age 100. If you die while your policy is still active, then your beneficiaries receive a lump-sum, tax-free payment (called the death benefit). They can use this money any way they please.
Whole Life Insurance
Whole Life Insurance is a type of life insurance policy that provides you with lifelong coverage to protect your loved ones. This coverage never expires, no matter your age or if your health changes. Permanent life insurance provides a death benefit, which is a tax-free payment your beneficiaries will get after you die.
Universal Life Insurance
Universal life insurance is one of the most flexible types of permanent life insurance for Canadian residents. It offers key financial planning features such as lifelong protection that never expires and opportunities for tax-preferred savings growth.
You choose a guaranteed death benefit for your beneficiaries. When you make a payment, your money goes into something called a policy fund. The policy fund is used to pay for your cost of insurance, while any extra balance can be invested in a broad range of investment account options for tax-preferred savings.
Participating Life Insurance
Participating life insurance (also called par insurance) is a contract that offers three important features: lifetime insurance, cash-value growth, and a chance to earn policy dividends. Here’s how it works:
Lifetime insurance:
A participating policy includes whole life insurance protection, which provides coverage that’s guaranteed for life. This means that your coverage will never expire and your beneficiaries are guaranteed to get a tax-free payment (also called the death benefit) after you die – this is provided you’ve paid your premiums.
Cash-value growth:
Participating policies also come with a savings portion called the cash value. You can borrow against your cash value or withdraw funds from it. Your cash value can grow over time on a tax-preferred basis. This means you won’t have to pay tax on any cash-value growth unless you borrow against the cash value above certain limits or start withdrawing funds.
Mortgage Protection Insurance
Thinking of buying a new home? Your mortgage lender may offer the option of buying mortgage insurance (also known as creditor insurance). But do you really need it? Or do you need mortgage protection insurance instead?
They sound similar, but they’re not the same.
Mortgage protection insurance is a life insurance policy that offers your family or beneficiaries a certain amount of money if you were to die. In such a case, with an active life insurance policy, your beneficiaries would receive a tax-free amount of money, called the death benefit. (The exact amount they’ll get depends on how much coverage you have.)
With a life insurance policy, you get to: keep your coverage even as you pay off your mortgage, keep your coverage even if you move, and select a beneficiary to inherit the death benefit.
With life insurance, you’re leaving your beneficiaries with the flexibility to use the death benefit in any way, for any reason. For example, they can use that money to cover: mortgage payments, debts, the cost of childcare, or the cost of other living expenses.
When buying insurance, remember to make sure that you have enough coverage to meet your family’s financial needs, whether it’s making mortgage payments, paying off debts, or anything else.
Mortgage insurance through a bank or lender, however, works differently.
It can only be used to pay off some or all of the remaining amount owed on your mortgage in the event of your death. But the money won’t go to any beneficiary. Instead, it goes directly to your bank or mortgage lender.
Mortgage insurance pays all or part of your mortgage debt, but it doesn’t leave any money for your family. And your family’s financial needs may go beyond just a mortgage. They may have other expenses to cover as well. That’s why you may want to consider mortgage protection insurance instead.