Life Insurance

Life insurance is a great way to secure your financial future and ensures your family is looked after should anything where to happen to you. There are various types of Life Insurance products, each with their own features and benefits:

Term Insurance: 

Term Insurance is for a specified term. Usually 5, 10 or 20 years. Some companies have the option of picking your term. This type of Life Insurance is the most affordable and offers a death benefit. The beneficiaries of the policy will receive a lump sum tax-free amount which can be used to pay outstanding debts or to ensure income is supplemented. Term Insurance usually have the options of being renewable and convertible. Please note that policies must be renewed and converted before terms end. Also, premiums are based on age.

There are two types of permanent insurance; Whole Life and Universal Life. The key difference between “Term Insurance” and the two types of permanent insurance are that, in addition to offering a permanent death benefit, permanent insurance offers a cash value that accumulates with interest which is tax-deferred. There are two components to Universal Life policies, the cost of insurance (COI) which is the minimum premium payment to keep the policy in force and the investment component of the policy. The flexibility of this type of policy is that you can adjust the investment component to suit your investment needs.

A Critical Illness Insurance policy will pay you a one-time, tax-free amount if you are diagnosed with a covered life-threatening illness. The funds received can be used to pay off debts or to cover the cost of recovery once out of hospital. Unlike term or permanent insurance, which are paid to your beneficiaries, Critical Illness are paid to you.

A Disability Insurance policy is used to protect an individual’s income should an injury or illness occur and will pay a monthly income of up 75% of a person’s income. There are two categories of disability: Short-Term and Long-Term. As the name suggest, the Short-Term category will take affect generally after your sick leave is over. 1 to 14 days after a claim is made and is used for less serious issues. The Long-Term category takes effects once the Short-Term category is exhausted and will cover an individual between 2 to 3 years. Although some policies will cover an individual to age 65.

A Health Insurance policy is used to cover what is not covered by provincial health plans such as eye glasses, medication and dental.

The difference between Health Insurance and Group Insurance is who owns the policy. Health Insurance is owned by an individual. Whereas, Group Insurance is owned by an individual’s employer. Employers generally offer Group Insurance as an incentive of employment. Policies generally include an option to convert it to an individual Health Insurance plan should individuals leave their employer.